Buyers of Second Homes Focus on Investment

 

Investment home sales conquered the second home market in 2016, with a total of 1.14 million units sold for 2016, according to the recently released Investment and Home Buyers Survey results, compiled by the National Association of REALTORS^® (NAR).  However, the number of purchases of vacations homes decreased dramatically by 21.6 percent with a total 721,000 units for 2016.

NAR Chief Economist Lawrence Yun says, “In several markets in the South and West – the two most popular destinations for vacation home buyers – home prices have soared in recent years because substantial buyer demand from strong job growth continues to outstrip the supply of homes for sale.”  “With fewer bargain-priced properties to choose from and a growing number of traditional buyers, finding a home for vacation purposes became more difficult and less affordable last year,” Yun adds.

According to Yun, vacation home sales are now 36 percent below their 2014 peak.  The median price for vacation homes was $200,000, representing a 4.2 increase from 2015.  The portion of all-cash purchases in this sector dropped from 38 percent in 2015 to 28 percent. 

The median price for investment homes was $155,000 for 2016, representing an 8 percent increase from 2015.  The portion of all-cash purchases in this sector remained the same, at 19 percent, from 2015 to 2016.

“Sales to individual investors reached their highest level since 2012 (1.20 million) as investors took advantage of record low mortgage rates and recognized the sizeable demand for renting in their market as renters struggle to become homeowners,” says Yun.  “The ability to generate rental income or remodel a home to put back on a market with tight inventory is giving investors increased confidence in their ability to see strong returns in their home purchase.”

According to the survey, 42 percent of investors purchased a property with the goal of generating rental income, while 16 percent of investors purchased a home to hold onto for potential price increases.  Forty-two percent of those who purchased vacation homes did so in order to use the home for a “family retreat” or vacation property, while 18 percent of those who purchased a vacation home did so for retirement.  A large number of both investment home and vacation home purchasers said they rented the property short-term (less than 30 days).

Grants and Programs Available to Assist First-Time Homebuyers

The tasks involved in purchasing a home can be very overwhelming, particularly for first time homebuyers. In addition to all of the forms and disclusures involved, all of the expenses involved can add up quickly and become daunting.  On the plus side, there are many grants and programs available to assist first-time homebuyers with this process. 

Some of the options available nationwide include FHA loans available through the Federal Housing Administration (FHA), an agency that operates within the U.S. Department of Housing and Urban Development (HUD), which insures the mortgage and lenders receive a layer of protection that will protect them from experiencing a loss if the borrower ends up defaulting on the mortgage.  FHA loans typically offer competitive interest rates, a reduced down payment, and lower closing costs. Borrowers with a credit score of 580 or higher could be eligible for a mortgage with a down payment as low as 3.5 percent.

Also, USDA loans provide a homebuyer assistance program of the U.S. Department of Agriculture focuses on residences in certain rural areas. Through this program, the borrower does not need to purchase or run a farm to be eligible, the USDA guarantees the loan, there may be no down payment required, and the loan payments are fixed. USDA loan program applicants with a credit score of 620 or higher typically receive streamlined processing.

Other programs available include:

·      VA loans through the U.S. Department of Veterans Affairs and this program assists service members, veterans and surviving spouses in the process of purchasing a home.

·      Good Neighbor Next Door, which is sponsored by HUD and focuses on providing housing aid for law enforcement officers, firefighters, emergency medical technicians and teachers.

·      Fannie Mae or Freddie Mac have a program through which they work with local lenders to offer mortgage options that benefit low- and moderate-income families.

·      Energy Efficient Mortgage is a program that allows one to add improvements to their home that will make it more environmentally friendly. The federal government supports Energy Efficient Mortgage loans by insuring them through FHA or VA programs.

Conversations Regarding Sustainable Homes Increasingly Significant

 

Sustainable features in homes are becoming a more important topic of conversation among real estate professionals, builders, homebuyers and sellers. The National Association of REALTORS^® (NAR) recent REALTORS^® and Sustainability report reveals over fifty percent of REALTORS^® affirm that real estate buyers and sellers are interested in home sustainability issues and practices.

"As consumers' interest in sustainability grows, Realtors understand the necessity of promoting sustainability in their real estate practice, such as marketing energy efficiency in property listings to homebuyers," says NAR President William E. Brown. "The goal of the NAR Sustainability Program is to provide leadership and strategies on topics of sustainability to benefit members, consumers and communities."

To accommodate the increasing consumer interest, more Multiple Listing Services (MLSs) are including data entry fields to identify a property's green features; 43 percent of respondents report their MLS has green data fields, and only 19 percent do not. Real estate professionals see great value in promoting energy efficiency features within listings, with seven out of 10 stating that they feel strongly about the benefits in promoting those features to potential homebuyers.

The sustainability survey asked participants about renewable energy and how they view the impact of renewable energy on the real estate market. 80 percent of real estate agents and brokers said that solar panels are currently available in their market; forty-two percent said solar panels increased the property value.

The home features that survey respondents said clients consider as very or somewhat important include a home's efficient use of lighting (50 percent), a smart/connected home (40 percent), green community features such as bike lanes and green spaces (37 percent), landscaping for water conservation (32 percent), and renewable energy systems such as solar and geothermal (23 percent).

When it comes to the sustainable neighborhood features that clients favor, 60 percent of survey respondents listed parks and outdoor recreation, 37 percent listed access to local food and nine percent listed recycling.

As conversations regarding sustainability issues and practices become more and more common and features for homes further advance technologically and with regard to accessibility, it will be fascinating to see how this dialogue progresses between real estate professionals, homebuilders, homebuyers, and sellers in the future.

Heather Wightman Named a Southwest Florida Five Star Real Estate Agent

 

Five Star Professional partnered with Gulfshore Life magazine to identify real estate, mortgage and insurance professionals in the Southwest Florida area who deliver outstanding service and client satisfaction.  

Now entering its 15th year, Five Star Professional conducts in-depth, market-specific research in more than 45 markets across the United States and Canada to identify premium service professionals. 

Five Star Professional contacts thousands of recent homebuyers, along with real estate agents, to identify award candidates (nominees) and measure their client satisfaction levels based on the services they have provided. Phone, mail and online respondents rate their mortgage professional on criteria such as overall satisfaction and referability. Qualifying candidates are then evaluated on objective criteria such as experience, production levels and disciplinary and complaint history.  Professionals do not pay a fee to be considered or awarded.

The Five Star award is presented to local professionals who demonstrate outstanding service to their clients and only a small percentage of real estate professionals in the Southwest Florida area can be selected to receive the award.

This year’s Southwest Florida Five Star Real Estate Agent award winners have been announced in this month’s issue of Gulfshore Life, and Heather Wightman is among the winners!

Heather provides world-class service, which is clear through her clients’ loyalty.  With a solid foundation of knowledge and experience, Heather works to understand her clients’ needs and provides her assistance in helping each of her clients to reach their individual real estate goals.