Boston Area Home Buying in December

When you think about “shopping” in December, it’s normally in retail stores, not the Boston area home buying market.  However, the month of December could be a great time to shop for a new home. This may be especially true for potential buyers who may have been outbid during the more active home buying months.

The month of December could be a great time to enter the Boston area home buying maze.

A Good Boston Area Home Buying Month

While the majority of home sales occur during the spring and summer, there are definitely advantages to consider the so-called “off-season” of the real estate market.

A compelling reason to make any purchase is value. For sellers just listing their homes or for those whose homes have been for sale for awhile, fewer prospects mean lower offers. That represents a wonderful opportunity for bargain shoppers looking now rather than in peak months.

Real estate experts say a home’s selling price may fluctuate during the course of the year by 5-7%. Many of the price variations are predictable. A home generally will be priced higher in the spring and summer than in the winter.

According to RealtyTrac, a publisher of real estate market data, the best bargains are usually found in October, with average sales prices around 2.6% below normal. Other experts say December is the best month to get more bang for your buck. Much of the rationale has to do with the seller’s mood, likely to be happier and more generous during the holidays.

Let’s examine five reasons to shop for a home in December.

The competition is limited. Most people are busy with the hustle and bustle of the holidays and aren’t active in the market then. Fewer potential buyers means less competition and greater opportunity for a savvy buyer.

There are tax benefits. If you’re in the market not only for a house, but also for some year end tax deductions, December could be a good month. Purchase and close your home prior to the end of the year and you can deduct the mortgage interest paid, any loan points paid and your pro-rata share of the property taxes from your 2015 income tax return.

Motivated –– even desperate –– sellers. As mentioned above, sellers often are willing to take the best offer they can if their home has languished on the market. They could be especially motivated if they have a contract on another home contingent on the sale of their existing house. In the case of job relocation, the sellers may have to move before the first of the calendar year and may be desperate to sell.

See homes in their “natural light.” Shopping for a home in December gives buyers a chance to see homes in their natural state –– without “make-up,” so to speak. When trees have lost their leaves, grass is dormant and flowers aren’t in bloom buyers can get a better idea of the home’s features and uniqueness. In addition, it’s a good idea to check out things like drafty, cold areas in the home. They could be signs of faulty insulation or window or door seals needing replacement.

Interest rates are still very low. Despite recent rumblings that interest rates may edge upward slightly, today’s mortgage rates are very affordable. And that’s good news for anybody entering the Boston area home buying market during December.

Happy holidays… and happy home shopping!

Boston Area Home Buyers Need Help From Family

During the recession of 2009, the number of Boston area home buyers depending on down payment assistance from family members or friends tripled. It’s estimated that roughly 21% of homes were purchased by homeowners using a gift or a loan as their down payment. Let’s look at why that need may still exist.

Boston Area Home Buyers – “Who Can Save Today?”

Boston area home buyers still need help from family these days to buy their first home

According to a recent analysis of Zillow of federally-provided real estate sales data, the percentage of Boston area home buyers needing down payment help from their families is still higher than it was before the 2009 housing crisis. The 21% number mentioned above dropped to just over 13% in 2014. However, compared to 2007 when only 8% of purchasers required assistance from friends or family, the percentage is substantial.

The Zillow report spotlights one glaring reason the need exists for many prospective Boston area home buyers — the absence of savings. In order to keep monthly mortgage payments close to or less than what they are paying in rent, first time homebuyers usually need cash for a down payment. That can be a challenge, and it’s the main reason
during the recession — and even now — prospective purchasers seek help from their family.

In what the Zillow data characterizes as “middle-income households” 25% of Boston area home buyers turned to friends or family members for help with their down payments in 2014. During that same year, only 15% of low-income and 16% of high-income households received assistance for their down payments.

Real estate experts say skyrocketing rents, a high percentage of student loan debt and slow income growth are among the factors preventing many first-time Boston area home buyers from being able to save money for a down payment. More troubling to some insiders is what is seen as a potentially widening gap in inequality. Assistance networks and programs available to low-income households may not be able to sustain that assistance, while higher-income home buyers may not need the help.

First-time Boston area home buyers are especially reliant on friends and family for help with the down payment. Not only are their rents high, but mortgage credit is tight, making their entry into the homeownership arena “iffy” at best. In addition, home values and sales prices have increased. And as prices increase, so do the down payment requirements. Naturally, as first time home buyers, they have no cash from the sale of a previous home to fall back on.

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A Good Time for Boston Area Home Buying

Boston area home buying markets are always changing — just like the seasons of the year. Many people associate spring with a renewed, popular time to home shop. Fall is usually associated with a slower-paced real estate market for a variety of reasons. However, fall could very well be a great time for Boston area home buying. Let’s take a look at a few reasons why.

Boston area home buying markets regularly change — just like the seasons.

Fall Brings Boston area Home Buying Advantages

Inventory from this past spring could mean great buys.
Many homes are listed on the market in the spring at prices that may be unrealistically high. As a result, price reductions naturally follow during the rest of the year. If a seller hasn’t successfully captured the attention of — or received an offer from — the Boston area home buying market by early September, a substantial price cut may occur.

There are less buyers competing for homes.
By early September, of course, due to the start of the new school year many home shoppers have tabled their search. That equates to less competition, more motivated sellers and greater potential opportunities for those in the Boston area home buying arena. This “thinning of the herd” gives prospective buyers a little more time to shop around for the best deal on the home they’re looking for.

Some home sellers may want to sell before the end of the year.
Often it’s important for sellers to close by the end of the calendar year to take advantage of any tax gain or loss. As such, Boston area home buying candidates may encounter more motivated sellers willing to negotiate if they can close the sale prior to December 31.

Holiday home listings often mean motivated sellers.
For most people, the holidays are a busy time. Homes that are on the market past, say, November 1 may be ripe for the picking. The seller may be motivated to sell as soon as possible to avoid interruptions during the holidays.

Curb appeal diminishes with changes in landscaping.
Much of a home’s appeal depends on how it shows to the Boston area home buying public. And that appeal begins to fade a little as the grass goes dormant, the leaves fall off the trees and the flowers stop blooming. However, seeing the home without some of its landscape amenities gives a home buyer the opportunity to view the exterior objectively and perhaps more realistically.

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5 Boston Area Home Buying Fears

Whether it’s the fear of the unknown or the fear of discovering a problem, some Boston area home buying prospects are hesitant to enter the market. Sometimes the fears are justified, and when they are there are steps you can take to alleviate them.

Facing Boston Area Home Buying Fears Head On

Boston area home buying fears include learning you have a cracked foundation in the home you are buying

Fear of a cracked foundation, leaky roof or dry rot problem. Unless you’re an avid “do-it-yourselfer” most buyers don’t relish fixing problems. Although most every home needs routine maintenance or minor repairs, much of the Boston area home buying public fears home inspection results. It’s important to remember, however, a home inspector merely raises awareness on issues with the house. Not everything on the inspector’s checklist is of immediate concern. If you need reassurance, ask the inspector to rank the importance of the issues and estimate the timetable for replacement or repair. If there are repairs that need to be made immediately then — and only then — should it become a “deal-breaker.” Even then it could be something you can negotiate with the seller to repair or give you credit for in the sales price.

Fear of losing the earnest money deposit. Most every real estate contract requires a certain amount of earnest money to be deposited when the agreement is signed. By law, the deposit is required to be held in escrow until the sale is consummated. Boston area home buying professionals say it’s highly unlikely a buyer would lose his deposit. Make sure your contract with the home seller includes certain requirements like a home inspection, disclosure review and a financing contingency. You may also make your purchase contingent upon the home appraising for at least the sales price, and if your situation warrants, contingent on the sale of your current home.

Fear of losing the house you want. In a seller’s market, it’s important to act quickly but efficiently. Once you see a listing for a home you’re interested in, contact your real estate agent immediately to view the home. Ask your agent to determine from the seller or their agent how they will entertain forthcoming offers. While motivated sellers often may accept the first good offer, they are more likely to set a date to assess multiple offers to determine which one best meets their needs — including not only the sales price but how quickly the buyers want to close the deal. Either way, it’s important to stay in contact with your agent on at least a daily basis to ensure your interests are being communicated and acted upon.

Fear that your agent isn’t doing everything you expect. Boston area home buying clients sometimes forget their agents are in the business to do one thing — sell real estate. While it may appear from time to time the search for the “perfect home” has lost momentum or stalled, a good agent is constantly working behind the scenes to find the listings which fit their client’s price range, desired location and home style. To ensure you and your prospective agent start off on the right foot, meet with them and discuss your housing needs and desires. In the process, if you feel you and your agent aren’t on the “same page” or don’t “click” keep looking.

Fear of finding a home in a certain time frame. It’s human nature to want to find a home and move in prior to some self-imposed deadline like the start of a school year, Christmas, or spring. Experts caution, however, that your Boston area home buying decision shouldn’t be hurried. If a deadline is fast approaching, consider a contingency plan. If you’re renting and your lease is up soon, for example, look into a short-term alternative if you haven’t found a house by then. This will relieve the pressure you face in potentially making a decision you may later regret because you were rushed.

In summary, most fears can be alleviated with good planning. It could mean the difference between a satisfied Boston area home buying experience and one you’d just as soon forget.

Student Loan Debt Affects Boston Area Home Buying

The Boston area home buying market has been impacted by many potential first-time home buyers wrestling with repaying student loans. A recent BankRate.com survey revealed that young adults who would otherwise be prospective home buyers shelved their home search until their student debt is either reduced significantly or paid entirely. To make matters worse, many of these first-time buyers are under the mistaken impression that having student loan debt will prevent them from obtaining a mortgage.

The Boston area home buying market is being affected by student debt

Impact of Student Loan Debt on the Boston area Home Buying Market

The Amount of Debt Isn’t as Important as Your Ability to Repay

Lenders look primarily at what a borrower’s debt-to-income (DTI) ratio is to underwrite a mortgage loan. A high DTI (over roughly 42%) may adversely impact your ability to obtain a loan, but anything less than that percentage should qualify you for a mortgage.

Your Credit Score is Only Impacted by Slow Payment History

Just because you may have student loan debt isn’t a negative mark against your credit score. However, if you have a poor repayment record, that will certainly lower your score. And because you will be required to pay a higher rate of interest if your credit score is low, your monthly mortgage payment will be more.

Repaying Your Student Loan Reduces the Amount of Money for a Down Payment

While you may have trouble saving money and reducing your student loan debt, you may still be able to qualify for a low-down payment loan. There are numerous programs available in the Boston area home buying market for first-time home buyers. You can research them online, or discuss them with your real estate professional or a mortgage lending officer.

With a little familiarization with the purchase process and some of its capabilities and requirements, there are opportunities for first time Boston area home buyers. So, don’t necessarily allow the repayment of student debt create a roadblock to home ownership. The two can co-exist.

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