How Aging Homes Could Affect Boston Area Home Buyers

With more and more houses getting older and older, how could this aging trend affect Boston area home buyers in the future? The Department of Housing and Urban Development’s American Housing Survey (AHS) shows that the median age of homes in the United States is now around 35 to 40 years old.

The National Association of Realtors asserts that homeowners will have to undertake remodeling and renovation projects before selling unless the home is sold as-is, in which case Boston area home buyers will be responsible to update their new residence. Even homeowners who aren’t selling will need to consider remodeling for structural and aesthetic reasons.

Boston Area Home Buyers Face Higher Prices

Many Boston area home buyers are opting for do-it-yourself renovations

Newer homes cost more than they used to. The price differential between new homes and older homes has increased from 10 percent traditionally to around 37 percent in 2014. This is due to rising construction costs, scarcity of lots, and a low inventory of new homes that doesn’t meet the demand of Boston area home buyers.

In December 2014, the average cost of a new home was $298,100 while the cost of an existing home was $209,500. Saving that kind of money on a home purchase allows a Boston area home buyer to budget for a remodeling project.

Many Boston area home buyers opt to save on remodeling costs by doing things themselves. According to a 2013 American Housing Survey, a homeowner can save more than half the cost of a project by doing it themselves. A professional bathroom remodel runs $8,221 versus a do-it-yourself job at around $3,000. The kitchen, one of the most costly remodeling projects to do, comes in at around $15,000 for the do-it-yourselfer and around $35,821 for a professional to do it for you.

Buying an existing home can put first-time Boston area home buyers in a better financial position. Instead of renting until they save up money for that brand new home, they can begin gaining equity in their house and enjoy the benefits of having their own place.

Get more tips and articles designed to help Boston area home buyers save money on remodeling jobs in the Boston area Home Improvements section below our Boston area Real Estate Categories in the column to your right.

Remember, we post tips for Boston area home buyers daily on Twitter, and also over at our Facebook Page. We’d love you to check us out there too.

Facts Boston Area Home Buyers Need to Know Now

There are some things Boston area home buyers need to know about this current seller’s market we’re in, but it’s not all that bleak if you’re looking to buy a home.

Although sellers are enjoying an edge with surging prices and tight inventories, it’s far from all negative gloom and doom for Boston area home buyers.

The market is far from all negative gloom and doom for Boston area home buyers.

Positive Factors for Boston Area Home Buyers

Mortgage rates are holding in historically low territory, with the 30-year-fixed rate lower than 4 percent for most borrowers with good credit. And new programs from Fannie Mae and Freddie Mac should make it easier for first-time Boston area home buyers to buy a home.

To qualify for Fannie’s and Freddie’s mortgage programs with just 3 percent down, prospective Boston area home buyers must have a credit score of at least 620. They must also be able to able to prove income, assets and job status, and purchase private mortgage insurance.

Overall nationwide, the housing market is favoring sellers. Total housing inventory at the end of February increased just 1.6 percent to 1.89 million existing homes available for sale. For the second month in a row, unsold inventory is at a 4.6-month supply, which is below what is considered normal for a healthy market.

Competition between regular Boston area home buyers and investors is decreasing, with home prices climbing and with fewer below-market distressed properties for sale. The share of home sales to institutional investors and all-cash buyers dropped to four-year lows in 2014, despite a quarterly increase in the fourth quarter.

A recent study by the National Association of Realtors found that rents are still climbing. The study also found that renters are spending about 30 percent of their wages on rent, compared to homebuyers who spend below 15 percent of their wages on a mortgage payment.

Despite low inventories, Boston area home buyers are picky about the condition of properties for sale and expect homes to be move-in-ready. Buyers don’t generally want to assume any risk with properties that need work, particularly first-time buyers with limited cash resources.

So even though it is considered a seller’s market, Boston area home buyers still have an edge in many categories, unlike many seller’s markets we’ve seen in the past.

Remember, we also post daily on our Facebook Page, and over at Twitter. We’d love you to check us out there too.

Fewer Boston Area Homes Being Bought With All Cash

Fewer and fewer Boston area homes are being bought and paid for with all cash. The same trend is holding up nationally as well.

Cash home sales fell to 35.5 percent of the market nationwide in December 2014 compared to 38.5 percent in December 2013, according to new numbers released by CoreLogic.

Fewer Boston area homes are being purchased using all cash and no financing

A high rate of Boston area homes being paid for with cash are often thought to indicate investors are playing a larger role in real estate purchases, as they usually have more cash available than traditional home buyers, who more typically utilize mortgage loans.

The year-over-year numbers for cash sales have fallen every month since January 2013, making December 2014 the 24th consecutive month of year-over-year declines in the share of cash sales. The peak came in January 2011, when cash sales made up 46.5 of home sales.

Who’s Buying the Most Boston Area Homes?

While the number of Boston area homes being bought with cash is continually dropping, a new study by the National Association of Realtors on generational trends found millennials represented the largest share of recent buyers of Boston area homes.

It is the second year in a row the study found those aged 34 and younger did the most home buying — 32 percent of the total in the United States.

Generation X, those aged 35 to 49, were the second largest group, at 27 percent.

Get more information about news that may affect buying Boston area homes in our section on Boston Real Estate News to your right under Boston area Real Estate Categories.

Remember, we post tips daily to Twitter, and also on our Facebook Page. We’d love you to check us out there too.

Many Boston Area Homebuyers Can Get Help

Many Boston area homebuyers could get down payment assistance without winning a jackpot or the lottery

A study to make Boston area homebuyers realize they could qualify for a free down payment without hitting the jackpot and winning the lottery found that 87 percent of all U.S. homes qualify for down payment help.

Boston Area Homebuyers Need to Investigate Options

Many Boston area homebuyers, especially Millennials, have not fully investigated their home financing options because they are pessimistic about qualifying for a mortgage. The Homeownership Program Index highlights the wide range and availability of down payment programs available to today’s Boston area homebuyers. 91 percent of the 2,290 programs in the registry have funds available to lend to eligible homebuyers. Income limits vary depending on the market and programs extend beyond just first-time Boston area homebuyers. It’s important for buyers to research down payment programs as part of their loan shopping process.

Historically low homeownership rates across nearly every age demographic have led to a public policy push to lower the barrier to homeownership through down payments as low as 3 percent, but the fact is, the barrier to homeownership is often much lower than even that 3 percent for borrowers who take advantage of one of the myriad down payment help programs available across the country.

RealtyTrac looked at 2,290 down payment programs from Down Payment Resource’s Homeownership Program Index and found that out of more than 78 million U.S. single family homes and condos in 1,792 counties with sufficient home value data, more than 68 million (87 percent) would qualify for a down payment program available in the county where they are located based on the maximum price requirements for those programs and the estimated value of the properties.

Boston Area Homebuyers May Be Missing the Boat

You could be REALLY missing the boat if you don’t at least look into one of the free down payment plans available across the country.

We have seen a dramatic increase in financing options available and loosening of credit scores with conventional 3 percent down payments readily available for qualified Boston area homebuyers. This is great news for the millennials and Boston area homebuyers re-entering the market.

Get more information about how first time Boston area homebuyers, whether Millennials or not, can get started in the home buying process in our section on Boston area Home Buyer Tips to your right under Boston area Real Estate Categories.

We post daily to Twitter, and also on our Facebook Page. We’d love you to find us there too.

Boston Area Homebuyers Say Location Still Matters

Nearly half of Boston area homebuyers surveyed by The Demand Institute who say they plan to move at some point in the future say that location still matters for them.

While some Boston area homebuyers say they will move for a larger or nicer home, or perhaps buy a home for the first time, three out of every four movers say that a location consideration is a reason for moving.

Most Boston area homebuyers surveyed still say location is an important factor

Most Boston area homebuyers who answered the survey said they won’t go very far. More people seem to be wanting to move closer to city centers and are looking for denser, more walkable living. But most Americans in general say they will still continue to choose to live in the suburbs.

Findings of Boston Area Homebuyers Surveyed

For most Boston area homebuyers, the location of their home is as important as or even more important than the physical home itself. So it’s not surprising that location-related reasons play a critical role in the decision on when and where to move. 75% cite one or more location-related reasons for why they are planning to move.

While location plays a big rol in housing decisions, most Boston area homebuyers say they will stay in state, and more than half (59%) will move within 30 miles of their current home, and 27% of those plan to move less than 10 miles from where they live now.

A big factor for Boston area homebuyers is the desire to feel safe where they live. “Safe Neighborhoods” is a top unmet housing need for many Boston area homebuyers, as well as most Americans nationwide.

Other location-related priorities vary greatly. Those with school-age children care about good schools, while those in the workforce want to be close to their job. Others want to be in walkable areas near entertainment, services and public transit, and some don’t want to be close to anything at all.

Since most Boston area homebuyers have at least one car, they continue to be fine with being a short drive from most services and amenities. Still, most do want to be within walking distance of one or two places, like a park, bus stop or convenience store.

There are important benefits associated with more walkability. More walkable communities report stronger expectations with home price growth, and are also more likely to report that their quality of live has improved in the past few years.

As you can see, there is tremendous diversity among Boston area homebuyers in terms of features and benefits. This diversity will likely persist going forward, given that these differences reflect divergent consumer needs and preferences. And this is a good thing, providing Boston area homebuyers with options consistent with their life stage and preferences.

If you’re considering joining the ranks of Boston area homebuyers but are not sure where to begin, give us a call or fill out our short contact form here on our site. We’re always available to sit down and discuss your moving plans with you and help you find the right neighborhood for your lifestyle and desires.