Home buyers in the Ann Arbor and Ypsilanti and surrounding areas who are planning to purchase a home are facing ever-tightening inventories of available homes and rising prices. While we expect to see inventories rise as the aging seller’s market peaks, based on the traffic we are seeing at open houses, it appears that there is a large buyer demand waiting for the next good home to hit the market. Based on this we expect competition for available inventory will be fierce as we move into the spring home-selling season, especially in the moderately priced price ranges.
So now, more than ever, it pays to take a creative approach, work with a strong real estate team, and have an open mind to finding housing deals that make sense for you and your family.
Tricks to Finding Housing Deals
Here are a few tactics and considerations to help you keep the bigger picture in mind and also improve your ability to land the perfect home within your budget.
Is the housing market in a bubble? That is always difficult to say for sure, but when looking at the Case-Shiller index we don’t see evidence of a bubble. In fact, the growth rate since 2011 has been fairly stable on a national level. The graph below compares where the Case-Shiller Index would be if it had seen steady growth of 4%, 5%, 6%, or 7% per year since 1975. The graph doesn’t show a bubble like the one seen ten years ago. Rather, it shows a steady climb.
It’s important to remember that housing has provided a consistent 4% or more return over the long haul with all the added benefits of calling this investment a home, including all the utility, peace of mind, and creative expression that home ownership offers. Plus, it is a leveraged investment. Waiting on the sidelines for housing prices to come down may not pay off in a better home deal, and will cause you to lose out in quality of life, too.
(source – Housing Wire)
Guerilla tactics required! Finding the right home in our present market will not be a simple process. Here are a few things we recommend:
- Find an agent that will hit the phones and the streets for you to find off-market homes and for sale by owner homes that that are a match for your needs. Your agent making a match this way often translates into less competition and the opportunity to get you into a great home at a fair price without multiple offers and bidding wars. We are actively calling, mailing, and walking neighborhoods to find sellers interested in moving to match up with our buyers. This is not the easiest method but often we can match up a buyer and seller to the benefit of both.
- Work with an agent that can give you strong pricing and offer strategic advice to make your offer stand out in a multiple-offer situation. Positioning your offer just right is not a simple task and requires research, good communication skills, and experience.
- Get your financing sorted out up front! You want to be confident and ready to offer – day one – when a new property hits the market. This means having your loan requirements in place. Interview lenders and find a highly recommended local lender. Experienced agents can give you several great lender referrals, so get more than one. Don’t blindly go with your local bank or your friend’s recommendation. Get all your documents in order and submitted to your lender and find out what you can afford for a payment after considering purchase price, taxes, association fees, insurance, maintenance set-asides, and estimated needed improvements. For instance, I always advise clients to plan for flooring, paint, and window treatments when buying a home. If you have older appliances, plan for their eventual replacement, too.
- Look for up and coming neighborhoods and ones that are off the beaten path. Up and coming areas are sleepy neighborhoods that are transitioning. See my list below for several areas that are on my radar for 2018.
- Buy quality. Don’t make the mistake of buying a “cheap” home. Homes are often cheap for a reason and they offer a low opportunity for appreciation. A strong agent will be able to point out conditions and factors that can throttle appreciation potential.
- Buy ugly. Homes that need cosmetic improvements and reasonable upgrades often sell for a discount over the HGTV-inspired staged homes. You have to have the imagination, though, and a renovation budget. My favorite deficiencies to watch for are bad paint, wallpaper, and worn and stained carpet. Also, homes with poor marketing photos and that are poorly staged can be great homes that unimaginative buyers may pass on. Sellers take note: fix these things first and get a faster sale and recoup most, if not all, of your expenses. It may be okay to buy a home with functional but outdated kitchen and baths. Fix these a couple of years down the road when there is more money. Think about the long haul here!
Andy’s Short List of Neighborhoods to Watch
These are a few neighborhoods offering a good opportunity for appreciation and excellent value. I am focusing on neighborhoods that are moderatly priced, that meet the needs of young professionals and growing families buying their first home. This is a huge portion of the housing market as Millennials hit their stride. Additionally, these are areas that are mostly in town or near town and are generally walkable or on transit lines. I am listing a few here. Reach out to us and let us know what you are after and we can probably show you some opportunities you have not considered. Also, we can recommend neighborhoods for anyone’s needs or price range.
Northside Ann Arbor Neighborhood
The Northside neighborhood has always been one of the best-kept housing secrets in Ann Arbor. However, the cat is out of the bag (I probably should not use cat analogies). Ann Arbor STEAM at Northside has increased awareness and attention to the area and people are noticing that is is a walkable neighborhood with great access to downtown, U of M, and also provides easy access to I-94 and M-14. Prices have moved up aggressively in the last few years and $300,000 is at the low end, but there are still great deals here. Watch for big growth on the north side with regional transportation improvements coming to the area.
Northside consists of an assortment of housing and for many years was overlooked in favor of the more cohesive west side and in-town neighborhoods. Home inventory consists of many pre-war bungalows and ranches, many 1950’s and 1960’s (mid-century) ranches and two-stories, one of a kind custom homes on unique lots, new infill lot homes and a few newer, small-ish neighborhoods such as Brookside.
Ypsilanti City – Downtown Depot Town and EMU College Heights
Depot town, Normal Park, College Heights, and other in-town Ypsilanti areas are taking off. In many cases, these homes are running half the price of comparable homes in Ann Arbor. Why not consider them? For many, Ann Arbor is just not affordable or does not offer the amenities buyers want for the price. Take a look at these areas. There are walkable streets, classic homes from the 1920’s and 1930’s, restaurants and shopping.
Washtenaw Club and Fairway Hills
A couple more sleepy Ypsilanti areas worth checking into if you are looking for affordable housing in town. Washtenaw Club features homes on larger lots with mature trees. Fairway Hills is a more traditional 1960’s neighborhood where you can get a lot of house for under 200k.
The Best Time to Buy a Home Is …
Deciding if this is the right time for you to buy a home is a decision that you have to make based on your unique needs. I like to say that the best time to buy a home is when it is the best time for YOU to buy a home. When forces in your life dictate that it is time to move, go for it! Be Bold! Find an expert real estate agent and lender to help you get the job done.
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