Smart Moves

It’s not exactly a tsunami, but real estate pros say there’s finally a growing wave of baby boomers letting go of their family homes and moving into smaller housing units, usually condos.

“From the point of view of price, it’s an absolutely fabulous time to sell one house and buy a smaller place,” says Stacy Berman, a longtime real estate agent in Washington, D.C.

Take the case of a retired social worker who’s about to relinquish ownership of the three-bedroom townhouse she’d hung onto for more than 20 years. The property is expected to sell for twice the value of the condo she intends to buy in a gated retirement community nearby.

“We anticipate a feeding frenzy for this townhouse among young families because it’s in a neighborhood with five-star schools that kids can walk to,” says Berman, the social worker’s listing agent.

Economists say there are multiple reasons why this is an opportune time to sell an affordable home in a popular community where property is still in short supply relative to demand among young adults. That’s because many from the millennial generation, who postponed marriage and child bearing, are now better positioned to buy. Meanwhile, more boomers have become eager to downsize.

Frank Nothaft, the chief economist for CoreLogic (corelogic.com), a California-based provider of global property information, says that many potential sellers are better off financially than they were in the years after the Great Recession.

“Also keeping the home-sales market humming is the fact that mortgage rates continue to hover near historic lows, a major factor intensifying demand among buyers of all ages," Nothaft says.

Though it’s a fortuitous time to sell in many affordable neighborhoods favored by young families, real estate specialists say it’s nearly always better to close on the sale of one property before buying another rather than making the purchase conditional on the sale.

“You can bargain more strongly if you’ve already liquidated the old property,” says Berman, who sells homes for the Long & Foster realty company.

Here are a few pointers for those planning to sell:

-- Try to obtain a realistic assessment of your home’s value.

As always, a minority of real estate agents might try to flatter you into hiring them by suggesting your property is worth more than it truly is, says Dorcas Helfant, a former president of the National Association of Realtors (realtor.org).

“You don’t want a fantasyland answer about your home’s value. You want your agent to be brutally honest -- to give you ‘tough love’ when it comes to the value and condition of your place,” says Helfant, the co-owner of several Coldwell Banker realty offices.

One way to increase the odds of finding a realistic listing agent is to interview at least three prospects. Ask each to do a “comparative market analysis” on your property, using recent data from similar home sales in your neighborhood as a basis to set the appropriate list price.

-- Rely on data to calculate your sales prospects.

Beside the location and condition of your home, another factor could strongly influence how much cash you’ll receive if you were to sell: neighborhood competition.

“Statistics on inventory levels are a meaningful way to determine the strength of demand in your neck of the woods,” Helfant says.

For instance, if there’s a three-month supply of unsold homes currently for sale in your market, you can expect to wait longer (and receive less in proceeds) than if there’s only a one-month supply.

Helfant recommends you ask your listing agent to give you a graphic showing fluctuations in inventory levels for your immediate area over the last six to 12 months. Also, ask for a similar chart showing what percentage of list price, on average, sellers have been receiving.

“In a strong seller’s market, you should expect to get at least 95 percent of your asking price and this gap should be narrowing rather than widening,” Helfant says.

-- Don’t let fear keep you from actualizing your home-selling plans.

As always, the real estate market is buffeted by economic trends related to both supply and demand for property and local employment conditions. Prices fluctuate continuously. This causes some potential sellers to delay their sale in hopes of a greater reward at the bottom line.

The current period, when consumer sentiment is still high, could be a good time to put your place up for sale. Yet there are no guarantees of timing, even now.

Those who’ve worked in the real estate field for many years know it’s tricky to time your home sale to your advantage and that a delay could hurt you on price as well as help you, should the economy slow.

“Trying to outsmart the market is usually a fool’s game. It’s nearly always better to time your housing transition to suit your personal plans and preferences,” Helfant says.

(To contact Ellen James Martin, email her at ellenjamesmartin@gmail.com.)

With their second daughter packing off for college this fall, a couple in their early 50s hankered for a whole new lifestyle. Rather than downsize, they recently bought a 3,000-square-foot wood-and-brick house in a newly developing urban community that adjoins downtown Spokane, Washington.

What most motivated the couple to move from the traditional suburb where they'd lived for a couple of decades wasn't the glitzy features of their new house. Rather, it was all the amenities available in the new neighborhood.

"They wanted a whole new lifestyle. That meant a very walkable setting with hiker-biker trails, locally owned restaurants, coffee shops, a golf course and even a winery," explains Michael Crowley, who's affiliated with the National Association of Exclusive Buyer Agents (naeba.org).

Of course, what constitutes an appealing neighborhood varies widely among buyers. Besides top-rated schools, young families might wish for easy access to a neighborhood day care center. Foodies might want a gourmet grocery store or a farmer's market. Bibliophiles might want a nearby public library. And pet lovers might wish for a dog park.

"Nowadays, the common denominator for nearly all buyers is walkability. People don't want to be stuck in their cars all the time like they were in the old suburbs," Crowley says.

In an acknowledgment of the importance of neighborhood choice to buyers, Trulia (trulia.com), which tracks real estate markets all over the U.S., each year makes what it calls its "Neighborly Awards" to communities it rates as "the friendliest, most spirited and most dog- and kid-friendly."

"People take great pride in where they live. In fact, many buyers and renters say the neighborhood mattered just as much as the house when they were searching for a home," says Tim Correia, Trulia's senior vice president and general manager.

Here are a few pointers for buyers in search of an ideal neighborhood:

-- Screen for shopping convenience, among other factors.

An annual study published by the U.S. Bureau of Labor Statistics called the American Time Use Survey finds that adults are spending an increasing amount of time inside rather than outside their homes. One reason could be more home-based work schedules that allow telecommuting. But as the survey also shows, most families still purchase their groceries at stores rather than having them delivered.

"Obviously, food shopping remains a key activity for most people. Because of that, it's wonderful to have a supermarket in your immediate neighborhood," Crowley says.

Although buyers appreciate having a grocery store within walking distance, most continue to drive there anyway, given that groceries are heavy to carry. Yet proximity to a grocery store is still considered a key factor.

-- Search for a neighborhood with plenty of greenery.

Timothy Saeland, an Oregon-based real estate broker, says about a third of his home-buying clients are "outdoorsy people who want that country feeling in their surroundings." For them, trees and green space are more important than a lavish kitchen or opulent bathrooms.

If you relish outdoor activities -- or, at least, the tranquility of gazing out your window at a pristine landscape -- you'll want firm assurances that the green areas around the home you buy will stay that way.

Saeland recommends that buyers stop by the local Chamber of Commerce office to learn more about long-term plans for open areas near any residence they may purchase. "Obviously, you'd rather know before you buy a house that the rural land across the street will be packed with new houses in the not-too-distant future," he says.

-- Don't ignore statistics on crime in the area.

It's increasingly common for prospective buyers to contact local police before deciding whether to settle in to a particular neighborhood.

Saeland says police in smaller communities are especially helpful in pulling out maps to show the areas with the most reported crime. Moreover, police can tell you what types of crime are most common in a neighborhood -- data that many buyers find more clarifying than straight statistics taken off the internet without any context.

-- Keep in mind your personal interests, needs and aversions.

For most buyers, high-quality schools and a short commuting time to work top the list of community attributes that are particularly critical.

But beyond these positives, purchasers vary widely in the importance they attach to neighborhood features.

"With a tremendous number of two-income families now in the home-buying population, having a nearby elementary school with a high-quality after-school program is extremely important to the lifestyle of both working moms and dads," Saeland says.

Retirees often wish to position themselves close to a hospital or doctors' offices. And those with severe health issues may want special assurances that emergency medical services could reach them quickly.

Buyers also vary in terms of their displeasure with certain neighborhood attributes. For instance, some find it objectionable to live close to a church that draws many cars on Sunday mornings. Yet that doesn't bother others.

Purchasers differ in their tolerance for traffic. Though many would reject a home located on a main roadway, others are adamant that they must live on a dead-end street or on a cul-de-sac with scarcely any traffic at all.

"Remember that neighborhood factors that might drive some buyers wild with displeasure could make other people very, very happy," Crowley says.

(To contact Ellen James Martin, email her at ellenjamesmartin@gmail.com.)

The United States was supposed to be heading toward a buyer’s market for real estate in 2019. But many would-be homeowners are still confronting sticker shock, especially in popular metro areas.

“Only in deep suburban and rural areas are prices starting to drop, particularly in towns where factories are closing,” says Fred Meyer, a longtime Massachusetts-based real estate appraiser and broker.

Given the overall strength of the American economy and the continuing shortage of residential construction, home price gains continue to outpace wage increases in a number of coveted communities, according to Todd Teta, a senior official at Attom Data Solutions, a California-based firm that tracks housing markets throughout the country.

“Despite falling mortgage rates and rising wages, the cost of owning the typical home remains out of reach or a significant financial stretch for the nation’s average wage earners,” according to Teta.

An analysis of housing affordability by Attom (attomdata.com) found that median home prices are not affordable for average wage earners in 353 of the 480 counties analyzed in its report. Even so, a minority of counties posted better affordability than a year ago.

Meyer urges wannabe purchasers to avoid despair about their odds of attaining homeownership, even if their target area is a pricey one. Rather than backing away, he recommends they take a strategic approach to finding a fair deal.

“Consider lowering your expectations in terms of home size and features,” Meyer says.

For example, you might consider a property with smaller bathrooms and a more diminutive kitchen than your ideal vision. Or you might accept a home without a garage.

Here are a few other pointers for income-tight buyers:

-- Focus on overpriced houses.

Merrill Ottwein, an Illinois-based broker with a long track record working with novice buyers, says some first-timers overlook an important reality in real estate. This is that buyers sometimes get the best deals on property that was priced too high in the beginning.

The trick is to be sure you’re among the first to know when the owners of a favorite property in your neighborhood of choice decide to take a significant price cut. Ottwein says buyers should tell their real estate agent to alert them immediately when this happens.

“That way you can swoop in before others do to try to negotiate a favorable deal, when the sellers are most willing to bargain,” Ottwein says.

-- Consider a dated-looking place.

The cash-flow-conscious buyer may want to consider a category of properties a notch above the fixer-upper. These are essentially well-kept houses; the electricity, plumbing and other systems work. But their owners, though conscientious in some respects, have neglected the interior decor. Hence, they may be forced to sell at a price that’s well below market value.

But Ottwein cautions against mistaking an out-of-fashion house for one with serious underlying issues -- what might better be termed a true fixer-upper.

He recommends a thorough inspection to determine whether a home has fundamental flaws, such as a failing air conditioning system or a bad roof. These are far more costly to fix than is an uninspiring decor.

-- Search for sellers who are highly motivated to deal with you.

In real estate, as in many transactions, time is money. Sellers who must move quickly, perhaps due to a marital breakup, job relocation or financial reversal, are obviously more likely to let their property go for a bargain price.

You needn’t pry or do anything sneaky to find out more about the motivations of owners of homes you are interested in. Often, sellers telegraph their intentions through online or print ads placed by their listing agent. Perhaps their ads will read: “Seller Motivated” or “Must Move Quickly.”

If the ads don’t reveal the sellers’ motivation, a few casual inquiries placed by your real estate agent to the listing agent could do so.

“It’s amazing how often listing agents will reveal the real motivations of their clients, even when it’s against their clients’ interest to do so,” Ottwein says.

Once you grasp the sellers’ motivation and their timing, you can customize your contract offer in keeping with their specific needs. As Ottwein notes, flexible buyers -- who’ve also been fully preapproved for a mortgage and have the necessary documentation in order -- are the most likely to command the sellers’ attention.

“The obvious truth is that highly motivated sellers are much more open to both offers and counteroffers. Often, it’s just a simple matter of timing,” he says.

(To contact Ellen James Martin, email her at ellenjamesmartin@gmail.com.)