The Dilemma of the Bucks County Home Buyer

The baby boom generation was fortunate.  During their prime home buying years, home prices were rising. Their starter homes generally increased in value, and they had sufficient equity to purchase their move up homes.

Today's buyers in their 30's and 40's may want to purchase larger homes, but frequently find that their starter homes have lost value and they have insufficient equity to pay for the down payment plus the closing costs required to purchase a more expensive home.

The traditional four bedroom Bucks County colonial may sell for $300,000 to $500,000.

With a conventional mortgage requiring a 20% down payment plus closing costs, a buyer needs about $75,000 to $110,000 in cash to purchase a home. These costs may be prohibitive, but before giving up the dream of a larger home, there are options that should be considered.

 It may be possible to purchase a home with a 10% down payment, or with an FHA mortgage which requires a lesser down payment.   Also, the buyer can  request the seller contribute towards the closing costs. Buyers should discuss financing options with their agent and a good mortgage broker to determine whether the home of their dreams is affordable.

 I've heard some buyers say their current  home needs to appreciate before they can buy a new home, and they are unwilling to take a loss on their current property.  That may be a mistake. If their starter home appreciates, the larger home they would like to purchase will have appreciated as well.  Also, with inflation, mortgage rates generally rise; so, buying power decreases.  Buyers waiting for their first homes to appreciate may find themselves priced out of the move up market.

Buyers wishing to purchase more expensive homes, who can afford the down payment and closing costs, are probably better off selling their starter homes at a loss and purchasing larger homes while prices are low and mortgage rates are at record lows.

 Buyers who would like to purchase a new home, but cannot afford to put 20% down plus closing costs, should discuss their financial situation with their agent and a good mortgage broker before ruling out it out.

Bucks County Single Home Sales Through 2011

The calendar year home sales statistics for Bucks County have just been released by the local MLS service.  Home Sale Statistics through 12/31/2011 are as follows:

Bucks County Single Family Home Sales 2011 Calendar Year Statistics Compared to 2009 and 2010 Statistics
	2009	2010	2011	2009/2010 Change	2010/2011 Change
Settled Units	4,829	4,560	4,423	-5.57%	-3.00%
Average Sold Price	$329,000	$343,000	$324,000	4.26%	-5.54%
Median Sold Price	$284,000	$295,000	$275,000	3.87%	-6.78%
Average Sold Price/ Original List Price*	92.28%	92.35%	90.88%	.08%	-1.59%
* “Original List Price” is the price at which a property is listed under the current listing contract.  If there is a price reduction, it would not be reflected in the original list price.
Source: MLS Trend

Home sales during 2010 were affected by the federal homeowners tax credit.  Sale numbers and prices in that year may have been affected by homeowners seeking to take advantage of the credit.

Short Sale Advise in Bucks County

Many people assumed large mortgages during the real estate boom of the last decade.  When job losses or unplanned expenses occurred, they were unable to keep up with their mortgage payments.

When the mortgage amount exceeds the net proceeds that would result from selling a property, some homeowners can not afford to sell and pay off their mortgage debt. Homeowners who find themselves in this predicament should investigate whether a “short sale” would make sense for them.

 A “short sale” is the term used when a lender agrees to accept less than the full amount owed on a mortgage to satisfy the debt, and the lender writes off the excess.  This process is frequently better for the lender because it can be less expensive than foreclosing on a property.  It can be beneficial to the homeowners because their credit rating may be less affected than it would be if they were subject to a foreclosure.

Until recently, short sales were uncommon in our area, so few local real estate firms have a lot of experience in this specialty.  Coldwell Banker Hearthside is an exception.  We have a short sale specialist who has completed over 2000 short sales during the past 30 years, and another specialist who has completed 400.

In addition to the assistance of an experienced agent, such as our specialists, we always advise a client to seek professional advice from both a financial expert and an attorney before and during the short sale process. 

We can arrange a confidential conversation with one of our specialists who can provide objective information on how the process works and whether it makes sense in a particular situation.  If you are looking for Short Sale Advise in Bucks County, PA, we are happy to help you.

Are Home Prices Stabilizing?

During the past few months, articles have appeared in real estate publications indicating that home prices may be stabilizing. 

The chief economist for the National Association of Realtors has pointed out that recent pending home sales figures have increased over the past few months.  Pending home sales represent homes for which there is an outstanding agreement of sale, but the property is awaiting settlement. http://speakingofrealestate.blogs.realtor.org/2012/01/03/2012-home-sales-positives-on-many-fronts/?cid=WR01052012:38917&ed_rid=2572431

An article in Kiplinger's suggests the negatives in the home sales market are balanced by the positives, and suggests that nationally, average home sale prices may have bottomed out.  Prices are not expected to rise significantly, but the Kiplinger's believes the worst is over. http://www.kiplinger.com/magazine/archives/where-home-prices-are-headed.html.

Real estate markets are local.  We've seen some positive signs in Bucks County, but it's too soon to predict trends and to say our local market will mirror national trends.  For those who plan to stay in a home for several years, it appears to be a great time to buy.  Prices are quite attractive and interest rates are at historic lows.