Buying A First Home With Second Home Buyers In The Market

First-Time Home Buyers are typically aware of their spending potential when they plan to purchase a home. The Federal Savings Bank finds their expectations include certain amenities, but nothing too extravagant, especially as most buyers in this group need a mortgage to buy a home. It's also no secret that home buyers who are purchasing a second home in addition to their primary residency tend to be older, have larger incomes on average and often prefer to live in warmer climates. A recent Housing Insights report from Fannie Mae focused on second home buyers, providing details on trends of consumers in this group.

While a recent April 7th HousingWire report may have dismissed this report as unsurprising information, it may provide some helpful details to first-time buyers who are searching in markets sought by those typically in the second-home buyer pool.

Considering the generation gap when choosing neighborhoods 

There are many factors that home buyers have in mind when choosing a location for their new home purchase, including nearby schools, entertainment and access to transit or main roads. First-time buyers who are also looking for a community populated by people around their age may decide to forgo areas where second home buyers frequent.

Florida often serves as a joke when describing where older populations like to live, and Fannie Mae's report noted that California and Arizona are also popular. In fact, 34 percent of all second home mortgages since 1998 were in these states.

The median age of second home owners is 47 years old, which may not bother some first-time buyers. However, those searching for a younger community may look elsewhere.

Factoring second home buyers into bidding wars 

Since the start of the housing recovery, first-time buyers have seen fierce competition from veteran buyers and institutional investors alike, especially with the latter typically having the advantage of all-cash offers. The target markets for second home buyers may be equally as challenging to compete in, as these consumers tend to have more wealth.

"The recovery in financial markets has allowed many second home buyers, who are typically older and more likely to own financial assets, to sell some of their assets to buy second homes or use dividend payments from these assets to cover second home mortgage expenses," the report said.

Fannie reported that between 2009 and 2013, the median household income of second home buyers was $90,660 compared to $74,580 for primary home buyers. Additionally, 70 percent of second home purchases required less than 80 percent financing. Conversely, 60 percent of primary home buyers required 80 percent or more financing. With these factors in mind, it may be harder to beat offers from second home buyers in warmer markets, possibly calling for additional tactics, such as writing a personal cover letter to sellers.

First-time buyers not to be discouraged 

Although second home buyers have more experience and capital, The Federal Savings Bank thinks there's still a chance that first-time buyers can land a wonderful property in sunny Florida. It may take a low rate mortgage to finance such a home, but buyers can look forward to owning a second home of their own down the road.

Helpful Moving Tips

• Move on a weekday when banks, utilities and government offices are open. 
• If you're moving locally, leave the power and water on at your old address a few extra days so you can go back and clean up after your move.
• Purchase boxes and moving supplies 2-4 weeks before your move.
• Choose a 'packing room' ahead of time and box up a few things each day.
• Use moving labels to mark each box with its contents and destination room.

• To save time, rent a carpet cleaner at the same time you rent your truck.
• If moving locally, leave your pets with a friend on moving day. Animals can become confused and frightened during a move.
• Allow for extra braking room when driving a moving truck. Anticipate stops and allow a 3-second gap between you and the vehicle in front of you.
• Moving trucks mostly require up to 12 feet of overhead clearance. Watch out for drive-thru restaurant and motel over-hangs.

Best advice now for homebuyers and sellers

Top experts and Money readers share their smartest tips on everything from selling a home quickly and winning a bidding war to cutting your electricity bills and prospering as a landlord.

Sell quickly. Win a bidding war.

Sell your home fast
Underprice it from the start. If you list your home for at least 10% less than it's worth, you'll often sell it for 10% more.

Buyers notice a house that's underpriced: They'll take it by storm and drive up the price with a bidding war.

People worry that setting the price low will deter bidders. That's not the case. If you don't get competitive bids, you didn't truly underprice the house to begin with. 
-- Barbara Corcoran, founder, real estate firm the Corcoran Group and panelist on ABC's "Shark Tank"

Win a bidding war
Go as high as the maximum price you'd ever be willing to pay -- if someone outbids you, you'll feel confident you gave it your best shot.

Sometimes it's not just about the money. Give the seller some breathing room too. Buyers often signal their interest by offering to close quickly, but that move might backfire in this market: If the sellers haven't found a new place yet, they may be unable to accept your offer.

Instead, propose a seller's residential lease. You close on the house quickly, then rent it back for 60 or 90 days. That gives the sellers a chance to look for a home in a nonpanicked way -- and gets you the house you want. 
-- Mary Beth Harrison, founder and realtor, Keller Williams Elite, Dallas

Cash still rules in area real estate

Cash buyers continue to dominate Southwest Florida's residential real estate market, according to a new report.

The Sarasota-Manatee region ranked third among major U.S. metropolitan areas with 65 percent of all home sales purchased with cash during the first quarter of 2014, according to data released Wednesday by industry researcher RealtyTrac.

In Charlotte County, the percentage was even greater. There, 83 percent of all home and condo sales in the quarter were bought using cash -- more than three times higher than in the first quarter of 2013.

Statewide, buyers paid cash for 64 percent of the homes purchased, nearly double from the 35 percent figure recorded a year ago.

Florida also was home to the top five cash-buying metro areas with populations above 500,000, RealtyTrac noted. Cape Coral-Fort Myers was first at 74 percent; Miami at 67 percent; Sarasota and Palm Bay at 64 percent; and Lakeland at 62 percent.

Bill Perrault, broker with Keller-Williams Peace River Partners, said Charlotte County has always had a high percentage of cash buyers, regularly accounting for up to two-thirds of sales.

The exception to that trend occurred from 2004 to 2006, when "pretty much anyone breathing qualified for a loan," he said.

"After the real estate bubble burst, it is no secret that getting a home loan went from easy as pie to being a very, very little piece of the pie -- even with extremely attractive interest rates," Perrault said. "Low interest rates don't mean anything to the folks who can't qualify.

"First-time home buyers were knocked out which, of course, directly relates to why institutional buyers came in, bought up properties to rent to everyone that could no longer qualify to buy a home," he said. "This caused rental prices to go up as supply and demand took hold."

Tighter credit standards and low home inventories have given the advantage to investors and other cash buyers, agreed Daren Blomquist, a vice president at RealtyTrac.

"The good news is that as institutional investors pull back their purchasing in many markets across the country, there is still strong demand from other cash buyers -- including individual investors, second-home buyers and even owner-occupant buyers -- to fill the vacuum of demand left by institutional investors," Blomquist said.

Though cash purchases remain prevalent, the influence of institutional buyers -- defined as entities buying at least 10 properties a year -- continues to ease in Southwest Florida.

They accounted for just 4.5 percent of all residential sales in Sarasota-Manatee in the first three months of the year, as compared with 5.7 percent in the prior period and 6.6 percent during the same time in 2013.

In Charlotte, institutions bought 15.8 percent of all homes traded in the first quarter, down from 23 percent in the fourth quarter but flat versus last year.

Statewide, those investors closed on 7.6 percent of home sales, down from 10 percent a year earlier.

Sales of new homes hit six-month high in April

Purchases of new homes rose in April by the most in six months as buyers took advantage of falling mortgage rates.

The 6.4 percent increase to a 433,000 annualized rate followed a revised 407,000 in March that was larger than initially estimated, Commerce Department data showed Friday in Washington. The median forecast of 75 economists surveyed by Bloomberg called for the rate to accelerate to 425,000. The April gain reflected a surge in Midwest sales.

Declining borrowing costs and greater employment opportunities raise the prospects for an industry that has struggled to build on gains made earlier last year. A pickup in construction that puts more properties on the market and slows price gains would help improve affordability and attract buyers.

"We definitely are seeing a rebound in activity," Anika Khan, a senior economist at Wells Fargo Securities in Charlotte, N.C., said before the report. "We are in the middle of the home-buying season and should start to see a bit more pickup with more traditional buyers coming into the market" even as first-time home buyers remain on the sidelines.

Estimates for April home sales ranged from 395,000 to 460,000 after a previously estimated 384,000 pace a month earlier. New-home sales, which account for about 7 percent of the residential market, are tabulated when contracts are signed, making them a timelier barometer than transactions on existing homes.

Figures Thursday from the National Association of Realtors showed a 1.3 percent gain in closings on sales of previously owned homes. Closings typically occur a month or two after a contract is signed. A bigger supply of properties helped lure buyers, the data showed. The number of available properties climbed to an almost two-year high, helping slow the pace of price appreciation.

At the same time, the existing-home sales figures included signs of underlying softness. Investors continued to play a big role in the market, the April increase was driven mainly by purchases of condominiums and the share of first-time buyers was little changed.

Lower limits on loans guaranteed by the Federal Housing Administration are also a hurdle for the industry.

Friday's report showed the median sales price of a new house declined 1.3 percent from April 2013 to $275,800.

I think we'll see an improvement, albeit maybe a little bit slow, but I do think that we're on the right track." Nicholson

The increase in demand last month was led by a 47.4 percent surge in the Midwest to an 84,000 annual rate, the fastest since November 2007. Purchases also climbed 3.1 percent the South. They fell in the Northeast and were unchanged in the West.

There were 192,000 new houses on the market at the end of April, representing 5.3 months of supply at the current sales pace after 5.6 months in March.

Housing began to cool in the middle of 2013, with residential investment becoming a drag on the economy during the last two quarters, its worst six-month performance since the first half of 2009.

Builder optimism has eased as well, reflecting still-tight credit conditions and limited availability of lots. Confidence dropped in May to the lowest level of the year, according to a gauge of builder sentiment from the National Association of Home Builders/Wells Fargo.

"I think that through the rest of the year, we'll see an improvement, albeit maybe a little bit slow, but I do think that we're on the right track," Larry Nicholson, president and chief executive officer at Westlake Village, Calif.-based Ryland Group Inc., said during a May 14 presentation.

Investors have soured on builder shares this year. The S&P Supercomposite Homebuilding Index has dropped 4.2 percent this year through Thursday.

Some relief may be in store for potential buyers as borrowing costs decline. The average rate on a 30-year, fixed mortgage dropped to 4.14 percent in the week ended Thursday, the lowest level since October, according to Freddie Mac in McLean, Va.

Builders are gradually adding to supply of single-family homes. A report last week from the Commerce Department showed construction starts of one-family properties increased for a third straight month, to 649,000 at an annual rate in April.

Home appliance maker Whirlpool Corp. in Benton Harbor, Mich., is upbeat about demand.

"We are, I would say, still in the early stages of a rebound in the housing market," Chief Financial Officer Larry Venturelli said at a May 14 homebuilding conference. Underlying demand in the housing markets "continue to be very strong."
Bloomberg

10 Tips for Packing

Start the Countdown

If you're starring in a 1980s sitcom, then the scene where you pick up a moving box full of stuff and the bottom falls out is hilarious. But in real life, there's no laugh track when eight of your best china dishes crash to the floor. So, it's a good idea to learn some packing skills basics before you start filling cardboard boxes with 80 pounds of precious -- and pricey -- dinnerware.

Is there an art to packing a box? Yes. Is there a strategy for labeling and organizing those boxes? Yes. Is there a good reason you should pack two months in advance? Yes.

1. Pack the Boxes Right

For a super secure box, you should tape the seam on the bottom, and you should run a piece of tape perpendicular to that seam. Pad the bottom of the box with newspaper and stuff the sides with extra paper to really make the bottom solid. Depending on what you're packing, you should wrap each item with paper. When you've filled the box to capacity, tape it shut and label it with its contents and your name. And be sure that you label the sides of the box, not the top of the box.

2. Pack Boxes by the Room

Pack similar items together. For example, if you're packing up the contents of your medicine cabinet, don't add kitchen utensils to the box. That will confuse matters when you're unpacking the box. Instead, add more bathroom items to that box. And while we're talking bathroom items, washcloths and towels make excellent stuffing. They can be used to prevent items from moving around inside a box. It's best that boxes are filled to the brim to keep them from collapsing. After you've filled a box, label it with your name, what it contains and an arrow indicating which side is up. And of course, if it's fragile, write that on the box as well.

3. Leave Stuff in Drawers

f you want to save boxes and the trouble of moving items from a drawer to a box, then simply take the drawers out of chests and desks. As long as the drawers are full and don't contain anything breakable, you can stretch tape across the top of the drawer to hold the components in place. Be sure to use masking tape -- it won't take the paint off of the furniture. That said, don't leave the masking tape on the furniture for too long. Take it off as soon as you move the drawers into your new place.

4. Pack Your Plates on Edge

You may think that the most logical way to pack your plates is to place them bottoms-down into the box. But actually, plates are less likely to break if they're standing on edge inside the box. Of course you also need to wrap each plate in newspaper and include plenty of stuffing on the bottoms, sides and in the corners of the box. Put so much stuffing inside the box that the plates don't have any room to shift around at all. Generally speaking, when you're packing glass items, you should pack the largest glass items on the bottom of the box and the smaller, more delicate glass items on the top of the box. Movers aren't always delicate with boxes and if they plop one down on the floor or the ground, the glass on the bottom of the box is going to take a beating, so those items should be stronger.

If you're using professional movers, consider having them pack your fragile items. Companies are usually only liable for the things they pack themselves. So if they pack it, you're essentially insuring it.

5. Pack Clothes in Wardrobe Boxes

If you don't know what a wardrobe box is, it's basically a big box with a rack inside where you can hang your clothes on hangers. It's an excellent invention for clothes packing because it saves you so much time. You don't have to take your clothes off the hangers, fold them and throw them in the box. You leave them on the hangers and just move them right from your closet to the rack in the box. You can even organize your clothes by season or color, stripes and solids - whatever you like. When you arrive at your new home, you can easily unload the clothes from the box, and your closet is quickly organized.

6. Tape String to the Box

Here's a cool trick: When you tape a box closed, put string underneath the tape and leave a bit of the string hanging out. When you arrive at your new place and you want to unload the box, you simply yank the string and it will rip through the tape -- and voila, the box opens. It's a little bit more time consuming on the front end to cut the string and tape it to the box, but it will save you time on the back end. You won't need to get out your keys or a box cutter to slice through the box tape. You can just pull on the little string.

7. Label Your Boxes

If you don't label your boxes to indicate what's inside, then when you arrive at your new home, you and your movers will have no idea where each box goes. Imagine how tedious it will be to go through every single brown box, trying to figure out what's inside and which room to place it in. So, be smart and label each box. You can label it by the room and with a general description of the contents it contains. If you include the room, then the movers will know where it goes. If you just label it by the contents, then only you will know where it goes. The label should be on the sides of the box, not on the top of the box.

8. Keep Up with Furniture Casters and Picture Hangers

Furniture casters are likely to separate from furniture during the move. So just go ahead and remove them before transport. You can tie them together with heavy twine and tag them with the name of the furniture piece they belong to. The same thing goes for framed pictures and mirrors. Some framed items come with special screws and hanging devices that you don't want to get lost in the shuffle during the move. Save those devices in a plastic bag and either tape the bag to the mirror or frame or store the bag separately with tags that indicate which hanging devices go with which frame.

9. Start Packing Well Ahead of Time

Don't wait until the week before you move to start packing your things. If you're like most people, then there are some items you can pack even a couple of months before a move and not miss them. For example, pack up out-of-season clothes, holiday wares, your good china, stemware, and books you've already read and don't plan opening again in the next two months. It might be annoying to have a pile of boxes in your house for eight weeks, but it will relieve a lot of stress during those last couple of weeks before the move.

10. Pack Small Items in Large Boxes and Large Items in Small Boxes

When you're packing boxes, pack the small items in the large boxes and the large items in the small boxes. It's a matter of physics. Heavy items are likely to come crashing through the middle of a large box. While this makes sense for most things, books are an exception. If you fill a big box with a bunch of small books, the weight is going to add up and the box is going to be too heavy to carry. Also, pack heavier items at the bottom of the box and lighter items toward the top of the box. And remember: If you're straining to pick up a box, it probably contains too many heavy items, and it could wind up breaking.

10 Tips for Moving with Children

Start the Countdown

The decision is now final. You've accepted the promotion and narrowed down the list of potential new homes, and you'll be moving soon. Now comes the hardest part -- planning the move and telling the kids. Whether moving out of state or just around the block, children and adolescents typically aren't thrilled by such an event. In fact, they rarely relish change of this magnitude. Fortunately, there are some steps you can take to ease the transition. Your attitude about moving and your willingness to let your children share in the experience will influence their feelings. Try  following these 10 tips to make the move as anxiety-free as possible.

10. Have a Family Meeting

Call a family meeting. Order some pizza and gather around the dining room table for a casual dinner and lots of conversation. If you're moving because of a promotion or a new job, tell your children that you're excited about it. Explain why you took it and how it will impact the entire family. Tell them how you feel about the move. Encourage them to express their feelings and concerns. If this is their first time moving, it could be particularly difficult because they're leaving their family home. Share with them your first-move experience. Let them know you'll be depending on them to help out during the move, from packing to settling in to the new place.

9. Get the Kids' Feedback on the New Home

If possible, involve your children, especially if they're older, in the selection process of the new home. Once you've narrowed the choices down to two or three houses, get some feedback from the kids. If where you're moving to is within a reasonable driving distance, take them to see the homes. If you're moving to another city, show them photos of each home, describe the neighborhoods in detail and, if you can, take a virtual tour online. Ask them to share their three favorite things about each house. Let them know you'll take their comments into consideration when making the final decision. After you've picked the house, keep them posted through the process. Have a little celebration once you know you've got the house.

8. Purge Before Packing

Let the kids know that now is a great time to cut through the clutter. Throughout the house, there's bound to be a plethora of things that do not need to accompany you to the new home. Get the kids to help you go through the house, room by room, to identify what should go with you and what you could get rid of. Let them know that you don't want to toss everything. It's OK to keep certain things that hold important memories. However, items -- be they clothes, toys or electronics -- that are no longer used, should be closely considered for the toss pile. And you don't have to toss them … you can sell them.

7. Organize a Moving Sale

Once you've figured out what you want to pack and what you want to purge, get the kids to help you organize a moving sale. They can help you sort through everything, organize it, inventory it, and price and tag it. Let them know that the proceeds from the sale will be used for something for the family. In fact, you can have a family meeting and vote to decide on what that might be. Maybe it's a giant flat screen TV for the new house, or maybe it's a chocolate lab puppy. Whatever it is, the more invested the kids are in the goal, the more helpful they'll be with organizing the sale.

6. Research the New Place

Try to learn as much as possible about the new neighborhood, community and town. Share what you find with your kids. You don't have to make everything sound wonderful; honest, matter-of-fact information will be most helpful in the long run. If you oversell things and raise expectations, there's room for disappointment. Encourage your kids to do their own research. With your help, they can go online and look up community and school Web sites. You could also find copies of some local magazines and a weekend edition of the localpaper. You'll be able to learn about community organizations and groups, school events and sports, and other social and civic activities.

5. Make Room Plans

To get your children excited about the new house, make room plans. You don't have to limit yourself to their rooms only. If they're interested in helping arrange and decorate other rooms in the house, let them. Take a trip to the hardware store to look at paint swatches. If you're going to purchase new furniture and the kids are interested, take them with you. For teenagers, set a budget and let them tackle their own rooms -- picking out colors, linens, rugs and furniture. Encourage them to shop at consignment and thrift stores. For younger kids, you can set a budget and work with them on executing their vision. Then, when it's all done, you can invite some family or friends over for a "big reveal" like they do on TV shows.

4. Do a Site Visit

If you're able, take the kids to the new place for a visit. If you're just moving across town, plan to spend the day doing a walk-through of the house and a tour of the new neighborhood. Then you can visit the local branch of the public library and each kid's school. If you're moving a great distance away, you might still be able to do this, even if it just means beating the moving van by a couple of days and staying in a local hotel. In addition to touring the children's schools and the local library, make arrangements to see any additional facilities you might end up frequenting like the area YMCA, community theater or music school. You can also drive your children by where you'll be working.

3. Host a 'See You Soon' Party

One of the most difficult things about moving for any child is saying goodbye to friends. You could lessen the anxiety of this by hosting a get-together with family, friends and neighbors and call it a "See You Soon" party. During the party, make sure everyone exchanges contact information, and take photos of your kids with their friends. Between texting, e-mails and phone calls, your kids should be able to maintain old friendships while transitioning to their new surroundings and making new friends. Depending on the distance of your move, you could speak with the parents of your children's friends about planning a weekend visit or meeting somewhere halfway for a day visit.

2. Map the Move

If you're moving a few towns away or to another state, pull out the GPS, maps and atlas. This can be especially helpful if you're leaving behind friends and family members you know you'll be returning to visit. Map out the moving route and mark some interesting places to visit and sights to see along the way. This will make the trip go by more quickly, and it will be more engaging for you and the kids. Keep the maps handy for when you arrive at your destination, too. Get the kids to help you plot out routine routes such as from the house to school or from the house to the local park, mall or movie theater.

1. Be a Tourist in the New Place

You've been in the new house for almost a week. Slowly, but steadily, the boxes are being unpacked, and you and the kids are starting to settle in to your new digs. Now it's time to settle in to your new community. If there is one, buy a guidebook for your new city. Grab it and a calendar and sit down with the kids to plan some fun outings around the area. Whether you decide on apple or strawberry picking at a local farm, hitting the natural science museum, or hiking, rafting or kayaking at the nearby state park, it's important to engage your kids and show them all that your new hometown has to offer. If they've met some new friends in your neighborhood or at school, encourage each child to bring a friend along on your outings.