Charleston SC Real Estate: Misconceptions Affecting Buyers And Sellers
The real estate market, both nationally and here locally in the Charleston SC real estate market, is still rolling strong as we kick off 2017. However, there are still some misconceptions out there that could affect both buyers and sellers.
As always, I stress how important it is for both buyers and sellers to be educated about the market. You need to know what is happening in the current market, what has been happening with an eye on what history can teach us, and to also know what the latest forecasts and projections are.
If you live in the Charleston SC real estate market and are thinking about selling your home in 2017, then one of your biggest concerns is how much can you sell your house for.
For home owners across the country, it seems as though too many are not aware of just how much equity they have in their home.
The following graphs illustrate that the majority of homes throughout the US have positive equity.
These graphs do not take into account the nearly one third of homes that do not have a mortgage–this is simply the other two thirds.
The next graph shows homes that have at least 20% equity in their home.
The next graph illustrates the misconception that exists as far as actual equity versus perceived equity.
The number of homes that actually have at least 20% equity (or greater) is more than double than what is perceived.
So, what does this mean? There are many home owners that might want to sell, but simply do not think they can.
This is important to a market that is in need of more homes for sale.
Traditionally, people stayed in a home for just a few years before making the next move–whether a move up or a move down.
However, after the bubble burst, many home owners found themselves in negative equity situations and were forced to stay in their homes longer.
The next graph shows this:
Home prices have been on the rise for the last 3-4 years, so most of that negative equity has been erased, and the majority of home owners are now in the black. Unfortunately, many simply do not realize this.
This is one factor keeping us from realizing the full potential in the market today–inventory is not keeping up with demand, something we need for a fully healthy and sustainable market.
Market forecasts for the next few years still remain strong despite this.
However, it is impacting the market dynamics because the natural flow of home sales is being stunted. First time buyers are looking for homes, but many would be move up buyers are staying put.
This could really have a big impact on the market if more starter homes were to come onto the market. It would also free up more move up homes as well to meet the strong demand that exists.
I’ve written about this before, but it bears repeating because this big misconception continues to persist. It seems many would be home buyers simply are not aware that buying a home does not require a significant down payment.
This graph is important because the Millenials make up the largest generation in the United States. They are already making a big impact on the real estate market, but that impact could be much greater.
With VA and USDA loan programs, qualified buyers can purchase a home with no down payment.
For those that don’t have the option of VA or USDA, they can still use FHA loan programs that only require a 3% down payment. Plus, FHA programs allow buyers to receive gift money from family to use for down payment.
Many would be buyers are not jumping into the real estate waters simply because they do not think they can qualify for a mortgage. Never mind the down payment misconception, they think they must have nearly perfect credit to qualify.
However, this too is wrong. Mortgage Credit Availability has increased dramatically over the last few years, making it easier to qualify for a mortgage.
It does not take a credit score of 750, 800 or higher to qualify for a mortgage.
The next graph shows the average FICO score for mortgages from 2016:
Over half of those mortgages went to people with a credit score under 750.
Clearing up these misconceptions is important and getting the word out there is especially important because Millenials want to buy in the very near future.
It’s important that they understand exactly what it takes to buy a home in today’s real estate market.
Stay tuned to my blog for the latest information about real estate so you don’t get left out! Be sure to visit my Pam Marshall Realtor website for more information for buyers and sellers in the Charleston SC real estate market.