According to recent
national research 70% of all existing homes in the U.S. were built prior to
1990. Research also shows the median age of a U.S. Home In 1992 was 25 years old…in 2002 it was
30 years and in 2011 it was 35 years old.
What do these stats show us?
If 70% of all U.S. homes
are 22 years or older… what does this say regarding the condition of the
majority of homes? According to the National Assoc. of Remodelers in 2009 22%
of all home purchasers who bought a home 15 years or older planned to do $10,000
or more of improvements within 6 months of closing…(I am sure with the influx
of REO and short sale properties that figure must be higher in 2012).
For the 10 years prior
to 2008, U.S. Homebuilders were churning out between 1.3 and 1.5 million new
home units per year…Since 2008 the average built number has dropped significantly
to <600,000. The last time this few new home units were produced was in 1932
….when the U.S. population was 124 million. The 2011 census now shows the U.S.
population at 314+ million (over double what it was in 1932). This leads us to
the old adage of supply verses demand.
Supply and Demand:
The U.S. population
is growing and living longer…Plus there are approximately 80 million Echo Boomers
between the ages of 18 and 32 years old who are already, or are thinking about,
entering the real estate market as buyers. Couple this demand with a lowest
supply of new inventory in 80 years and I think you can see where I am headed.
I feel the demand
for existing homes will be higher over the next 5-8 years than it was during
the “boom” years. With the median age of 35 years… a large portion of these existing
homes sales will need updating, remodeling, or rehabbing. Here is where the “Next
Big Opportunity” lies.
Cash is Tight but Financing is Cheap:
Many home sellers… turned
home buyers… have lost a good portion of their equity and are “cash poor”. This
makes REO and Short Sale listings in high demand to these cash strapped buyers…many
times allowing them to buy into built in equity. The national average discount for
REO sold homes was 34% below non-distressed like kind sales and short sales were
discounted 24%. In the past 18 months the percentage of distressed homes sold
to buyers who plan to occupy them has increased significantly…where previously
the majority of REO buyers were savvy investors who usually know the market and
the cost and hard work of rehabbing.
It is important to
know what programs are available to buyers who want to buy homes in need of
repair…We as REALTORS have to help our clients see a vision…see past what the
home is now to what the home “could be” after the rehab work is complete. So…It
will become even more important to build solid relationships with trusted contractors
who have experience in remodeling and rehab and to educate yourself on loans
like the FHA 203k (FHA
203k Loans) or Fannie Mae HomePath ( http://www.homepath.com/
) which allows buyers to finance all, or a portion
of, the repairs or improvements on their existing home purchase. For questions regarding financing call Dan
Flynn at 919-785-4238
New opportunities
do exist in our marketplace; you just might have to look a little… (and work a
little) harder to find them. If my gut feeling is right…this information shows
a new need your clients will be facing…step up to the plate and become their “go
to” professional for all things real estate related. Grab the opportunity to be
ahead of the curve and secure business you may have otherwise missed!
Eddie Brown
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