Orlando Real Estate Blog
November 12, 2013
Making the switch from renting to buying a home can be daunting. First time buyers are faced with several new financial considerations when owning a home, including:
- Paying a mortgage
- Property taxes
- Home maintenance costs
- Yard/pool upkeep
Though homeownership might seem expensive, it can make financial sense down the road. If you are unsure whether this transition is viable, consider these five advantages to buying a home over renting.
1) Long-Term Profits
Some people look at their rent payments like they are throwing away money each month. While this might sound a bit extreme, essentially that money is never going to be coming back to you. Mortgage payments should be viewed in a different light. Each payment helps bolster equity in the home and takes you one step closer to complete ownership.
If the home is well-maintained or renovated, then its value can significantly appreciate over time. Your neighborhood can also make a big difference in asking price. Well-maintained homes can then be sold for a significant profit. This, obviously, is not an option available for renters.
2) Homeowner Tax Breaks
Here’s one that might catch some long-term renters off guard: tax breaks for homeowners. Monthly interest payments for mortgages can be deducted from total taxed revenues. Since interest accounts for a large part of your payment, this provides more relief than renters may assume.
3) Borrowing Power
You can leverage the equity built up in your home to open up new lines of credit or take out a loan. This could give you the wiggle room needed to complete that important renovation or make a new investment.
Use precaution when taking out a loan on your home. People who choose to borrow against the whole amount could be left with payments that aren’t feasible. This can create an unfortunate scenario that leads to crushing debt and eventual foreclosure.
4) Buying Can Be Cheaper in the Long Run
Depending on applied mortgage rates, owning a home could be cheaper than paying rent over time. There are several factors which can impact this outcome, including:
- Length of time in the home
- Itemized deductions
- Applied tax bracket
Buy/Rent Calculators can offer first time homebuyers some valuable insight on how much they’ll save by owning their home. The New York Times provides an excellent calculation if you can provide the following:
- Current monthly rent
- Future home price
- Down payment
- Mortgage rate
- Yearly property taxes
5) You’re Free to Remodel
Owning a home means that you can make structural and aesthetic alterations as you see fit. Renters may not even be allowed to repaint a bathroom, let alone make any major renovations. They also face the threat of fines or other penalties if the residence is not left unaltered during their tenure.
People are faced with a variety of changing life circumstances which will push them to either buy or rent. Choosing to buy your next home is a serious decision, but it could also be the smartest one.
November 3, 2013
Despite concerns over flood insurance rate premiums, real estate experts believe that Florida’s housing market is going to be the one to keep an eye on this next year. A new report predicts that Florida will edge out other recovering markets to regain the national title again in 2014.
According to the Home Buying Institute, the inventory of available properties in many of Florida’s most sought after locations is dropping fast. Combine that with a steadily growing rate of demand for properties statewide, and you have a formula predicted to drive this market to the top over the next year.
“Just like the last decade, Florida is the market to watch,” explained Jack McCabe, a real estate consultant here in Florida. “During the last boom-bust cycle, what happened in Florida first spread through the rest of the country. It was the tip of the iceberg and will be again.”
Robust Demand for Florida Homes
Reports coming in have shown strong home sales through the end of September. Realtors in several counties around Florida topped out at above 18,000 single-family homes and condominiums sold through the end of September (18 percent higher than the previous year).
This healthy growth in demand has started to push up the median price for Florida homes by 18 percent over the last year to $199,000 last month. At the same time, the inventory of available homes for sale was reduced to just a 4.4 month supply of listings.
The Institute for New Home Buyers
The Home Buying Institute, a group based out of Carlsbad, CA and orchestrated by Brandon and Melissa Cornett, works to educate potential buyers about smart purchasing habits in residential real estate. The institute predicts that prices will continue to build in the majority of U.S. metropolitan areas, especially those found in the Sunshine State.
The group is also fairly certain that the number of real estate investors in the market will continue to decrease over the course of 2014. Foreign investors have been very active in the Florida market over the last couple years, which has created some problems for potential first-time home buyers in the area. This predicted exodus should help them secure the homes they want.
Florida Market Becomes Important Indicator Once Again
Predicted mortgage interest rates are expected to top out above 5 percent in the next year as well. This scenario could create some problems for several housing markets around the United States, but the impact should not be as significant here in Florida. That assertion is based on a recent report which suggests more Floridian homebuyers are using cash for their purchases.
In the end, the Home Buying Institute expects that the 2014 Florida housing market will still favor sellers over home buyers. The economic trends in the state could once again play an important role for the entire nation.
“Florida is once again going to be a very good indicator,” McCabe said.
October 29, 2013
As the competition to sell homes in Orlando continues to heat up, first-time home sellers must take things to a whole new level to reel in prospective buyers. Home staging is becoming a staple for selling homes as quickly as possible, with some sellers hiring professionals to help ensure that their homes will look as attractive as possible.
For real estate agents, it can be difficult to explain to client why they should really consider investing a few thousand dollars in hiring someone to professionally stage their home. Still, statistics have suggested that real investment in improving the overall appearance of the home can produce a much quicker sale at an even higher selling price than what was expected.
Longer Time on the Market
“If you don’t fix a house up, it will be on the market for a longer time, and you’ll get a reduced price,” explained Debra Kandrak, an experienced real estate agent and professional home stager. According to Debra, the average home will spend 90 to 120 days on the market from the time it gets listed to when it’s sold.
With Kandrak’s last three properties, the sellers all had received deposits within a week of being listed, and they had closed on a sale with the first month. Her advice for other realtors is to be honest with their clients about the state of the home. If a home does not have a good feel to it, then it is going to be a harder sell.
Pricing for Home Staging
The overall cost of staging a home will vary from property to property. In some cases, it may only cost a few hundred dollars and involve rearranging some of the furniture and/or accessories in the home. Then again, a home that really could use some work might cost a few thousand to effectively stage.
Still, more and more home sellers are coming to the conclusion that their properties aren’t going to sell unless they look as attractive as possible. Many are realizing that significant monetary gains can be made by investing in a professionally staged home. This means that professional stagers like Kandrak are becoming increasingly valuable commodities in the Orlando real estate market.
What can Staging Do for Your Home?
A stager who knows what they’re doing can tailor the overall look and feel of the home in order to attract the right audience of prospective home buyers. It really can be a powerful marketing tool when used effectively. If you are willing to invest say 1 to 3 percent of the listing price on staging, you can expect to realize a 6 to 10 percent gain over the original listing price when the property is sold.
A 2012 study by the Real Estate Staging Association showed that a select grouping of homes — they were not staged — stayed on the market for 166 days on average before the homeowner decided to call in a professional. The same properties — after they had been staged — received first offers with 32 days on average.
This doesn’t mean that you have to spend thousands of dollars to completely rearrange your home. Even small, inexpensive improvements can make a big difference and add that extra appeal which really speaks to prospective buyers. Many aren’t capable of seeing past the dated appearance of a home and appreciating its real potential. When the house shows well, it can dissipate many of the buyer’s concerns over “hidden” issues.
October 21, 2013
If you remember from our previous post on cash sales in the Florida housing market, it has been quite strong since the housing recession began turning around. Indeed, some might argue that international investors have helped reinforce this recovery period. That being said, it seems like the number of homes sold to foreign buyers actually dropped over the course of the year.
In a new report released by the National Association of Realtors (NAR), the numbers show that the amount of homes sold to international buyers was down compared to 2012, but the value of the average transaction was higher. In the 12 months ending with July 2013, 22,572 pre-existing homes were sold to foreign purchasers, while there had been 26,806 sales in the previous 12 months. At the same time, the accumulated value of these purchases came to $6.43 billion, as opposed to the total of $6.20 billion from the last year (this partly is a reflection of rising home prices in Florida).
Feeling the Effects of a Worldwide Recession
Economic recessions in Europe, Brazil, and other countries could help to explain the reduced number of transactions, since these places supplied many investors looking to purchase property in Florida. This is certainly one of the factors that Jed Smith, the managing director of quantitative research for NAR, believes contributed to this result.
“International activity is down partially because there has been a worldwide recession,” Smith reported in an interview.
Still, transactions from international buyers accounted for 9 percent of the $74 billion in existing home sales reported in the state of Florida. In 2012, the total transactions in Florida totalled $58 billion.
International Buyers Still Play Vital Role
The Florida Realtors Association and the National Association of Realtors had reported last year that foreign purchasers had produced $10.7 billion in sales, which would have accounted for 19 percent of the total $58 billion in sales for the year. They chose to revise these reported numbers in order to match the contemporary methodology, which is focused on non-resident foreigners.
Looking at the markets in South Florida, international buyers still play a very influential role, especially since the transactions reported here accounted for 21 percent of all Florida international sales. The second largest grouping of foreign purchases was focused around the Orlando-Kissimmee area, accounting for 14 percent of international transactions.
Who has an Eye for Florida Real Estate?
According to National Association of Realtor’s report, non-resident purchasers paid a median price of $216,477 for a piece of property in Florida. This is significantly higher than the state’s overall median sales price of $144,074 and the nationwide median sales price of $187,483.
Looking closer at the international buyers interested in a growing Florida real estate market, Canadians represented the largest number of purchasers, accounting for 29.6 percent of reported transactions. We also saw an influx of Chinese buyers interested in property here, moving from just 0.8 percent of transactions in 2011 to 3.7 percent over this last year. Florida’s real estate market currently attracts more international buyers than any other state in the country. So even though transactions may have dipped in the last year, this state still holds many opportunities for investors.