1. Shopping for a home before you get preapproved
Searching for a home is exciting, and it can be very tempting to hire a real estate agent and immediately begin shopping. The problem with this is twofold: you may not fully understand your price range, and you won’t be able to make a qualified offer when you do find the perfect home. Getting pre-approved for a mortgage before you shop will allow you to refine your price range, and enable you to quickly make a strong offer on the home you desire.
2. Not knowing your credit score or debt-to-income ratio
Your credit score and debt-to-income ratio are two of the most significant metrics that lenders use when approving you for a mortgage. You can find your credit score on sites such as freecreditreport.com and creditkarma.com, and you can calculate your debt-to-income ratio by dividing your recurring monthly debt by your monthly gross income.
3. Forgetting about property taxes and home maintenance fees when budgeting
Monthly mortgage payments are often significantly lower than renting costs, but they’re not the only cost of owning a home. Property taxes, homeowner’s association fees, and home maintenance costs can add significantly to your monthly expenses. Make sure to incorporate these into your budget.
4. Picking the first mortgage company and product you see
The lender and mortgage you select can help save you thousands of dollars over the course of your mortgage loan. Before choosing a lender, search for their current interest rates online and compare those with other lenders. After you’ve narrowed your choices to a few lenders, determine which lender will give you the best advice when choosing your mortgage product.
Certain mortgage products may be great for one borrower but not for another. For example, ARM loans are great for borrowers who will be moving or refinancing soon, whereas fixed rate mortgages are great for borrowers who are settling down.
5. Not budgeting properly for closing costs
Closing costs add up quickly. Taxes, origination fees, the down payment, attorney fees, title insurance, and all other closing costs place a large initial hurdle to buying a home. Make sure to thoroughly inspect your HUD-1 Settlement Statement before you close to budget and understand your closing costs.
6. Skipping the home inspection
Home inspections are often considered to be an annoying expense, but the value of a home inspection can be massive. To an untrained eye, the home you’re looking at may seem perfect, but an inspector will help point out any potential flaws in the home. These will give you a better understanding of the home you’re buying, and will allow you to negotiate with the seller for repairs or credits.
7. Buying when you’re in a transient stage
The closing costs for buying a home are not the only expense you’ll have when transferring ownership. Selling costs can also be extremely pricy – especially when you seek the assistance of a real estate agent. If you think you may move in the next year or two, it is probably smarter to rent instead of buy.
8. Relying on verbal commitments
Don’t trust any commitment unless you have it in writing. Having a commitment in writing will give you legal leverage if the other party attempts to back out of their commitment.
As the economy continues to recover, a handful of housing markets are standing out due to their low down payment costs, high equity level and a handful of other key metrics.
WalletHub compared 25 of the largest metropolitan areas across 10 key metrics to find out which metros rank as the healthiest housing markets.
The information for 25 of the largest metropolitan areas were from
WalletHub used information for the 25 metropolitans that were already selected by the U.S. Census Bureau in its American Housing Survey.
Here are the results, showcasing the 10 healthiest housing markets.
1. Boston, Massachusetts
2. Oklahoma City, Oklahoma
3. San Antonio, Texas
4. Northern New Jersey, New Jersey
5. Hartford, Connecticut
6. Austin, Texas
7. New York, New York
8. Rochester, New York
9. Philadelphia, Pennsylvania
10. Houston, Texas
By: Brena Swanson
According to the Multiple Listing Service (MLS) report released today by the Austin Board of REALTORS® (ABoR), Austin-area home sales topped 3,000 sales for the first time since July 2013, increasing five percent year-over-year to 3,051 sales for the month of June. Mid-year statistics show that Austin-area home sales increased an average of four percent year-over-year to 13,917, putting 2015 on pace to potentially exceed 2014’s historical high in sales volume.
In June 2015, total dollar volume reached $1,018,625,166 and increased by eight percent compared to June 2014. Additionally, the total dollar volume of single-family properties sold in the first half of 2015 was $4,617,178,959, a year-over-year increase of 12 percent.
Barb Cooper, 2015 President of the Austin Board of REALTORS¬®, explained, “June’s increased home sales, combined with total dollar volume exceeding $1 billion for the first time ever, shows the amazing equity Austin homeowners have in the market and the powerful impact of real estate in Central Texas. However, this increase heightens the need to replenish and expand housing stock to help achieve sustainable growth.”
According to the report, the median price for Austin-area single-family homes increased eight percent year-over-year to $272,250 in June 2015, while average price increased two percent to $333,866 during the same time frame. Keeping with the upward trend over the last several months, less than three in 10 single-family homes sold in the Austin area were priced below $200,000.
Price increases are similar for the first half of 2015, with median price increasing 10 percent to $263,000 and average price increasing eight percent to $331,765. At the same time, homes spent an average of 50 days on the market, three more days than the same time last year.
“If this growth continues, 2015 could become another historical year for Austin-area home sales. Both homebuyers and sellers can expect a strong, competitive market for the rest of the summer selling season,” said Cooper.
Active listings increased by four percent year-over-year to 6,701 listings in June 2015 and pending sales increased by eight percent to 3,023 compared to June 2014.
While new listings increased by three percent to 3,812 for June 2015, inventory held steady at 2.8 months, remaining well below the 6.5 month level the Real Estate Center at Texas A&M University estimates as a balanced housing market.
Cooper concluded, “While growth shows positive momentum for our city, ABoR supports solutions that serve the entire community, accommodate new populations and help residents find the homes they want. To help achieve these goals, ABoR and Austin REALTORS® recently met with members of the Austin City Council and Mayor Adler to discuss big picture issues affecting Central Texas residents and with a strong focus on sustainable and managed growth. We’re pleased to see the steps city leaders are taking toward a more affordable Austin.”
June 2015 Statistics
- 3,051 – Single-family homes sold, five percent more than June 2014.
- $272,250 – Median price for single-family homes, eight percent more than June 2014.
- $333,866 – Average price for single-family homes, two percent more than June 2014.
- 42 – Average number of days single-family homes spent on the market, three days more than June 2014.
- 3,812 – New single-family home listings on the market, three percent more than June 2014.
- 6,701 – Active single-family home listings on the market, four percent more than June 2014.
- 3,023 – Pending sales for single-family homes, eight percent more than June 2014.
- 2.8 – Months of inventory* of single-family homes, unchanged compared to June 2014.
- $1,018,625,166 – Total dollar volume of single-family properties sold, eight percent more than June 2014.
2015 Mid-Year Statistics
- 13,917 – Single-family homes sold, four percent more than the first half of 2014.
- $263,000 – Median price for single-family homes, 10 percent more than the first half of 2014.
- $331,765 – Average price for single-family homes, eight percent more than the first half of 2014.
- 50 – Average number of days single-family homes spent on the market, three days more than the first half of 2014.
- 19,865 – New single-family home listings on the market, three percent more than the first half of 2014.
- 5,727 – Active single-family home listings on the market, eight percent more than the first half of 2014.
- 15,984 – Pending sales for single-family homes, five percent more than the first half of 2014.
- $4,617,178,959 – Total dollar volume of single-family properties sold, 12 percent more than the first half of 2014.
The following sections describe trends in other sectors of the Austin-area real estate market.
Townhouses & Condominiums
The volume of townhouses and condominiums (condos) purchased in the Austin area in June 2015 was 331, a 12 percent increase from June 2014. The median price for condos was $234,500, which is eleven percent more than the same month of the prior year. When compared to June 2014, these properties spent 8 more days on the market, or an average of 39 days.
For the first half of 2015, 1,510 Austin condos were sold, which is seven percent less than this time last year, while the median price was $226,250, or six percent more than the first half of 2014. Condos spent an average of 43 days on the market, one day fewer than the first half of 2014.
In June 2015, a total of 1,861 properties were leased in Austin, which is fourteen percent more than June 2014. The median price for Austin-area home leases was $1,600, seven percent higher than in June 2014. In the first half of 2015, a total of 8,525 properties were leased in Austin, which is eight percent more than 2014, and the median lease price was $1,520, a five percent increase from the first half of 2014.
If you’re considering a major home renovation project, you have two options on how to pursue it: You can hire a construction firm and a design firm and manage them separately or hire a design-build firm that would integrate the two functions into one contract.
Prior to starting my own architecture firm, I worked at a traditional architecture firm for six years, and at a design-build firm for two. So I know the pros and cons of each option.
Design-build is becoming an increasingly popular buzzword in the industry — many contractors market themselves as such; you see many more signs for “design-build” companies. It now represents 16 percent of all billings.
According to data from the Construction Industry Institute, the design-build approach can be more cost-effective and efficient than the traditional method of signing separate construction and design contracts. For instance, according to the institute based at the University of Texas at Austin, the unit cost of design-build projects is 6.1 percent lower and the delivery speed is 33.5 percent faster than the traditional method.
Still, you can achieve the same result by hiring your own architect and contractor separately who can work together.
Here’s what you need to know before deciding whether to hire an architect and contractor separately or a design-build firm:
• Learn what exactly a “design-build” is. Simply put, design-build is a way to streamline the design and construction of your project to save both time and money. A budget is typically identified early in the project, and the design is tailored to meet the budget.
Having both the designer and builder involved from the beginning allows for more accurate pricing information as well as designs that are closer to that budget.
Traditional design-build firms offer themselves as a one-stop shop for your entire project; you can work with the same single company from the design through the construction.
Ideally, they are licensed as both architects and general contractors. However, that’s not the only option. A second, equally successful option is to assemble your own design-build team. That option typically involves hiring both an architect and general contractor at the beginning of your project and allowing these professionals to work together, as a team, for you.
I have been involved in design-build style projects completed in both ways with almost equal results. It is different that the traditional design-bid-build method in that the contractor’s involvement comes much earlier and provides an early price-check to ensure the adjustments can be made earlier than not to meet your budget, though certain detailed decisions become more budget driven and are often finalized in the field.
• Shop around: Meet with several firms, design-build firms, architects and contractors to decide who is the best fit for you.
• Make sure you are working with both a licensed architect and a licensed contractor. This ensures you’re working with properly trained professionals. The American Institute for Architects (AIA) and the National Association of the Remodeling Industry (NARI) are important professional organizations that list many professionals. Your state or local jurisdiction can help you determine if the professional is licensed.
• Understand your contracts. True design-build firms offer a single point of contact and contractual relationship. This can be good, but be sure you read your contracts. Many will discount their architectural fees initially, but if you do not continue through and use their in-house construction services, you are often back-charged the amount you were originally discounted.
One way to avoid this is to look for firms that charge a market rate design fee and a credit toward construction. You should be rewarded, not penalized in this process.
• Be honest and upfront with your team about your budget. If you hire professionals you trust (and you should), letting them know your true budget will help them tailor the project to you. Follow the process outlined by your team — it will likely involve multiple steps designed to guide you through each decision as required.
• Avoid two-against-one conflicts: If you hire an architect and contractor separately, you have two points of contact/separate contracts. But you also have two professionals that can each advocate for you throughout the process. This will create fewer conflicts of interest when questions arise.
• Pay attention to the “design” half of design-build. Make sure a licensed architect is involved, either as an employee of the firm, or as your own hire to work together with a contractor. This is the best way to have the end result meet your expectation as you see it on paper. After I show my clients the initial schematic, I ask them to wait at least a week before responding so they can study the drawings in their home, and really think how they’ll live.
• Determine whether speed is more important than controlling the numerous phases of the project. Generally the design-build method offers a quicker timeline, but many decisions are made over the course of the entire project including during the construction phase. I’ve seen more projects go from paper to brick using this method than not.
The traditional process of contracting an architect and designer separately is a slower process, but would be ideal for someone who wants to understand every detail and aspect of their project prior to any hammers hitting nails.
While planning your project, keep in mind that the AIA is reporting tremendous demand for remodeling and renovations, with 4.5 month average backlog of projects at residential architecture firms.
So be patient and persistent in your search for a professional to meet your design needs. Spending a little more time in the beginning can help ensure a more successful end result.
By Matthew S. McDonald
SmartAsset has compiled a list of the 10 best housing markets for stability and growth — those with steady growth that avoid the temptation and pitfall of the bubbles.
To find the U.S. housing markets with the most stable growth, SmartAsset analyzed home price data from theFederal Housing Administration on the 358 largest urban markets. They looked at home prices for each of these areas going back to 1990.
For each market, SmartAsset first calculated the overall growth since the first quarter of 1990. These ranged from as high as 320% (in Casper, Wyoming) to as low as 27% (in East Stroudsburg, Pennsylvania).
They then calculated the probability over that same period of time that a homeowner would have experienced significant price declines (5% or more) at any point in the 10 years following his or her home purchase.
Five of the top 10 housing markets with the most stable growth over the past 25 years are located in the west.
These cities — one each in Colorado, Wyoming, Alaska, Montana and Washington State — have all had overall growth north of 200% and very few dips in home prices.
The Lone Star state also fared well, with three of the top ten cities.
The state capital, Austin, placed second overall, with a 242% total growth rate since 1990. Texas is known as a relatively homeowner-friendly state because of its low closing costsand light zoning regulations.
1. Boulder, Colorado
Over the past 25 years, home prices have grown an average of 4% a year in Boulder and are approaching a price level nearly quadruple that of 1990. During that time, home prices have never once seen a decline of more than 5% in Boulder – not even during the national foreclosure crisis. That stability means homeowners in Boulder have been spared the stress of a plummeting market, while still reaping the benefits of price appreciation.
2. Austin, Texas
The Austin housing market is among the hottest in the country, but unlike many other hot markets, Austin isn’t recovering from a major bust. While many cities such as San Jose and Seattle saw price declines of over 10% during the housing crisis, in Austin prices declined by just 3.4% in that time.
Those relatively minor declines were more than compensated for during the rest of the past two and a half decades. According to data from the FHFA, home prices in Austin have climbed 242% since 1990.
3. Bismarck, North Dakota
North Dakota’s economy has consistently been among the strongest in the country over the past three decades. The state’s current seasonally-adjusted unemployment rate is just 2.6%. That economic stability also helps lead to stability in the housing market. Even during hard times, housing demand stays strong, foreclosures are low and price declines are minor and short lived. The average homeowner who bought a Bismarck house at any point in the past 25 years never experienced price declines of 5% or greater.
4. Midland, Texas
This West Texas city has had among the highest overall growth rates in its housing market over the past 25 years, with prices increasing by an average of 3.3% annually. While the city’s economy has historically been driven by the local oil industry, in recent years that hasn’t led to the booms and busts typical of many oil towns. There have been zero periods of significant price declines in Midland since 1990.
5. Casper, Wyoming
The second largest city in Wyoming, Casper’s economy has expanded in recent decades as the region’s coal and uranium fields have been developed. Likewise, the city’s population has grown significantly over the past 30 years. That combination of economic and population growth have led to the highest average home appreciation of any U.S. city over the past 25 years. Home prices in Casper have increased 320% since 1990, an average of 4.7% annually.
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6. Anchorage, Alaska
The largest city in the Last Frontier has remained largely untouched by the housing market swings that have affected much of the lower 48 states over the past two and a half decades. While the city has seen annual average growth of over 3% since 1990, it has not suffered any significant price declines over that same period. That, in general, means more equity and less stress for Anchorage homeowners.
7. Billings, Montana
Even during the recession of the last decade, the economy in Montana’s largest city never really faltered. The unemployment rate in Billings never exceeded 7%. With most people in the city retaining their jobs, foreclosure rates remained relatively low and the housing market in Billings saw relatively minimal price declines. On average, homeowners in Billings had 0% odds of seeing their home value decline by 5% if they bought at any point in the last 25 years.
8. Walla Walla, Washington
Walla Walla is located in the southeast corner of Washington State, in one of the state’s most productive winemaking regions. Growth in the local winemaking industry has bolstered the economy in recent years and sent the housing market to new heights. Home prices have grown nearly 30% since the start of 2005, despite temporary losses during the housing crisis. In fact, Walla Walla’s overall growth rate of 256% since 1990 ranks as the 5th highest of the 358 markets in SmartAsset’s study.
9. Odessa, Texas
On average, a homeowner buying in Odessa over the past 25 years has faced just 4% odds of seeing price declines of 5% or greater. Compare that to cities like Las Vegas and Atlanta, where the odds of such declines since 1990 were 41% and 39%, respectively. But it isn’t just stability in Odessa’s housing market. Home prices have consistently increased there as well. Price levels today are more than triple what they were in 1990.
10. Houma-Thibodaux, Louisiana
Home prices in the Houma-Thibodaux region have grown nearly uninterrupted since 1990. In fact, despite the multiple setbacks of Hurricane Katrina and the recession, home prices declined by just 2.5% from their peak at the beginning of the crisis to their low point. That, combined with average annual price growth of 2.8% make the Houma-Thibodaux market one of the top 10 markets with the most stable housing growth.
By: Trey Garrison
After setting a record in April, single-family home sales dipped two percent to 2,767 home sales in May, according to the May 2015 Multiple Listing Service (MLS) report released today by the Austin Board of REALTORS®.
Single-family home prices remained high, both setting a record for the month of May and increasing at a rapid rate that is outpacing historical appreciation, which is typically four percent annually according to the Real Estate Center at Texas A&M University. The majority of homes entering the market continue to be priced outside of an affordable price range for many residents, with only 25 percent of single family housing options in Central Texas below $200,000.
Barb Cooper, 2015 President of the Austin Board of REALTORS¬®, explained, “Affordability remains an issue across the region, identifying a need for Central Texas to address the “missing middle” with an influx of diverse housing stock.”
According to the report, the median price for Austin-area single-family homes increased nine percent year-over-year to $271,000 in May 2015, while average price increased seven percent to $348,201 during the same time frame.
New listings for single-family homes decreased three percent year-over-year to 3,865 listings, while active listings increased by six percent to 6,323 listings in May 2015. Pending sales remained unchanged at 2,936 pending sales compared to the same time frame last year.
A combination of a slight decrease in home sales and an increase in active listings caused inventory levels to rise in May 2015. Austin-area housing inventory increased 0.1 months year-over-year to 2.7 months in May 2015, a figure still well below the 6.5 month level the Real Estate Center at Texas A&M University estimates as a balanced housing market.
“Unfortunately, the majority of single-family homes can no longer be developed within the region in an affordable price range for most homebuyers. Creating conditions that allow for housing options for all of our residents, such as medium-scale housing options, will help increase housing affordability, improve the tax base and potentially provide income for homeowners,” said Cooper. “Equally important, this type of housing stock allows for greater density and helps residents to live close to where they work and go to school.”
May 2015 Statistics
- 2,767 – Single-family homes sold, two percent less than May 2014.
- $271,000 – Median price for single-family homes, nine percent more than May 2014.
- $348,201 – Average price for single-family homes, seven percent more than May 2014.
- 42 – Average number of days single-family homes spent on the market, two days more than May 2014.
- 3,865 – New single-family home listings on the market, three percent less than May 2014.
- 6,323 – Active single-family home listings on the market, six percent more than May 2014.
- 2,936 – Pending sales for single-family homes, unchanged from May 2014.
- 2.7 – Months of inventory* of single-family homes, 0.1 months more than May 2014.
- $963,472,167 – Total dollar volume of single-family properties sold, five percent more than May 2014.
The following sections describe trends in other sectors of the Austin-area real estate market.
Townhouses & Condominiums
The volume of townhouses and condominiums (condos) purchased in the Austin area in May 2015 was 299, a 15 percent decrease from May 2014. The median price for condos was $231,000, which is eight percent more than the same month of the prior year. When compared to May 2014, these properties spent approximately the same amount of time on market, or an average of 41 days.
In May 2015, a total of 1,569 properties were leased in Austin, which is seven percent more than May 2014. The median price for Austin-area home leases was $1,600, seven percent higher than in May 2014.