Buyers' Expectation

Most buyers these days are looking for similar features in a new home.  The list generally includes  fantastic kitchens, hardwood floors, new or remodeled bathrooms, open floor plans, high ceilings and walk in closets in the master bedroom.

These features can be difficult to find in Lower Makefield, Upper Makefield and Newtown for buyers seeking a single family home in the $350,000 to $550,000 price range.

When moving from areas where housing prices are lower than in Bucks County, or from places  where there is a lot of new construction, buyers are usually disappointed. They frequently have to see many homes before they realize they must lower their expectations

The Bucks County communities along the I95 corridor were largely developed before 1995 with many of the homes being 30-50 years old.  These homes can be very nice, but buyers frequently view them as dated and in need of remodeling.  There are some newer homes, but those homes generally command higher prices.  If the buyers are lucky they may find a home that has been significantly updated, but in most cases they make compromises.

What many buyers don't immediately realize is that most of these older homes are well built and comfortable to live in. Updating can be done gradually and may not be as expensive as anticipated.  The area's ease of commuting to different destinations, fine schools and desirable neighborhoods are well worth the tradeoff.

Bucks County Year to Year Home Sale Statistics

The Bucks County real estate market is improving, but prices are not expected to rise very much in the near future. Prices are now at the levels they were at in 2004.  That is an average, however.  Homes that have been remodeled, maintained well and have the features that are currently attractive to buyers sell for more than do older homes that have not been updated.  

Here's a chart showing the annual appreciation/depreciation rates of single family home prices in Bucks County since 2002.  Price figures indicate thousands.



In general, prices for luxury homes have fallen more than prices for homes more affordable homes.

Bucks County Home Sales: January, 2012

The number of homes sold and the average price of sales increased during the first month of 2012 compared to January 2011.  We'll have to wait and see whether a trend is developing. 

                                      

              

Get A Mortgage Preapproval Before Your Home Search

Most home buyers need to finance their purchase with a mortgage.  Unfortunately, many don't realize they should obtain a mortgage preapproval before they seriously look for a home. Sellers today usually insist on seeing a preapproval before negotiating the sale of their property.

I'm working with a couple now that had an idea of the price of the home they could purchase, but found a home they wanted to look out before getting a mortgage preapproval. They loved the house, but needed a preproval to make an offer. They obtained a preapproved, but found that they can only make a very low offer on the home.  They may get lucky and the seller may accept their offer; but, they were looking for homes above their price range.  I fear they will be disappointed.

To avoid disappointment and wasted time looking at homes above their price range, buyers should get a mortgage preapproval before shopping for a home. 

A mortgage preapproval does not lock a buyer into a specific mortgage company.  Buyers can still shop around for the best rate.  It will help them to know their price limitations and allow them to move quickly when they find the home of their dreams.  

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.

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.

Estate Owned Homes

Grown children frequently have fond memories of growing up in a property and remember all the hard work their parents did to maintain it.  Their parents may have paid $50,000 for a property that is now worth $500,000 and would have been thrilled by the appreciation. The children are more likely to focus on  recent home sales and may view their childhood home with rose colored glasses. 

I recently became executor of my mother's estate.  My mother wasn't particularly wealthy, but it's still a big job to gather information and complete required paperwork.  I'm relieved she didn't have any real estate to sell.

I have acted as a agent for both buyers and sellers for estate owned home sales, and have concluded that  it may be harder for the children of deceased parents to sell a home than it would have been for the parents to do so themselves. 

I once represented a young couple buying their first house which was an estate owned property. The price they paid was fair, but the seller thought it was a little low. He decided to sell his parent's home to the couple because they wanted to restore the tiered backyard flower garden that once was magnificent.  That flower garden was his mother's pride and joy and he was pleased by their plans to restore it.  At settlement, the seller broke down and cried.  He was saying goodbye to his childhood home and his memories, but trusted the buyers to take good care of his family home.

When I took the Senior Real Estate Specialist (SRES) course, I found that my instructor specialized in estate home sales.  At first that sounded like a great specialty.  Business is referred to him by attorneys trying to settle estates in which the heirs are disinterested or uninvolved.   As the agent, he is able to set the price at a saleable level  and, because the properties are empty, there is no problem with potential buyers being able to schedule appointments.

At first that sounded like a great specialty, but nothing is as easy as it first appears. My instructor went on to explain that he sometimes has to get homes fumigated because the owner is found dead in the property.  Elderly people sometimes are unable to maintain or clean their properties; so, he sometimes has to deal with unsanitary situations including removal of  insects and rodents.  Because he has been able to handle these types of situations quickly and effectively, he has developed a reputation with estate attorneys. and continues to get referrals.

My only suggestion for buyers who are interested in an estate owned property in which a family member is the executor, is that it may be hard for the sellers to let go.  If the executor thinks you appreciate and maintain the property, you are more likely to come to terms with him or her on price and conditions.

For sellers of estate properties, try to be realistic about your childhood home.  To maximize the eventual sale price, make sure it is clean and  in good repair.  It's still a tough market and you are likely to be competing for buyers with sellers of newer properties. Your realtor can help you  price the home correctly, but if it have doubts about the proper price, or if the home doesn't sell in a reasonable amount of time, consider getting an appraisal and list the price close to the appraisal level.

Has the Real Estate Market Bottomed Out?

Whenever I go to a social event, I am asked, "How's the market?" or, "Has the real estate market bottomed out?"

Nobody has a crystal ball that can precisely predict a turn in the real estate market, but the national press has been publishing articles that view the market more favorably than it has in years.  Among other sources, the National Association of Realtors is guardedly optimistic.  CNBC recently published a positive article, http://www.cnbc.com/id/45816002/, citing encouraging signs in the housing market.

No one would suggest that you start flipping houses, but today's market with it's low mortgage interest rates and historically affordable prices, may offer opportunities for home buyers who are likely to stay in a property for seven to ten years. 

The housing market gets a lot of attention in the national press, but, for us in Bucks County, it is the local market that  matters.  While home prices did continued to deteriorate in 2011, there were some positive signs such as a noticeable decrease in the number of homes on the market in Bucks County in November, 2011 compared to November 2010.  We'll have to wait a few months to see whether positive trends continue.

Newtown Township, Bucks County, Home Sales Statistics

Newtown Township Home Sales Statistics through November 30, 2011 are now in.  Here are facts in a nutshell for single family home sales:

·      The number of homes on the market increased 2.5% in the past year from 122 in November, 2010 to 125 in November, 2011.

·      The average price of homes for sale decreased 10.6% from $458,000 in November, 2010 to $410,000 in November, 2011.

·      The number of homes sold during the first eleven months of 2011 decreased 18.8% from 191 in 2010 to 155 in 2011. 

·      The average sold price to original listing price was 93% during the past year.

Comparing current data with Newtown Township Home Sales Statistics for prior years, it's  apparent we are still in a buyer's market.

	2011	2010	2009	2008	2007
JAN	13	7	7	13	11
FEB	5	9	6	17	16
MAR	11	11	13	21	22
APR	10	25	15	13	14
MAY	15	21	17	28	31
JUNE	23	42	30	34	37
JULY	24	18	29	31	27
AUG	14	19	30	21	36
SEPT	15	15	21	13	16
OCT	8	15	22	19	17
NOV	16	9	19	7	19
DEC		11	14	10	13

Source:  Coldwell Banker Hearthside Realtors market research based on Trend MLS Data

New home construction is still taking place in Newtown Township, and new homes are generally  priced above the average sale price of resale homes in the township.  When one or more new homes sell, the average home sales data can be distorted by the higher prices; so, in Newtown, the trend from year to year is more relevant than the data for any given month or year.

Homeowners wishing to sell their homes should understand current market conditions and not expect to sell their homes for prices of homes that sold in their neighborhoods at the peak of the housing bubble. Most buyers will not make an offer on a home they feel is significantly overpriced; so homes that are realistically priced have a better chance of selling.

Buyers now have the opportunity to purchase homes at attractive prices and at record low mortgage interest rates. No one can totally predict the market, but for people planning to stay in the same area for several years, it may be a good time to buy.

Bucks County Home Sales Statistics

The number of homes sold and the prices at which they sold continued to drop during the first eleven months of 2011 compared to the same period in 2010. The one bright spot in the most recent data is that the number of homes sold in November of 2011, as well as the number of homes under contract, increased significantly compared to data for November, 2010.  Here are the facts:

Monthly Market Snapshot: November 2010 vs. November 2011

Homes for Sale                                  -7%
Average Asking Price                        -4%
Homes Pending                                 +10.7%
Homes Sold                                       +8%
Average Sale Prices                          -6.4%

Year-to-Date Market Snapshot:  1/1/2010-11/30/2010  vs. 1/1/2011-11/30/2011

Homes Sold                                        -4.3%  
Average Sold Price                            -5.5%
Average Days on the Market         +14.8%

Source: Coldwell Banker Hearthside Realtors Market Research for Trend MLS Data

As a homeowner, current Bucks County home sales statistics are discouraging, but, we we are actually quite fortunate.  Many areas of the country have experience a 50% deterioration in home sale prices since the real estate bubble burst.  Bucks County home sales prices have deteriorated to a much lesser extent

If you are considering selling your home, be realistic when setting the price.  Prices during the real estate boom were inflated beyond their realistic values.  Buyers are shopping around and comparing properties and prices.  In the process, they become fairly good judges of relative home values.

Best School Districts in Bucks

Council Rock School District has long been recognized as providing students with excellent educational opportunities.  This summer, Newsweek magazine confirmed what we in the area already knew.  Council Rock's high schools are amount the best in the country.  Central Bucks School District also ranked high in Newsweek's ratings. 

Council Rock North ranked 246 out of 500 high schools that were deemed to be excellent.  Council Rock South ranked 314,  Central Bucks East ranked 255 and Central Bucks West ranked 274.  The full review and information on criteria for the rankings can be found on http://www.buckslocalnews.com/articles/2011/06/26/the_advance/news/doc4e04182328bd1938442471.txt.

Any rankings of schools is dependent on the criteria used in the study. We have many excellent school districts in Bucks County.  For more information on local schools, including elementary and middle school, you  may wish to check other sources such as http://www.schooldigger.com/.

Council Rock School District serves the Bucks County communities of Upper Makefield (including Washington Crossing), Newtown, Northampton and Southampton.

Bucks Real Estate Market vs. National Market

Everyone has read the gloom and doom reports released by the national media; but remember, real estate markets are local and Bucks County has fared better than most areas of the country.

Nationally, short sales and bank owned properties make up about 30% of the market, but in Bucks County, this figure is between 12% and 15%.  Although 12-15% is not desirable,  it shows that the Bucks County home sales market has not not suffered as much as other parts of the country.   There are fewer desperate home sellers in our area, and prices have not dropped as significantly as elsewhere.

This is little consolation for those who purchased homes during the peak of the market, but those who purchased before 2003 are likely to have increased their equity.

Should You Have a Buyer's Agent When Purchasing A Home?

Most home buyers start their search for a new home by viewing properties on the Internet.  Many will also visit open houses.  This is a great way for buyers to acquaint themselves with what is available in their price range.  When they see something they might like, they tend to call the agent whose name pops up by the property on the Internet.  Depending on the website, this may or may not be the listing agent.

The advantage of dealing with the listing agent is that s/he may be more familiar with the property than other qualified agents.  The disadvantage is that s/he represents the seller.  Is this a matter of concern, and should you have a buyer's agent when purchasing a home? 

The concept of "buyer's agent" is a fairly new one.  Historically, the realtor working with the buyer was actually an agent for the seller.  The logic was that the realtor was being paid a commission by the seller; so, his interests were to be primary.  This led to many buyers misunderstanding the role of the realtor with whom they were working  and dissatisfaction with the transaction.  Consequently, the concept of "buyer's agent" was born.  Now, even though an agent is paid a commission by the seller, s/he can represent the interests of the buyer. 

If you purchase a home from the listing agent, are you represented?  Well, not to the extent that you would be if you had your own agent.  When the listing agent is also the buyer's agent, s/he is a "dual agent."  A dual agent must walk a tight rope and not favor one party over the other.  PA law states that a dual agent take "no action that is adverse or detrimental to either party's interest in the transaction."  A dual agent owes both parties confidentiality, except that the agent must disclose material defects. In other words, the dual agent must remain neutral to both parties during negotiations and during the transaction.

Some buyers are savvy negotiators and familiar with real estate transactions, but most benefit from the guidance of an experienced agent representing them alone.  Many times buyer's will seek guidance on price values, appropriate starting points for price negotiations and responses to inspection issues.  Although each transaction is unique, experienced agents gain a feel for reading between the lines and knowing what the traffic will bear.  Having an agent that truly represents you as a a buyer is usually an advantage.

If you wish to be represented, should you wait until you find the right home?  After all, if you call a real estate office, some agent will probably show you the house you are curious about, and many will agree to e-mail you new properties that meet your criteria.  Well, it's possible to find a property that way, but most agents will not expend a lot of effort trying to find the perfect house for you if they think you may buy through another agent.  By hiring an agent to represent you, your status changes from a "customer" to a "client".  A buyer's agent in PA is obligated to make a "continuous and  good faith effort" to find a suitable property for you. In exchange, you agree that during the time period of the agency agreement, you will not purchase a home through another agent. Hiring an agent early in your home search will also allow you to choose your agent rather than winding up with an agent that happened to answer the phone when you called to see a house.

When I am employed as a buyer's agent, finding my client the right home is important to me and a priority.  I search the MLS daily and visit broker's open houses to see if a home meets my client's criteria.  I often drive by properties to check locations and neighborhoods and frequently preview homes before actually showing them to buyers. This is a major commitment of time and effort.  Many agents work this way.  Buyers who shop through several agents may not be serious buyers and are less likely to buy from any particular agent.  Therefore, they do not get the time and attention buyers who have shown loyalty to an agent will command.

Do you know someone who's falling behind on their mortgage payments?

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 than foreclosure because it can be less expensive.  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.

Each short sale is different and the process can be frustrating.  An agent experienced in short sales can make or break a successful transaction. Until recently, short sales were uncommon in our area, so few local real estate firms have had 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.

Newtown Township Home Sale Statistics 1/1/2011-9/30/2011

  

NEWTOWN TOWNSHIP

SINGLE FAMILY HOMES

Market Facts1/1/2011-9/30/2011

______________

Source: COLDWELL BANKER HEARTHSIDE REALTORS MARKET RESEARCH from TREND MLS Data

·          There were 151 single family homes for sale in September 2011.

·          There were 130 single family homes for sale in September 2010.

       Inventory is up 16.2% year over year,

·          Average price of single family homes for sale in September 2011 was $410k

·          Average price of  single family homes for sale in September 2010 was $465k

This increase is due to relatively high priced new construction homes being sold within the township.

·          131 homes sold during the first nine months of 2011 at 93% of list price      

·          167 homes sold during the first nine months of 2010 at 95% of list price

Unit Sales volume is down 21.6% year over year.

Actual Selling Prices are averaging about a 7% below the Original List Price

Summary:  Inventory levels are up and year to date unit sales are down compared to the same period last year.  The market is in “Buyers Market” territory with a 10.9 Month Supply of Homes in Inventory. 

Note that a Market is viewed as “Balanced” with a 6 Months Inventory of homes for sale.  

What does this mean to a Seller? 

There is almost an 11 Month Supply of homes on the market, and generally taking about 70 Days on Market to sell, vs. 51 Days on Market last year, so selling conditions are relatively challenging.  It is more important now than ever to price your home right and market aggressively. You may not have enjoyed the per year appreciation in 2007-2010 versus the ~10% experienced during most of the prior 3-4 years.  Be realistic and remember the current market is what determines the price of your home.