Home Buying Tips

Incentives for a limited time

The price discount and incentive packages you see are real, but they won’t be around for long. Homebuilders know this and that’s why they don’t mind offering them. They understand that a “Buyers’ market” will last only as long as an oversupply of inventory allows it. When the oversupply recedes, it turns right back around into a “Sellers’ market,” with sellers firmly in control. It is for this reason that they are willing to take hits in the near-term – to more quickly reach that (longer-term) shift in leverage that is approaching with every new home sold around the nation. And make no mistake, with interest rates low and the economy chugging forward, it is fast approaching! Homes are still selling; it’s simply a matter of supply reduction.

Buyer's market means better service, quality

One of the most overlooked aspects of incentives is the intangibles –the higher levels of customer service and personal attention that homebuyers receive in a “Buyers’ market.” Just like in any industry, when demand exceeds supply as it has for the past two years, there generally follows a shortage of labor – everyone from the sub-contractors who build your home, to seasoned site agents with whom everyone wants to work, to front-office personnel. In such an environment, it is a fact that service-issues can arise: A “hurried” sales process; homes not being completed on time; and potential oversight of important quality-control and follow-up issues.

In a “Buyers’ market,” the opposite occurs. Slowing sales and an oversupply of inventory result in a glut of labor. Homes are completed faster and with fewer complications and attention to service increases as agents work harder to close deals.

To this end, in a “Buyers’ market”, what many may notice is that builders and developers pare down their staffs to deal with the slower pace of sales. Newer, less experienced agents can be left to exit the business or push on to other places, leaving the proven “All-Stars” behind (though some All-Stars can also be young!). These “super agents” are the crème-de-la-crème, true professionals who understand the difference between fast food-style “order-taking” and relationship selling.

They understand product better; they are better able to communicate the pros and cons of various floor plan options and upgrades; they can suggest and walk you through financing options themselves; and in some cases, they negotiate on the builder’s behalf to help close deals. In short, in the current marketplace you have a rare window of opportunity to enjoy exceptional choice, incredible discounts and a heightened degree of flexibility, sensitivity and attention to your individual needs. Don’t sit on the sidelines during a remarkable climate for home buying!

There are seven main reasons why home ownership is a good investment:

1. Creates Wealth: Buying a home is the largest investment most families will ever make and homeownership is the single largest creator of wealth for Americans. More than 4 out of 5 Americans think the main reason to own a home is that it is a good long-term investment, according to the annual National Housing Survey conducted by Fannie Mae.
2. Builds Equity: Families can build financial security as the equity in their home increases. Home appreciation has historically raised 5-6 percent annually on a national level. Homes have never lost value and have consistently beaten inflation since 1968, according to the National Association of Realtors. This is why real estate has always been a more secure investment than stocks.
3. Lowers Debt: As homeowners repay mortgages, their debt declines, while overall wealth and equity in their homes grow.
4. Provides a Great Return on Investment: If you bought a $200,000 house with 10% down, that would be an investment of $20,000. At an appreciation rate of 5% annually, a $200,000 home would increase in value $10,000 during the first year. This means you’ve earned $10,000 with an investment of $20,000. Your annual return on investment is a whopping 50% percent!
5. Lowers Taxes: You are allowed to deduct the interest on your mortgage payments, as well as your property taxes, from your taxable income, as long as your mortgage doesn’t exceed the value of your home.
6. Earns Profits, Tax-Free: A couple who owns and lives in their home for two years and then decides to sell can keep up to $500,000 of the profit tax-free. (A single owner can keep $250,000.)
7. Provides Additional Lines of Credit: Many families elect to take out home equity loans to help put children through college, purchase a second home, make home improvements, start a new business, pay for medical costs or take vacations. Interest payments on home equity loans are also fully tax-deductible up to $100,000.

RICHMOND PROJECTED TO BE THE 12TH HEALTHIEST NEW HOME MARKET IN AMERICA IN 2010

Richmond is expected to be the 12th healthiest new home market in the country in 2010 based on projections in a recently released Builder Market Health Index report.

The report notes that “ Richmond is another market on the mend. The city of 1.24 million is a state capital and home to several universities. The median price of a home here fell only 5% last year. Now, the region, which boasted a below average unemployment rate of 8.4% at year end, is poised to start adding jobs again. Market Intelligence expects employment to rise 0.3% in 2010 and permit levels are expected to rise by roughly 10%.”

The Builder Market Health Index is compiled by Hanley Wood Market Intelligence, the market research arm of BUILDER magazine. The index is the result of a formula that uses weighted 2009 permit data and weighted 2010 projections for household formations, resale values, job growth and income growth.