April is New Homes Month

Home buyers often look for a place to better suit their family’s changing needs and modern lifestyle in the spring, and it doesn’t get any better than a newly-constructed home.   During New Homes Month in April, the home building industry is sharing just some of the advantages of newly-constructed homes.

“Newly-constructed homes today can’t be beat for convenience, safety, energy-efficiency and comfort,” said Aaron Kalizewski, President of the North Coast BIA.  “They provide outstanding value and investment in your family’s future.”

Analysis by the National Association of Home Builders, using data from the Census Bureau’s 2011 American Housing Survey, shows that maintenance and operating costs are lower for new homes.  Even though new homes tend to be larger, energy costs are about 10 percent lower in new homes compared to existing homes one very important feature of brand new homes is peace of mind for a family’s safety.   A new home was constructed with the proper permits, has passed recent and thorough inspections and conforms to current building codes.   There’s no worry that renovations or repairs were done by an unskilled do-it-yourselfer, wiring is old or connected incorrectly, or outdated techniques or materials were used.

New home owners won’t be surprised with repair bills for issues such as structural defects, hidden water damage, faulty appliances or more that may not have been discovered during the home inspection of an existing home.   A new home is under warranty and any issues that arise or appliances that fail during the warranty term will be fixed at no cost to the home owner.  Maintenance cost on average were 56 percent lower in new homes $547/year versus $241/year for homes built after 2008.

Today’s appliances, entertainment resources and home automation systems require state-of-the-art technology capabilities.   New homes are outfitted with the electronic and wiring components that can accommodate high-definition televisions, full-house sound systems, hard-wired fire and security alarms and more.

New homes are always move-in ready.   Home buyers can work with the builder before construction beings to select the appliances, cabinets, countertops, floor coverings, paint colors, custom features and other design elements that meet their family’s needs and tastes.   There’s no need to spend time painting, tearing out unwanted features or having daily life disrupted while a contractor makes changes.

Existing homes often don’t have features that cater to modern lifestyles, such as open space floor plans, walk-in closets and pantries, creative storage solutions and conveniently-located laundry facilities – but newly-built homes do.

Finally, new homes are highly energy-efficient, which can save the home owner significant money over time and also helps the environment.   New windows, doors and insulation better control the home’s interior climate, and ENERGY STAR-rated appliances and other modern components such as tankless water heater and new HVAC systems help save costs on utility bills.

New homes not only benefit the home owner, they benefit the community.

First-Time Home Buyers Advice: Gift Money as a Down Payment

It’s not uncommon for first-time home buyers to ask: “Can my mom and dad give me money to help me buy this house?”

The good news is yes, you can receive a gift from your parents to buy a house, but the way that you actually receive the gift is very important. Mom and dad can’t just leave money under your pillow like the Tooth Fairy did when you were younger.

The process of accepting a gift for your down payment isn’t complicated, and by following these simple rules, you can be sure that the underwriter who is reviewing your file will look at it with an approving eye.

Write a gift letter

If someone is going to be gifting you money to help you buy a house, you’ll first need a gift letter. The gift letter needs to be a short, sweet letter that is hand-signed by you and the person giving the gift. It needs to contain the following:

• The relationship between the home buyer and the person giving the gift.
• The amount of the gift.
• The address of the home being purchased.
• A statement that the money is a gift and not a loan that must be paid back.

Establish a paper trail

Next, you’ll need to create a paper trail. This is important because underwriters will look for where the money came from and where it went. In simple terms, they will look for proof that the money came from your parents’ account and went into yours.

Each situation will be slightly different, but be ready to provide paper proof of your parents’ account having money in it, money coming out of that account, a deposit into your account and proof that your account now has the money in it. Accuracy matters when creating this paper trail, so make sure each transaction is for the exact amount of the gift.

Write a gift letter and use this shortcut

Creating a paper trail correctly has proven to have its fair share of hassles. Getting copies of transactions is time-consuming, and underwriters seem to question every little thing in the process (“where exactly did the $10,000 transfer that I see coming into mom and dad’s account come from?”).

The good news is that there’s a shortcut when it comes to gift letters — one that makes the entire process easier.

Simply add one sentence to the letter that says: “Will wire the gift directly to escrow at time of closing.”

If you add this line to your gift letter, you can avoid all of the paper chasing that most underwriters will require. A day or two before closing, you can get wiring instructions from your escrow agent for mom and dad to wire the exact amount of the gift directly to the escrow company working on your transaction.

New Report Tracks Buying Motivations of Over 67,000 New Home Shoppers

New home sales represent under 7% of all homes sold this year – a figure significantly below historic levels of 16-17% newly-built.  Despite that low number, consumer research company, iHave5Questions, says that now more than ever homebuilders need to listen to what new home shoppers are saying.  That's because their latest research of 67,000 new home shoppers surveyed in 150 cities across the nation reveals that 90% of people visiting new homes today are actually on a mission to buy.  This makes the motivators behind their purchase decision all the more important to understand.

Today, iHave5Questions releases their 2013 Homeshoppers' Survey, which presents aggregated consumer research results that delve into buying patterns including international buyers, age-qualified and multi-generational housing trends, condo conversion and luxury rental predictions as well as other basic consumer demands in home function and design. 

"Our research shows buyers gravitating to builders based on brand loyalty," said David Harding,chief research officer of iHave5Questions. "This is a surprising primary motivator as it has grown 5 times since last year's report. Brands that garner this support do not necessarily build the highest cost homes.  Consumers are saying that great brand loyalty is possible at every price of a new home."

This information is crucial for homebuilders as they look to draw in new buyers and perhaps change their traditional approach of leading with location, neighborhood size and amenities. In age-targeted communities especially, over 20% are primarily motivated to purchase because of a builder's brand and reputation, but are told more about the pools and the views. Consumers seldom care.  These findings present homebuilders the ability to focus their efforts into areas considered important by their consumers.

In addition to their direct consumer research, iHave5Questions has dug deep into homebuilding industry reports to pinpoint compelling trends.  These trends have a definite impact on the way that homebuilders plan for new potential buyers and broaden their understanding of market potential – especially as it relates to the international new homebuyer.  Key findings show that nationwide average sales price per owner-occupied residential breaks down as follows:

• $220,000 (American)
• $425,000 (Chinese nationals)
• $300,000 (Indian nationals)

"Homebuilders have long focused on buyers from China," says Harding.  "With this data, there is a huge opportunity to attract buyers from India – the world's largest democracy with an economy that is growing at twice the American clip and with buyers who cite California as their favorite state and greater Los Angeles as their top city to own a home and live in America.  The growing entrepreneur and middle class, from a country soon to be the world's most populous, can be a gold mine to those ready to properly serve this segment." 

Additional Findings

iHave5Questions is a consumer research company that specializes in quick, conversational lines of questioning  designed to reveal accurate and immediately-useable results to clients.   Homebuilders are able to gauge consumer reaction in real time, even while home shoppers are still at the models.

Additional findings from the 2013 Homeshoppers' Survey include:

• 90% of consumers surveyed did not say location was their primary motivator for buying a new home.
• 87% of ALL shoppers are more motivated by factors OTHER THAN the "deal" of price,interest rates, investment value, etc.
• Consumers are looking to buy bigger homes, not necessarily with more rooms, but with bigger rooms. Buyers want a more efficient space, which luckily is more efficient for builders too and can help lower construction costs.
• Over 70% of surveyed renters in luxury apartments have a pet. This statistic is interesting for builders who may add rental apartments to their business. As well, it empowers homebuilders to deliver pet-friendly amenities and regulations to compete with the luxury apartments also vying for this customer pool.
• 29% of these same renters said that wood floors are the most important attribute of their existing residence. To entice them to move to a new home, not having wood floors would be a deal breaker.

Because of the quick and accurate consumer data and feedback, iHave5Questions is delivering a powerful new tool to new homebuilders who typically rely upon consumer research that is 4 or more years old – half the duration of a typical business cycle.  By having this information so quickly at their fingertips, they can plan more efficiently and more importantly, be relevant to the ever-changing demands and interests of new home shoppers.

The findings from the report were revealed on Thursday, November 14, 2013 at the fourth annual iHave5Questions Coffee Symposium where a select group of opinion leaders and lead marketers in the new homebuilding industry received the critical data about new home buying trends.  The event was presented in conjunction with Kovach Marketing and KTGY Group, Inc., Architecture + Planning.

About iHave5Questions

California-based iHave5Qs is a mobile market research program. It uncovers consumer motivations, attitudes and trends in industries including housing, health, sports, supermarkets, and automotive in geographic locations from California to Maryland, Utah to Texas and from British Columbia to Guandong, Province China.

A bench of experts crafts questions customized to solve each client's burning issues.  This person-to-person approach garners some of the industry's highest capture ratios. Its proprietary, real-time download of results allow clients to respond to today's consumers...today and in real time.

Read more here: http://www.sacbee.com/2013/11/14/5911687/new-report-tracks-buying-motivations.html#storylink=cpy

New home purchase apps post significant gains

Applications for new home purchases increased by double-digits in the latest Mortgage Bankers Associationupdate, signaling an America that is prepared to buy more homes. 

Texas, Florida and California were the top three states that led the way in new home purchase volume, with mortgage applications increasing 9.5%, 9.3% and 4.6%, respectively.

In the broader market, purchase applications continue to decline, dropping both week-over-week and year-over-year.

For instance, apps fell 1.8% this week after a significant drop last week, while the refinance index declined 2% from the previous week.

"The reason the broader market has slowed is because of the rise in mortgage rates," explained MBA chief economist Mike Fratantoni. 

He added, "People are taking another look at finances and re-evaluating what size home is right for them given the higher level of rates."

However, the new home purchase market is writing a different story.

By product type, conventional loans composed 67.5% of loan applications, while Federal Housing Administration loans composed 17.8% of apps.

The average loan size of new homes increased from $289,650 in September to $294,480 in October, the MBA noted.

Going forward, the MBA believes new homes sales will increase 10% in 2014, compared to 2013 — matching the continued trend that new home purchases will continue growing.

The key indicator for the continued push in new home purchases will be strong economic data, specifically employment numbers, Fratantoni stated.

"The job market data from October was stronger than expected and that will be the source of homebuying going forward," the chief economist said.

He concluded, "It’ll be the main source of support for new home purchases and our expectation is that an increase in rates will be a minor headwind."

Building a Home? 5 Things to Know

It’s not ‘new news’ that the real estate market has picked up in many parts of the country. Though lots of buyers are out shopping, inventory is still low. Nobody can predict when that situation will improve, of course. But large national home builders, as well as small local ones, are buying up land, getting plans drawn up, and starting construction on new homes.

But is a new-construction home the right path for you? Here are five things you should keep in mind.

1. New homes may not be listed in your local MLS.

Unlike a regular seller who lists their home with a local real estate agent, homebuilders often have their own employees working for them on site. They do this to have more control and to cut costs.

What does this mean for you, a buyer? Mostly, it may mean the home builder isn’t a member of the local MLS. As a result, the homes may not show up in your agent’s MLS search. The builder may be more apt to advertise online, in the paper or with billboards. So if you’re interested in newly built homes, work with your agent to make sure you’ve identified all the possibilities.

2. New homes are often sold before they’re built.

A builder will generally get financing lined up and map out both a construction and a sales process. This means they’ll try to sell as many homes as possible, before they’re even built. To accomplish this, they’ll build out model homes and allow buyers to go in and review floor plans, fixtures and finishes while the homes are under construction. Depending on the state, builders need to get through some of the approvals process before they can actually start signing contracts.

For the most part, you can get a sense of what your new home would look and feel like and where it will be located in the community. Ready to move forward? You’ll likely have to put down a deposit, from a few thousand dollars to 10 percent of the purchase price.

Be aware that even if there are 100 homes in the community, they won’t all be available at once. Home builders tend to release the homes in phases. If the first 10 homes sell quickly at the asking price, and the market continues to do well, the builder can raise the prices on the second or third phase. Also, the sales cycle for a new community can take years. The last phase could end up being priced 10 percent or more than phase one, simply because the real estate market has appreciated.

3. The first buyers may get the best discounts.

A home builder, especially early in the sales process, wants to get a few homes under contract quickly. If the builder can announce they have 10 homes under contract in a few weeks, the project can seem more desirable to future buyers.

Also, builders like to go back to their lenders with positive news about the project and their investment. To do this, they need early buyers to sign contracts.

For buyers, this means there could be room to negotiate the price down early in the sales process. But with the reward, there is potential risk. By being an early buyer, you’re committed to the project. If for some reason sales don’t manifest or you don’t want to move ahead before the home is built, you risk losing your down payment. For example, right after the housing downtown, some buyers were stuck under contract on new homes where sales had stalled.

4. Builders don’t have a personal or emotional attachment to the house.

A typical seller has lived in the home for many years, raised their family or built memories there. So when it’s time to sell, the seller may experience all kinds of issues, questions and uncertainties, which can come out in the negotiation and purchase process. As a consequence, the seller may unconsciously price the home too high because they’re not ready to emotionally detach from it. They may want to know more about you or what your plans are for the property. If given a choice between two buyers, the seller may pick one over the other for non-financial reasons.

With a home builder, it's just a numbers game. They’re focused more on spreadsheets than sentiment. They want to make sure you’re qualified and can get a loan. They set the prices based on their inventory, though there may be a little room for negotiations.

5. Discounts may be available in the form of upgrades.

Is the project you’re interested in nearing the end of its sales cycle, with many homes already sold? If so, the builder may be a little more willing to negotiate with you, not so much on price but on upgrades. If they reduce the price on your home and the sale closes, then that sale price becomes public record. But if they offered you an upgrade package (hardwood floors instead of carpet or higher-end appliances), there isn’t any way to track that. What could amount to thousands of dollars in upgrades could end up being a better deal than simply getting a price reduction.

For many first-time buyers, new construction could be a great idea. If you’re used to renting and relying on the landlord for mechanical fixes and general maintenance, you can almost be assured that your first few years in a new home will be maintenance-free.