The 20 Most Profitable Housing Markets This Year

If you own a home in one of these markets, there's a good chance you've had a nice return on your investment.

If you’re looking to buy or sell a home this year, you probably know the housing market is booming in virtually every corner of the country. In fact, homeowners who sold in the first quarter of the year realized an average price gain of $44,000 since purchasing their home, a new ATTOM Data Solutions report shows. That equals an average 24% return on purchase price across the country — the highest average price gain for home sellers in nearly 10 years.

“The first quarter of 2017 was the most profitable time to be a home seller in nearly a decade, and yet homeowners are continuing to stay put in their homes longer before selling,” said Daren Blomquist, senior vice president with ATTOM Data Solutions. The report showed homeowners are staying in their homes just shy of eight years on average. “This counter-intuitive combination is in part the result of the low inventory of move-up homes available for current homeowners, while also perpetuating the scarcity of starter homes available for first-time homebuyers,” Blomquist added.

Of course, there are still some laggards. Baton Rouge, Louisiana, for example, saw average home prices decline by $15,000 from their previous purchase price. The same is true for Huntsville, Alabama, where average home prices declined by $8,100.

Of the 20 metro areas with the highest percent return on the previous purchase price, 10 were located in California and three were in Colorado. Competition among homebuyers, especially in these areas, is fierce, so it’s particularly important to have your finances locked and loaded before you start your search. Regardless of where you’re looking, getting pre-approved for a mortgage is key. You’ll also want to be sure your credit is in good shape so you’ll get the best mortgage terms available. You can check your credit scores for free on Credit.com.

These are the top 20 metro areas where home sellers are making the most money when selling their homes.

20. Port St. Lucie, Florida

Average return on investment: 39%
Average price gain: $53,000

19. Austin-Round Rock, Texas

Average return on investment: 39%
Average price gain: $81,795

18. San Diego-Carlsbad, California

Average return on investment: 41%
Average price gain: $144,000

17. Riverside-San Bernardino-Ontario, California

Average return on investment: 41%
Average price gain: $90,000

16. Boston-Cambridge-Newton, Massachusetts-New Hampshire

Average return on investment: 41%
Average price gain: $111,100

15. Oxnard-Thousand Oaks-Ventura, California

Average return on investment: 43%
Average price gain: $160,000

14. Sacramento-Roseville-Arden-Arcade, California

Average return on investment: 43%
Average price gain: $99,000

13. Fort Collins, Colorado

Average return on investment: 43%
Average price gain: $97,500

12. Greeley, Colorado

Average return on investment: 44%
Average price gain: $85,050

11. Urban Honolulu, Hawaii

Average return on investment: 46%
Average price gain: $161,110

10. Salem, Oregon

Average return on investment: 46%
Average price gain: $70,800

9. Vallejo-Fairfield, California

Average return on investment: 47%
Average price gain: $115,000

8. Denver-Aurora-Lakewood, Colorado

Average return on investment: 50%
Average price gain: $110,000

7. Los Angeles-Long Beach-Anaheim, California

Average return on investment: 50%
Average price gain: $187,000

6. Stockton-Lodi, California

Average return on investment: 51%
Average price gain: $101,000

5. Modesto, California

Average return on investment: 51%
Average price gain: $87,500

4. Portland-Vancouver-Hillsboro, Oregon-Washington

Average return on investment: 52%
Average price gain: $110,799

3. Seattle-Tacoma-Bellevue, Washington

Average return on investment: 56%
Average price gain: $139,325

2. San Francisco-Oakland-Hayward, California

Average return on investment: 65%
Average price gain: $276,750

1. San Jose-Sunnyvale-Santa Clara, California

Average return on investment: 71%
Average price gain: $356,000

Image: Peopleimages

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Want to Buy a Home in the Next 5 Years? 5 Things You Should Do Now

buying_a-home

Buying a home is a lot like running a marathon. Very few people can just decide to up and do it in the next day or two. It takes preparation, patience and perseverance.

If you’re looking to buy your first home in the next 5 years or so, you’ll likely need to start now to ensure you’re in the proper financial shape to do so. To complete the marathon metaphor, here are six things you’ll need to do to help get you to the homebuyer finish line.

1. Improve Your Credit Score

A lot of first-time homebuyers are holding off on buying in hopes they can get a better rate once they improve their credit scores, according to a recent Experian survey, and that’s smart. While you don’t need top-tier credit to get a mortgage, an improved credit score can not only help you get approved quickly for a mortgage loan, it can also make better interest rates available to you.

Most conventional lenders look for a credit score of at least 640, but a credit score of 620 is often a common credit score benchmark for government-backed loans (like the Federal Housing Administration, U.S. Department of Veterans Affairs and the U.S. Department of Agriculture).

If your score is subpar, and even if it isn’t (everyone’s credit can be improved), you can start improving your credit scores by using Credit.com’s free credit report card, which offers you two free credit scores, updated monthly, plus your very own credit report card that tells you how you’re doing in the five key areas that are included on your credit report and determine your credit score — payment history, debt usage, credit age, account mix and inquiries.

It’s also a good idea to pull your credit reports, which you can do for free every year at AnnualCreditReport.com. Be sure to review it closely for any errors or discrepancies and then dispute any items that are inaccurate.

2. Find Out What Can You Afford

Getting pre-approved for a loan can help you determine how much mortgage you can qualify for, but that doesn’t necessarily mean that’s what you can afford. That’s because lenders look at your credit, income, debts and assets, but don’t take into account your own personal spending and savings habits (you can use this calculator to help you determine just how much you can afford).

When it comes your income, lenders prefer that you’ve worked in the same or similar field for at least 2 years. If that’s not your case, it’s a good idea to explain your situation in writing, and be sure to include any employment gaps. Lenders also have to show that your income supports your mortgage and any other debt payments. If those debts exceed 45% of your income, you might not qualify for as much house as you might like.

Once you know how much you can comfortably afford and what kind of mortgage you can qualify for, you’ll have a better idea of how much you’ll need for a down payment.

3. Save Your Down Payment & Closing Costs

The bottom line with a down payment is the more you can put down, the less you’ll have to borrow, so your minimum monthly payments will be lower. Also if you have only a very small downpayment (5% or less, for example), you’ll qualify for fewer types of mortgages and could also be charged a higher interest rate.

While most lenders would like to see a 20% down payment, some mortgages are available for as little as 3% down. And then there are the closing costs, the fees paid at the closing of a real estate transaction, when the title to the property is transferred to the buyer. They typically range between 2-5% of the purchase price.

Whether you’re able to save for your down payment and closing costs can be a good indicator of whether you’re ready to own a home. If you can’t save enough for a 3-5% down payment, are you really ready for the financial responsibilities of owning a home? Will you be prepared when the furnace breaks or when the dishwasher needs to be replaced? There are a lot of expenses, big and small, that come with owning a home, not just the down payment, mortgage and closing costs.

4. Have an Emergency Fund 

You’ll want to be prepared for unexpected emergencies in your new home, and that means having enough savings to cover some of the big expenses. Sure there are home warranties and homeowners insurance to cover some things, but say, for example, a huge rain storm causes your new home to flood and you don’t have flood insurance. You’re going to be stuck with the costs of cleaning up the damage, remediating any mold or mildew issues, replacing sheetrock, mouldings and flooring — not an inexpensive experience.

Having a savings account with at least several months income in it can ensure you have peace of mind and a solid cushion should things go wrong.

5. Find a Great Realtor

You’re more than likely going to be spending a lot of time with your Realtor when you’re looking for your new home, so it’s important that you like the person. More importantly, having a knowledgeable Realtor who understands your market, knows the neighborhoods, has great connections with inspectors and contractors and has seen his or her share of shady real estate dealings is going to be immensely helpful in your search.

Go ahead and meet with several Realtors that friends and relatives might recommend. Choose someone you feel is a good fit and who you think you can trust and build a relationship with. And go ahead and look at homes now so you can get to know the market a bit better, even though it may seem like the house of your dreams is going to get away if you don’t go buy right here and right now. Your Realtor can make a big difference in finding the right home and having a smooth closing.

Image: Justin Horrocks

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Where Did the Term ‘Real Estate’ Come From?

real-estate

There are plenty of words we use everyday. But have you ever thought of their origins? Take real estate, for example. With its storied past, the term defines genuine land property, the soil beneath it and any structures built on it.

Here’s a quick look at how that came to be.

Defined by Merriam-Webster as property consisting of buildings and land, real estate can be broken into two different parts, real and estate. Realis is a Latin term that means existing and true. According to Etymonline.com, real is used in a legal context in Middle English to reference immovable property (i.e., a house, building or structure), as opposed to personal property, such as clothing or furniture.

The term estate can be traced to Latin and even French. Derived from the Latin term status, which means state or condition, it’s combined with stare, which means to stand, and its French derivative is estat. The English definition for the term today, according to Dictionary.com, is property/possessions or an individual’s interest, ownership or property.

The combined term real estate was first coined in London in 1666, the year of the London Fire. (Ironically, this was the year much of London’s real estate was demolished.) In 1670-era London, the term realty was first used with the same meaning, and that’s why we use it today.

If you’re in the market for some real estate of your own, you will probably need a mortgage. But you’d better have a decent credit score and a sizable down payment. Having a good credit score today is as crucial as ever for hopeful homebuyers (you can view your credit score free, updated each month, on Credit.com). Staying on top of your credit report will also allow you to address potential errors before you apply.

More on Mortgages & Homebuying:

Image: Courtney Keating

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Half of Future Homebuyers Waiting to Improve Credit Before Buying

mortgage payment

A lot of potential homebuyers — especially first-time homebuyers — are holding off on taking the mortgage plunge in hopes they can get a better rate once they improve their credit scores.

That’s the finding of a new Experian survey about homebuying and credit, which found that 34% of future buyers say their credit score might hurt their ability to purchase a home and 45% have delayed a purchase to improve their credit score.

“Your credit profile is one of the factors that can have a substantial impact on securing a home loan because it is used by lenders as an indicator of your financial health,” said Rod Griffin, director of Public Education at Experian in a press release. “Consumers planning to purchase a home should check their credit scores and reports to see where they stand. From there they can develop a financial plan so they are in the best place to try to secure the loan they desire.”

According to Experian, low credit scores have led 1-in-5 to likely opt out of the loan process or purchasing a home at all for the next five to 10 years.

On the upside, the Experian research also found almost 70% of survey respondents are paying their bills on time while 60% are paying off debt. Additionally, 28% of future homebuyers are keeping balances low on credit cards while 15% are taking steps to protect their credit information from identity theft and fraud.

The online survey was conducted by Edelman Berland for Experian from Feb. 19–24, 2016, among 500 adults in the U.S. who purchased a home within the past year or plan to purchase one in the next year.

Other key findings include:

  • 35% of future buyers said they do not know what steps to take to qualify for a larger loan.
  • 29% of consumers surveyed would purchase a more expensive home if they had better credit and could qualify for a larger loan.
  • 3-in-4 future buyers are not pre-approved for a home loan.

If buying a new home is in your future plans, you should be checking your credit regularly, not only so you can identify areas for improvement but also to make sure everything on your credit reports is accurate (here’s how to get your free annual credit reports from the three major credit reporting agencies). You can generally improve your credit score by paying down high credit card balances, disputing errors on your credit reports and making all loan payments on time. To stay on top of your progress, you can check your credit scores for free every month on Credit.com.

More on Mortgages & Homebuying:

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