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THE MARKET IS GETTING CREATIVE

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Paul George,

In the ever-changing real estate market, buyers, sellers, builders, lenders and even politicians adapt.

We have a polarizing real estate market right now where it seems to be the haves and the have-nots.  The haves are the people who own real estate.  They have tons of equity, low mortgage rates and the peace of mind that they are sitting on an appreciating asset.

The have-nots are the first time home buyers who are stuck in a rental that is so expensive they can’t seem to set aside enough money for a decent down payment, and even if they could, the interest rate stretches them to their max payment. The other have-nots are some sellers who think their home is worth much more than the market says because they are stuck in the 2022 mindset of “it will sell in a weekend and for more than asking price.” (Yes, that still does happen but only in certain price ranges and overly improved homes that are priced correctly).

So how are we getting creative? How are we adapting?

Here are a few examples.

Builders need to hit numbers.  They are the first to realize it’s all about payment so they buydown interest rates so that buyers can make the payment work.  Buyers don’t see the extra $30,000 the builder has to pay to get a rate down because they build it into the price of the house.  If you purchase a home a builder has already started building, I’ve seen rates as low as 2.99% for year one and then 3.99% for years 2-30! Others are at 3.99% or even 4.99% which is well below the current 6.5% 30-year fixed rate.  There are also some locations that are tax abated meaning you only pay property taxes on the land, saving thousands of dollars a year.  You think this is only in blighted areas or rural areas, but think again, there is an area in downtown Powell that is tax abated for 15 years!

Some sellers are offering to pay “buyer concessions” in lieu of price reductions.  Instead of dropping the price of a house $10,000, sellers are buying down the buyer’s rate for a couple of years, meaning for the first year a buyer’s payment is based on 4.5%, the second year is 5.5% and years 3-30 are 6.5%.  Of course, they could refinance in the meantime.

Lenders have all kinds of grants available. The have the homebuyer plus savings account which is kind of like a 529 college plan with some even having a 1% down or no money down programs.  There is even a Lifestyle Home Loan where if you are 62-years-old or older and put down 65-80% of the value, depending on your age, you never make a mortgage payment for the rest of your life.

All of this information is very general.  You need to contact me to see if any of these options fit your personal situation because if you have a need to buy or sell real estate, there are traditional solutions, but there are also more and more creative solutions to get you to your next home.

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