Real estate agents talk buying and selling homes in the new year

By: Andy Kozlowski | C&G Newspapers | Published January 15, 2020

METRO DETROIT — Local real estate agents say that the start of a new year tends to see buyers slow down in their search as they wait for more inventory. There are other challenges too, with demand outstripping supply and house prices higher overall. However, right now is still a fine time to buy, with interest rates on mortgages at historical lows.

“People start looking after the start of the year, but they tend to be reserved, since they’re basically looking at leftovers,” said Mark Kimble, a real estate broker of 32 years and the owner of Sell Smart. He noted that in his hometown of Madison Heights, there were only 52 residential homes available for sale Jan. 4, and 35 pending or waiting to close, out of 12,000 residential homes overall. Likewise, in Royal Oak, a geographically larger market with more than 30,000 residential homes, there were only 145 available for sale and 91 pending sale.

“It doesn’t really start to pick up until after the Super Bowl. February and March and April are some of the busiest times of the year,” Kimble said. “If a client told me they’re not finding much they want right now, I’d say hang tight, because more will become available on the market. However, there will also be more competition with other buyers to get those houses.”

He said he has found some of the best deals late in the year, around the holidays. Kimble said that in his experience, families with kids in school tend to look in the spring, while single people tend to look in the fall. He said there is real incentive to buy now, though, even with the challenges.

“Availability of houses is the challenge for buyers, with the limited housing supply. The housing crash created a void in the housing supply that has not gone away. But people are snapping up what’s left because mortgage rates are at record lows below 4% interest rate, and houses are generally more affordable to buy than to build new or to rent, because rents will continue to rise, whereas when you buy, you establish your own form of rent control if you select a fixed-rate mortgage, which offers a certain degree of stability in an increasing rent market,” Kimble said.  

So what are people looking to buy?

“It depends on who the buyer is,” Kimble said. “If it’s a younger professional, my experience over the last five to six years is they are looking for a turnkey, a house that’s completed, because for them it’s a convenience factor, a monthly number. They have the disposable income, they don’t have children or obligations, so they’d rather just buy something that’s already done. But overall the thing in common is all buyers want value for their money, even if they have to work on it.”

This observation was shared by Caron Koteles Riha, an associate broker with Real Estate One in Rochester.

“Today’s buyers are looking for move-in condition homes that may only need slight cosmetic work. If a home needs a roof or windows, they are usually not at all interested and will move on to the next opportunity. If a home needs carpet or paint, or updated kitchen counters, it is more interesting. However, a perfectly remodeled, move-in home will always sell the fastest and for top dollar,” Riha said in an email. “Smart technology, quartz counters, large showers, free-standing tubs and wood flooring seems to remain the top sellers in this market.

“Homes needing minor cosmetic improvements can be a good opportunity for buyers to catch a deal at below-market prices,” she added. “Interest rates are appealing and allow buyers to maintain low monthly financial obligations while budgeting for improvements needed when owning a home. The challenges of today’s market is the increasing property values and looming student loan debt, both of which often prevent buyers from purchasing versus renting.”

Daniel Litvin, one of Riha’s lenders, with Advantage Lending Corp. in Rochester, noted that current interest rates are “holding strong at historical lows,” with the conventional 30-year fixed rate averaging around 3.86% the week of Jan. 8, down from 3.9% in 2019.

“These low rates are making it possible for homebuyers to get more house now for the same payment than they could if rates were higher,” Litvin said via email. “As an example, just a 1% increase in rates on a $250,000 mortgage would mean $148 more every month for the same loan on the same home purchase. Or another way to look at it would be that the same 1% increase in rates would equal $31,000 less buying power. That’s a big difference, and why it’s so beneficial to consider purchasing now while rates are as low as they are.”

Riha said that there are fewer homes available for sale right now in the Rochester area than this same time last year, and that the average sale price has gone up. In 2019, the starting average sale price in the same area was over $238,000, increasing by just under 2% by year’s end. In this sense the market favors sellers, but there are still steps that they can take to sell their homes faster.

“Fresh paint and flooring go a long way when prepping a home to sell. Ensuring the mechanicals are in good working order and there are no structural issues are the key factors to attracting buyers when selling your home. The greater the updates, the greater the price and faster the sale,” Riha said. “Also, when prepping a home, less is better. Declutter and remove personal items such as family photos, wall diplomas and other personal effects that may cause a buyer to be distracted from the beauty of your home.”

Kimble said that sellers need to add value and price right.

“Even in this market, you’ll still have holdovers because people have a high price. It’s like a car lot where they have a blowout sale, but there are still some left over in the inventory. It just goes to show how important it is to price your home right. It’s still a seller’s market if you’re priced right and your house is presentable — it’s that simple,” Kimble said. “It’s a balancing act of what money to put into the house to get a return out. Curb appeal is always very important since it’s the first impression. You want to identify things you can do at a lower cost to improve the salability of your house to get a higher return. Like if the carpet is dated or worn out, I’d suggest to replace it, but go with a more modest-priced carpet or, if there’s hardwood under the floors, I’d suggest they have those refinished and throw in an area rug.”

As for those buying, one final tip Kimble had was to invest in a high-quality inspection so you know exactly what you’re buying. And both he and Riha said that working with a Realtor will give you an edge when checking comparables and learning about what’s available.

“Get with a qualified Realtor that can put you on an automatic email update list,” Kimble said. “The websites like Zillow get their information from our multi-listing service, so we have it first. We can set up search profiles for you.”

Added Riha: “As a buyer, the best thing you can do for yourself is to connect with a reputable Realtor who knows and works the areas you are interested in living. The Realtor can then send you new properties as they become available. And many times they have the inside scoop on before-market properties, so that you should never miss out on the right opportunity.”