If you are entering the housing market as a buyer, one thing that you should be aware of is that not all sellers have the same motive. A seller desperate to escape a financial situation they were unprepared for will make for a drastically different sell than an investor looking to prune off an unneeded property. Nowhere is this more evident than when you are buying a house that has been flipped. They might not always be upfront about the flip, so here are ways to find out if the house was flipped recently, as well as what you need to look out for when buying a potentially flipped house.

Flipping houses is a practice whereby an investor will purchase a house, renovate it, and look to put it back on the market quickly, often in 6 months to a year. Therefore, the easiest indicator that a property is being flipped is that the current owner has owned the house for less than a year. If they are selling so soon after buying, you always need to be asking why. In particular, if the asking price now is higher than the previous asking price, the home is likely being flipped.

A flipped home is not necessarily a bad thing though. It’s possible that the house has been renovated to be stylish and in good condition. If you are looking for a property that is in good shape, you may find that a flipped house will be in better condition than other houses in the area.

However, all of this depends on the ability and integrity of the person performing the flip. It is good to ask for a record of all work that has been done recently. Shy away from homes with purely cosmetic improvements. If the bathroom and kitchen are gleaming with new tile and fixtures but there have been no repairs to the electrical, plumbing, or other systems, it is likely that the flipper is trying to sell you based on the shiny appearance rather than good quality work. Also, find out if the work done has been done by a licensed contractor. Licensed contractors will have ensured that a good job was done, and that everything is up to code. If the seller did the repairs themselves, it will be up to you to find out if they knew what they were doing, or were just trying to save money and got in over their heads. Look for uncovered or shoddily put together electrical boxes, especially under cupboards or other areas where it might not be immediately visible.

(summarized from the NAR Daily Real Estate News, Friday, April 28, 2017)

Nationally, the average price gain for homeowners who sold in the first quarter was $44,000. This represents an average return of 24 percent on the purchase price — the highest average price gain for home sellers (in both percentage and dollars) since the third quarter of 2007, according to ATTOM Data Solutions’ First Quarter 2017 U.S. Home Sales Report.

According to Daren Blomquist, senior vice president with ATTOM Data Solutions, “The first quarter of 2017 was the most profitable time to be a home seller in nearly a decade, and yet homeowners are continuing to stay put in their homes longer before selling.” Blomquist noted that “This counterintuitive combination is in part the result of the low inventory of move-up homes available for current homeowners, while also perpetuating the scarcity of starter homes available for first-time home buyers.”

The report showed that homeowners who sold in the first quarter had owned their home for an average of 7.97 years. Between the first quarter of 2000 and third quarter of 2007, prior to the Great Recession, average homeownership tenure was 4.26 years.

Blomquist suggested that the situation may be changing somewhat: “There are some early signs this inventory logjam may be loosening up in some markets, with the average homeownership tenure down from a year ago in nine of the 66 markets we analyzed, including Memphis, Dallas, Boston, Portland [Ore.], and Tampa,” adding that “sky-high potential price gains may be finally prompting more homeowners to sell.”

One of the things to keep in mind when observing the housing market, is that price is affected by many factors. Keeping an eye on both national and local factors is critical when looking to get a good idea of the future of the housing market. To this end, there are organizations which assess and report trends in the housing market. The National Association of Home Builders (NAHB) releases monthly assessments of homebuilder confidence. The NAHB homebuilder confidence index is a look at how optimistic homebuilders are sales of single family houses in the near future. So, what does it all mean, and why is it happening?

The index is compiled through survey of home builders. They are invited to rate their current sales as well as what they expect the next 6 months to look like. Their scores are compiled into an aggregate rating, with scores above 50 being positive, and scores below indicating negative sentiment. Currently, the score is 71, indicating a lot of confidence about the future of the housing market.

While the index jumped after the election which cemented Donald Trump as the president, it slid in the first two months of his presidency before jumping again in March, this time to the highest level in 12 years. The changing political climate is a major factor in the home market. So, a large part of the rise is that builders believe changes in the laws and regulations governing housing will change to affect them positively. One of the main factors is that Donald Trump has sworn to repeal and remove many of the environmental regulations on the construction of new houses. As builders have seen congress and the president moving in this direction, they understand that less regulations will mean cheaper construction.

What this means, is that we could end up seeing a stronger home market in the next few years. While it is important to keep an eye on a number of market factors, this one suggests that there could be increased construction and sale of homes. While the housing market has largely recovered from the Great Recession, many homeowners and businessmen stand to profit if the housing market goes through a boom.  However, we will have to wait and see what surprises await us in the coming years. While things look good now, it remains to be seen whether or not these confident expectations will be met.

Recent trends have seen Scottsdale real estate interest rates rise slightly over the past couple of months. While prospective home buyers may feel disillusioned by rising rates, let's take a look at what it may mean for them and the possibility of becoming homeowners.

As mortgage rates increase, naturally, the amount of home you can purchase decreases. In other words, the higher the interest rate, the higher the payment — and perhaps the lower the mortgage amount must be to be affordable. Borrowers need not be completely dismayed however, as there is flexibility among mortgage lenders and their qualification guidelines. Let's take a short revisit of the rate fluctuations since the presidential elections of this past November and review how interest rates have affected home affordability. How will recent Scottsdale real estate trends affect the housing market?

Scottsdale real estate interest rates have risen slightly over the past couple of months.

A Recap of Scottsdale Real Estate Interest Rates and the Outlook for the Future

Between the election on November 8 and Christmas of 2016, Scottsdale real estate interest rates went up .75%. The rate increase was fueled in part by the feeling on the part of the American public that the new administration would enact policies of infrastructure spending, tax cuts, and a certain amount of deregulation that, once enacted, would be inflationary. In addition the skyrocketing gains in the stock market pushed the bond yields downward, and since mortgage rates are very closely tied to the US Treasury bond rates, mortgage rates had nowhere to go but up.

Most savvy economists felt when interest rates rose, they would also level off in time. And, while that is happening, it is still volatile at best. Interest rates go up and down literally daily in response to investors reacting to policies of the new administration. When investors exhibit concern that post-election inflation will continue to occur, the rates go higher. Conversely, when investors feel inflation will be softened by certain policies, delays in action, or hindrances, rates will come down.

The bottom line for interest rates is the post-election peak seems to be over, and the net result is an interest rate increase of roughly .5% since the election.

Experts predict continued rate volatility as stock market investors and the Federal Reserve work to gauge interest rate movement as part of the new government administration. Here's how that volatility is expected to impact housing activity.

The Effect of Scottsdale Real Estate Interest Rates on Home Affordability

According to experts, a $350,000 home purchase on which a prospective borrower plans to put down 20%, a rate increase of .5% reduces the affordability by roughly $17,000.

While such a decrease in affordability may tend to make a prospective homebuyer look for a lower-priced home, there are other alternatives — especially if you're familiar with how most mortgage lenders operate.

For decades, mortgage lenders have used a debt-to-income (DTI) ratio in their qualification guidelines. A DTI compares the relationship of your total monthly recurring debt to your gross monthly income. Mortgage lenders typically like to see a DTI of 43% or less.

Borrowers earning, say, $65,000 annually with monthly obligations such as an auto loan and credit card bills totaling $615 per month may have qualified for the $350,000 home mentioned above. However, at a slightly higher interest rate of .5% more, they may not. Here’s why: At the income and debt totals currently, the DTI ratio was less than 43%. With the rate increase, it’s climbed to over 44%. At first glance, the only solution is to work to reduce the purchase price down to $333,000 (the original $350,000 less the $17,000 by which the affordability was reduced.) That would reduce your DTI back to a level less than 43%. However, let’s consider an alternative.

Increasing Home Affordability

Rather than trying to get the price reduced by $17,000, most experts recommend lowering your other recurring debt. As an example, a monthly credit card payment of $125 with a remaining balance of $3,125 can be reduced to roughly $45 per month by paying down the balance by just $2,000. Honestly, that may be a much easier solution and a much softer sell than trying to get the seller to come down $17,000.

Analyzing Scottsdale Real Estate Interest Rates and Trends to Make the Best Decisions

It’s important to keep an eye on interest rates and other changes in the marketplace. Remember, in much the same way that the old adage, “All real estate is local,” all mortgage lending is individual. What that means is every situation is different and everyone’s DTI is comprised of components that may be changed slightly to improve the qualification percentage. Don’t make the erroneous assumption that rising rates will always reduce the price a borrower may qualify for.

See more articles pertaining to the latest Scottsdale real estate interest rates and trends in the section of articles on Scottsdale Real Estate just below Scottsdale Real Estate Categories in the column to your right. And remember, we also post tips daily on Facebook and Twitter. Check us out there as well.

In recent Scottsdale economic news, it appears home buyers and home sellers are entering the coming spring selling season with a feeling of optimism. Despite interest rates moving slightly upward and home prices continuing to rise, housing sentiment is increasing as well.

Fannie Mae publishes an index each month that ranks buyers’ sentiment. The most recent report showed buyers’ sentiment about the spring real estate sales season has risen to the highest level in six years, in part, due to a strong showing by millennial purchasers.

Millennials are entering the housing market and that's making Scottsdale economic news.

The millennials segment of the home buying population mentioned solid increases in employment confidence and income gains, which go hand-in-hand for first-time home purchasers – creating increased demand in the housing market. And while millennials are finally making the move out of mom and dad’s basement or spare bedroom faster than ever, the majority are still destined to rent, according to Fannie Mae’s research and statistics. As the supply of affordable inventory in the housing market continues to plague many millennials, so too does the higher price appreciation. Simply put, most millennials still find it challenging to afford to purchase their first home.

However, an ever-increasing number of millennials are entering the housing market and that’s making Scottsdale economic news. The same millennials that had put off marriage and having families are slowly turning their thoughts to home ownership. Recent research shows roughly 50% of millennial families have at least one child. That represents an increase of nearly 5% from last year and 7% two years ago. Real estate experts say children in the family is the most common reason young couples buy their first homes. With the U.S. home ownership rate at what has been near an all-time low, that’s good news for millennials and good for the housing economy. In addition, when it comes to living in urban areas, the number of millennials desiring to live the urban lifestyle is decreasing – by more than 6% in just two years. They are opting for the suburbs for the spacious outdoor amenities like playgrounds and parks.

The Fannie Mae buyers’ sentiment survey also revealed 85% of millennial buyers felt their home purchase was a “good financial investment.” And why wouldn't they? They’ve seen the prices of homes rise consistently in many of the popular neighborhoods throughout the country and they’re familiar with the average cost of a home – many have watched homes in their price range continue to rise faster than their income. Despite the higher prices, the fact that millennials see their home as a good investment should fare well for increased demand as they and other millennials begin raising bigger families and buy larger and newer houses as their families grow.

Experts say the Scottsdale economic news would include even greater demand for housing were it not for home values that continue to rise as a result of lower inventories nationwide – especially starter homes, popular with first-time home buyers. According to CoreLogic, nationwide home values increased 6.9% in 2016 compared to 2015. While home prices grew at a faster pace than incomes, the result was lower during the month of December 2016. Analysts cite a rise in mortgage interest rates immediately after the presidential election as possibly having an affect on asking prices by eager home sellers.

A CoreLogic spokesperson said, “Home prices continue to climb across the nation, and the spring home buying season is shaping up to be one of the strongest in recent memory.” He further added, “A potent mix of progressive economic recovery, demographics, tight housing stocks and continued low mortgage rates are expected to support this robust market outlook for the foreseeable future.”

According to the Fannie Mae sentiment report which measures consumer confidence regarding the housing market, the biggest gain in confidence was among those respondents who felt now is a good time to purchase a home. In addition, home sellers also felt it was a good time to sell. With more Americans feeling better about their employment and job opportunities, fewer are worried about losing their jobs. Other statistics in the survey showed more households are reporting slightly higher incomes – and the number of people surveyed expecting home prices to continue to rise did indeed increase. Lastly, among respondents asked about expectations that mortgage interest rates would drop, the survey percentages remained largely unchanged for the third consecutive month. This signals to researchers and real estate professionals alike that demand is high in the housing market, prospective purchasers are fairly bullish on home values and, so far, are not thwarted by what could possibly be continued slight increases in mortgage rates.

All in all, it appears that the biggest story in the Scottsdale economic news is that the housing market could see a relatively strong spring selling season. Prices will be as high as they’ve been for the past several months, but qualified purchasers will be fueled by steady incomes and job security for the most part – and, while interest rates are worth watching, most analysts feel they won’t be a deterrent for purchasers anxious to trade up.

You can find more articles pertaining to Scottsdale economic news in the "Economy" section of articles just below Scottsdale Real Estate Categories in the column to your right. Remember to also check us out by finding us on Facebook and Twitter.