Happy Monday, January 7, 2019
In December 2018, the Wesley Chapel housing market trended neutral. That means neither buyers or sellers had an advantage.
The number of homes sold fell 36.1% from December 2017 and 10.9% from November 2018. The number of homes for sale rose 17.9% from a year ago, but dropped 3% from a month ago. The number of homes under contract declined 31.2% compared to December 2017 and 10.2% compared to November 2018. The Months of Inventory (based on Closed Sales) hit 3.6 months, up 82% from December of last year.
The Average Sold Price per Square Footage increased 6.1% compared to November 2018 and 5.4% compared to last December. The Median Sold Price fell 15.9% from November 2018. The Average Sold Price decreased by 12.5% during that same period. So based on the 6-month trend, the Average Sold Price and and the Median Sold Price trend is “neutral.”
The Average Days on Market rose 40.4% compared to a year ago. The ratio of Sold Price vs. Original List Price came in at 95%, a decrease of 2.1% from December 2017.
Current Inventory of Homes (For Sale)
The total number of homes for sale jumped by 58 units or 17.9% compared to a year ago. The amount of current inventory fell 3% compared to a month ago.
Property Under Contract (Pended)
Homes under contract (pending) decreased by 10.2% compared to last month and 31.2% compared to last year.
The Average Sold Price per Square Footage shows the direction of property values. The “mix” of very expensive or very cheap homes sold can skew the Median Sold Price and Average Sold Price. But the Average Sold Price per Square Footage can provide a more normalized indicator of the direction of home values. In December 2018, the Average Sold Price per Square Footage was $123, down 6.1% from $131 in November 2018 and 5.4% from $130 in December 2017.
The average Days on Market (DOM) shows how many days the average home is on the market before it sells. An upward trend in DOM indicates a move towards more of a Buyer’s market, while a downward trend indicates a move towards more of a Seller’s market. The DOM for December 2018 was 73 days, up 9% from 67 days last month and up 40.4% from 52 days in December of last year.
The Sold/Original List Price Ratio is Falling
The Sold Price vs. Original List Price reveals the average amount that sellers are decreasing their original list price. The lower the ratio is below 100% the more of a Buyer’s market exists, a ratio at or above 100% indicates more of a Seller’s market. This month Sold Price vs. Original List Price of 95% is the same as last month and down from 2.1% in December of last year.
The Average For Sale Price is Neutral
The Average For Sale Price in December was $356,000, down 2.7% from $366,000 in December of 2017 and up 0.8% from $353,000 last month.
The Average Sold Price is Neutral
The Average Sold Price in December was $280,000, down 11.9% from $318,000 in December of 2017 and down 12.5% from $320,000 last month.
The Median Sold Price is Neutral
The Median Sold Price in December was $260,000, down 6.5% from $278,000 in December of 2017 and down 15.9% from $309,000 last month.
A comparatively lower Months of Inventory benefits sellers while a higher Months of Inventory favors buyers.
*Buyer’s market: more than 6 months of inventory
Seller’s market: less than 3 months of inventory
Neutral market: 3 – 6 months of inventory
Months of Inventory based on Closed Sales
The December 2018 Months of Inventory of 3.6 was increased by 82% compared to last year and 9.1% compared to last month. Absorption Rate measures what percentage of the current active listings are being absorbed each month.
*Buyer’s market: 16.67% and below
Seller’s market: 33.33% and above
Neutral market: 16.67% – 33.33%
Absorption Rate based on Closed Sales
The December 2018 Absorption Rate was 27.7. This was a 45.9% drop compared to last year and an 8.3% decline compared to last month.
WESLEY CHAPEL, Fla. — The 7.5-acre crystal-clear lagoon in Wesley Chapel is finally open to residents.
The project was shut down by Pasco County in May after fire inspectors discovered nearly 20 buildings on the site were built without county building permits.
But now, after a long wait, residents can enjoy the lagoon — the first of its kind in the country.
“It beautiful, it’s definitely the reason why we came here,” resident Sara Watlington said.
The lagoon features a cabana area, a beach section and a swim up bar.
“You just take the golf car from the house, come here and we’re literally in paradise,” Watlington said. Her daughter woke up early Saturday just to be the first in the lagoon.
From the Blog:
Every homeowner wants to make sure they maximize their financial reward when selling their home. But how do you guarantee that you receive the maximum value for your house?
Here are two keys to ensure that you get the highest price possible.
1. Price it a LITTLE LOW
This may seem counterintuitive, but let’s look at this concept for a moment. Many homeowners think that pricing their homes a little OVER market value will leave them with room for negotiation. In actuality, this just dramatically lessens the demand for your house (see chart below).
Instead of the seller trying to ‘win’ the negotiation with one buyer, they should price it so that demand for the home is maximized. By doing this, the seller will not be fighting with a buyer over the price but will instead have multiple buyers fighting with each other over the house.
HGTV gives this advice:
“First impressions are everything when selling your home. Studies have shown that the first two weeks on the market are the most crucial to your success. During these initial days, your home will be exposed to all active buyers.
If your price is perceived as too high, you will quickly lose this initial audience and find yourself relying only on the trickle of new buyers entering the market each day. Markets are dynamic, and your price has an expiration date. You have one chance to grab attention. Make sure your pricing helps you stand out on the shelf — in a positive way.”
2. Use a Real Estate Professional
This, too, may seem counterintuitive. The seller may believe that he or she will make more money without having to pay a real estate commission, but studies have shown that homes typically sell for more money when handled by a real estate professional.
Research by the National Association of Realtors in their 2018 Profile of Home Buyers and Sellers revealed that,
“the median selling price for all FSBO homes was $200,000 last year. However, homes that were sold with the assistance of an agent had a median selling price of $264,900 – nearly $65,000 more for the typical home sale.”
Price your house at or slightly below the current market value and hire a professional. This will guarantee that you maximize the money you get for your house.
Homeownership down among self-employed, but that’s not the whole story
According to the Urban Institute, “At all income levels, mortgage use and homeownership rates declined more for self-employed households than for salaried households between 2001 and 2016.” There are many reasons for this, but there is also good news for self-employed home buyers. If you’re one of them, you have options in 2019.
The news is not bad
Self-employed home buyers often worry about their ability to qualify for mortgage financing. However, as someone who last held a full-time job in 1972, all I can say is: relax. I’ve never been turned down for a mortgage. And I can assure you, I’m not on any list of the wealthiest Americans.
To me there has never been a better time for the self-employed to obtain real estate financing. That’s not just an idle observation. There are several reasons to support such thinking.
No tax return needed
Since 2010 the mortgage industry has operated under rules laid out by the Dodd-Frank Act. The law runs 849 pages and the juicy part for the self-employed reads like this:
A lender “making a residential mortgage loan shall verify amounts of income or assets that such creditor relies on to determine repayment ability, including expected income or assets, by reviewing the consumer’s Internal Revenue Service Form W–2, tax returns, payroll receipts, financial institution records, or other third-party documents that provide reasonably reliable evidence of the consumer’s income or assets.”
The rules mean lenders can look at far more than pay stubs and W-2s when checking borrower income. This is great news for the self-employed, because we simply don’t have such documents. However, we have tax returns and bank records. They’re surely anyone’s definition of “reasonably reliable evidence” to show our income and assets.
The real challenge is finding mortgage lenders willing to put in the extra work for those with this kind of documentation. And with lending business tapering off, and a huge pool of self-employed applicants, it’s getting easier — a lot easier.
The gig economy is exploding
It used to be that the definition of “work” pretty much meant a nine-to-five job. That wasn’t true in the past and it’s not true now. Look around. We are surrounded by the self-employed. Your lawyer, accountant, plumber, electrician, and computer repair pro have long been part of the gig economy.
“Climbing the corporate ladder is no longer the American dream,” says FreshBooks in its latest Self-Employment Report. Over the last few years a significant mindset shift has taken place, and with it has emerged a workforce which values flexibility over stability.”
With downsizing, rightsizing, automation, and the job exports to places far away corporate employment is no longer so stable. More of us have to be self-employed because traditional jobs are a vanishing species. According to Sen. Mark Warner (D-VA), 30 percent of the labor force – 42 million workers – are now part of the gig economy.
The fact that so many people are self-employed has created a new reality for lenders: either adapt to the gig economy or lose a lot of business. Lenders, as you might expect, are adapting.
The paperwork shuffle
There’s no reason why self-employed home buyers should not be able to get real estate financing. The trick is to overcome the two big worries feared by lenders.
According to Fannie Mae, 95 percent of all lenders “think it is difficult to use gig economy income to approve mortgage applications with today’s lending practices. Top barriers include unpredictability and instability of gig economy income, investor requirements, and underwriting criteria standardization.”
“There is wide recognition that self-employed people find it more difficult to get approved for a mortgage than people who receive a regular paycheck,” said the Urban Institute. “The self-employed can be more difficult to underwrite in part because they, unlike salaried workers, experience greater income volatility and lack pay stubs or W-2 wage statements that make it easy for lenders to verify and document income.”
Less caution, more common sense
Part of the problem is that lenders have a need to be super-cautious when originating mortgages. A lender who violates program rules, even accidentally, can sometimes be forced to buy back loans from investors. Also, there can be big fines when incorrectly originating FHA- and VA-insured mortgages.
Sen. Warner and Sen. Mike Rounds (R-SD) introduced legislation in 2018 that if passed would allow lenders to accept a wide variety of paperwork for all types of loans. Under the proposed Self-Employed Mortgage Access Act, limits on the use of IRS Form 1040 Schedule C for sole proprietorships, IRS Form 1040 Schedule F for farming, IRS Form 1065 Schedule K-1 for partnerships and IRS Form 1120-S for S Corporations would be eased or eliminated.
Since the Warner and Rounds legislation did not pass in 2018 it will have to be re-introduced in the next Congress.
Mortgages for self-employed home buyers
Even without the new legislation there are plenty of borrowing options available today for self-employed home buyers.
Bank statement mortgages
Lenders – and credit scoring services – have begun to increasingly look at bank statements as an index of borrower income and financial stability. In 2019 new scoring models from Fair Isaac (UltraFICO) and Experian (Experian Boost) will ask consumers for permission to track bank account activity. Fair Isaac estimates that “seven out of 10 consumers who exhibit responsible financial behavior in their checking and savings accounts could improve their score” with the new approach.
Lenders who accept bank statements will likely want all statements for the past 12 to 24 months. In a growing number of cases with your approval they will be able to get such documents electronically from banks.
Most mortgages are originated by lenders and then sold to investors through the secondary market. However, there are some lenders – so-called portfolio lenders – who keep some of their loans. Because such mortgages are not being sold to investors they do not have to meet investor or program requirements. Instead, they have to meet bank standards. Bank standards are often much more open to the self-employed. If you have a personal or business account with a local bank be sure to ask about portfolio mortgages.
Two-years of self-employment
Many mortgage programs require two years of self-employment. However, you have to look very carefully at how that “two years” are defined. If you’ve had a career in computer programming and now want to do auto repair the two-year standard will likely apply. However, if you’re moving from corporate accounting to your own practice one year of self-employment may be acceptable.
Lenders are very happy to look at tax returns and that’s good for the self-employed. Why? First, because you have them. Second, they can raise your qualifying income. For instance, lenders can add depreciation back to your income. Lenders can “gross-up” untaxed income such as military allowances and child support to increase qualifying income.
For details and specifics speak with lenders. Let them check tax returns and other paperwork to get the best sense of your borrowing ability. In today’s gig economy you’re likely to well with most lenders.
With luxury home sales in decline and inventory on the rise, The Wall Street Journal’s (subscription) Amy Gamerman reached out to Realtors, analysts, designers and developers to find the luxury amenities that stand out – and sell fast – to potential buyers.
The professionals’ top picks include:
- Retractable glass walls
- High ceilings
- Quartzite countertops
- A butler’s pantry
- Spa-like bathrooms, including steam showers and “high tech Japanese toilets”
- Smart home systems
- A four-car garage
- A barn, carriage house, or in-law apartment
- A generator, especially in hurricane-prone areas
- Neutral decor
On the turn-off list? Granite, jet bathtubs, French doors with mullions, bidets, heavy brown furniture, and “unsightly” built-in entertainment systems.
January 3, 2019
Mortgage rates declined to start the new year with the 30-year fixed-rate mortgage dipping to 4.51 percent. Low mortgage rates combined with decelerating home price growth should get prospective homebuyers excited to buy. However, it will be interesting to see how the recent turmoil in the stock market will affect homebuying activity in the coming months.
Thanks for reading Tampa Market Monday. We’d love to help you buy or sell your home, so please get in touch! You can reach me, Doug Bohannon or Dale Bohannon at 813-979-4963 or by completing this contact form.
Have a Fantastic New Year!
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Thanks for taking time to read the Tampa Market Monthly! If you want to buy or sell a home or find out your home’s value please let us know. We’d love to work with you. You can reach me, Doug Bohannon or Dale Bohannon at 813-979-4963 or by completing this contact form. You can search all Tampa area homes for sale at www.teambohannon.com.
Have a Fantastic week!