Your sellers may have “nose blindness.” The term refers to the process of adapting to the smells around you and becoming so desensitized to them that you learn to ignore them or become less sensitive to them, says Dr. Richard Doty, director of the Smell and Taste Center at the University of Pennsylvania.

But, of course, buyers will probably notice the stench as soon as they walk through the door. HouseLogic flags the following scents as common offenders in a home and how to get rid of them.

Pet Odor

If the sellers have a pet, they will likely need to neutralize the trail of odors it leaves behind. Ask your clients to bathe and groom the pet regularly. Sprinkle some baking soda on the carpet and vacuum frequently. Remove pet hair, paying special attention to tight spaces where it most often accumulates, such as the border between the carpet and the wall or on the edges of steps.

Dank Basements

Basement mustiness caused by mildew and mold is a common culprit in nose blindness, HouseLogic notes. Inspect the basement carefully, including every cardboard box, to try to find evidence of any gray or white splotches or mold. Take precaution when removing mold and mildew if using bleach. A trick to deodorize rooms: Set out a bowl of vinegar, cat litter, baking soda, or even an onion (the onion smell goes away in a few hours), HouseLogic suggests. Also, consider running a dehumidifier to improve the air circulation and ensure the smells don’t return.

Mattresses

Yes, mattresses can stink too and can make the entire room smell. Sprinkle baking soda on them and let it remain there for an hour or more. Then, vacuum up the baking soda. You also might try adding a few drops of essential oil (like lavender) to the baking soda.

Source: “You Can’t Detect These 4 Odors, But Your Guests Can,” HouseLogic (March 2017)

Parents are having a tough time saving money. Fifty-one percent of parents recently surveyed say their mortgage was having a “major impact” on their ability to save, according to Bankrate’s Money Pulse survey for February.

“It’s probably not as much about the mortgage as it is that stage of life,” says Jonathan Smoke, realtor.com®’s chief economist.

Homeowners with children are likely to be in their early 30s to mid 50s and have many financial goals. They’re not only tending to the needs of their children but also saving for college and retirement, maintaining a home, and paying the mortgage.

Jim Sahnger with Schaffer Mortgage in Palm Beach Gardens, Fla., says parents may need to change how they think of mortgage payments: It’s not just another form of paying off debt but it’s a form of savings.

“If you look at it from the aspect of you’re building equity, that’s obviously important,” Sahnger says. Further, homeownership can help shield you from rental cost increases, and there are tax benefits to owning, he adds.

Two in three parents who don’t own a home say that financial issues such as poor credit or being unable to afford the down payment are preventing them from buying.

The Bankrate survey also found that 15 percent of Americans say they’re very or somewhat likely to purchase a home this year, with older millennials (ages 27 to 36) and Generation Xers (ages 37-52) showing the greatest likelihood of buying.

Source: “Parents Have Trouble Saving Because of Mortgage Payments, Bankrate Survey Finds,” Bankrate.com (February 2017)

About 32.7 million Americans—or 10.2 percent of the U.S. population—claimed Irish ancestry in 2015, according to the U.S. Census Bureau. In honor of St. Patrick’s Day, do you know which U.S. city is the most Irish of all? Realtor.com® researchers scoured the data in the 300 largest U.S. cities to find the percentage of Irish-Americans living there.

New England boasts the most Irish descendants in the nation, with Manchester, N.H., leading the pack. Nearly one in five residents living in Manchester claim Irish heritage. Realtor.com® flagged the following cities as the Irish epicenters of the U.S. (based on the percentage of the population claiming an Irish ancestry):

  1. Manchester, N.H.: 19.4%
  2. Lowell, Mass.: 17%
  3. Pittsburgh, Pa.: 16.2%
  4. Naperville, Ill.: 15.9%
  5. Cedar Rapids, Iowa: 15.4%
  6. Worcester, Mass.: 15%
  7. Centennial/Highlands Ranch, Colo.: 14.8%

Source: “Celebrating Saint Patrick’s Day? Here Are the 10 Most Irish Cities in America,” realtor.com® (March 16, 2017)

 

More high-end home sellers across the country are being forced to offer discounts as the luxury real estate market shows signs of softening, The Wall Street Journal reports.

“Buyers are very price sensitive,” says Donna Olshan, a real estate professional based in Manhattan. “If it’s not priced right it’s going to sit until the cows come home.”

Real estate pros and sellers in the luxury market are having to adjust their expectations. In the third quarter of 2016, the median asking price for homes in the top 5 percent of listings reached $1.2 million, an 18 percent increase from a year ago, according to realtor.com® market data. The actual sales prices in that luxury segment, however, only rose by 3 percent during that period.

Luxury listings are lingering on the market longer than the overall market too. Luxury listings are taking a median of 131 days to sell, about 4 percent slower than a year ago, realtor.com®’s data shows.

“The smart sellers today are pricing for now, not 2014,” says Jeff Adler, of New York’s Douglas Elliman. “An $88 million apartment went into contract three years ago and just sold. Would they get $88 million today? Probably not.”

The strength of the U.S. dollar has caused some overseas buyers to pause.  Also, oversupply may be another problem facing the luxury market. For example, a surge in luxury condos and speculative homes over the past five years in markets like New York and Miami has sparked a slowdown. A luxury apartment in Manhattan was listed in April for $120 million and is now being offered at $96 million, a $24 million discount. A luxury condo in midtown is seeing developer discounts now being offered at 10 percent to 15 percent on lower-level units priced between $4 million and $12 million.

“We’ve priced to account for today’s market,” says developer Gary Barnett. And, “the market wants to see some discounting.”

Source: “Luxury Home Sellers Slash Millions off Asking Prices,” The Wall Street Journal (Feb. 23, 2017) [Log-in required.]

What makes a top-ranked small city so desirable? According to realtor.com®’s research team, it has a low unemployment rate, a crime rate below the national average, an affordable median home price, and a majority of households that spend no more than 28 percent of their annual income on housing costs.

The research team ranked more than 500 towns with populations between 10,000 and 50,000. The median home price of its top 10 small towns ranged from $65,600 to $139,900 (the national median price is $250,000, for comparison).

The following are the top 10 most affordable small towns for 2017, as ranked by realtor.com®:

1. Mexico, Mo.

  • Median home price: $65,600

2. Guymon, Okla.

  • Median home price: $76,000

3. Decatur, Ind.

  • Median home price: $81,900

4. Oskaloosa, Iowa

  • Median home price: $98,500

5. Hereford, Texas

  • Median home price: $98,900

6. Worthington, Minn.

  • Median home price: $119,900

7. Malvern, Ark.

  • Median home price: $120,000

8. Ionia, Mich.

  • Median home price: $124,000

9. Wapakoneta, Ohio

  • Median home price: $127,500

10. Greensburg, Ind. 

  • Median home price: $139,900

Source: “Top 10 Affordable Small Towns Where You’d Actually Want to Live, 2017 Edition,” realtor.com® (March 6, 2017)

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Americans have, so far, stood resilient to rising mortgage rates, but a bigger impact will come soon, say Goldman Sachs economists.

Housing’s share of the economy rose above normal levels from November to January, despite mortgage rates surging 60 basis points at the time.

Still, economists caution that there may be a lag to the impact of rising rates and particularly their effect on home prices. In an analysis—pulling data from past 100-basis point increases in mortgage rates—economists found that the median home price often drops 3 to 4 percent.

“This median estimate suggests that the recent 60 basis point rise in mortgage rates should, all other things equal, lower house prices by 2 to 3 percent,” the Goldman analysts concluded. “This estimate thus supports our forecast that national house prices will continue to rise, but at a slower pace in the next few years.”

That said, buyer demand is much stronger than supply at the moment and the economy and job growth are continuing to support the housing market.

“The housing market is also in a more virtuous cycle: Home equity has recovered, mortgage rates remain low enough to be manageable, and high rents make homeownership attractive,” MarketWatch reports.

Many economists are skeptical whether mortgage rates will actually rise much more than they already have. A survey conducted by MarketWatch in December 2016 showed an average for rates of 4.5 percent throughout 2017, a 35 basis point increase from current readings.

Source: “Here’s How Home Prices May Respond to Rising Mortgage Rates,” MarketWatch (March 7, 2017)

The McMansion—once the popular symbol of prosperity prior to the 2008 recession—may be losing its favor with home buyers.

Suburbs across America once boasted McMansions, “sprawling, mish-mashed homes boasting several thousand square feet,” Business Insider says.

“The pretty and prototypical image of such suburban lifestyle is the seven-bedroom and four-bathroom McMansion with a driveway where three gas-guzzling SUVs are parked (one for dad, one for mom and one for the kids) and a sprawling green lawn that is perfectly manicured with sprinklers spewing hundreds of gallons of water a day,” wrote economist Nouriel Roubini in 2008. “The result was that the U.S. invested too much—especially in the last eight years—in building its stock of wasteful larger and larger homes and housing capital and of larger and larger private motor vehicles.”

But foreclosed McMansions in subdivisions grew during the housing crisis, and they began to lose their appeal.

Premiums paid for McMansions dropped significantly in 85 of the country’s 100 largest cities, according to a study conducted by Trulia, which analyzed McMansions built from 2001 to 2007 with 3,000 to 5,000 square feet of space. For example, in Fort Lauderdale, Fla., in 2012, a typical McMansion was valued at $477,000, about 274 percent more than the area’s other homes. In 2017, the McMansion is valued at $611,000, about 190 percent above the rest of the market.

Further, McMansion Hell blog writer Kate, who wished to use only her first name on Inside Business, insists that McMansions mostly were built cheaply in order to squeeze as many amenities inside them as possible. As homeowners now face repairs, they’re looking at trading in their big house for something else, she says.

Let’s be clear, however: Developers are still building big homes, and Americans still like large homes. The average home size continues to grow in square footage: The average square footage of a single-family home was 2,467 in 2015 compared to 1,595 in 1980, according to U.S. Census data.

Yet, Americans’ tastes of what they want in their big houses is evolving. Large Mediterranean-inspired mansions that were popular during the housing crisis are moving more to complex, New England-inspired colonial homes, Kate says.

“No one likes McMansions, ever, but a well-appointed luxury home, on the other hand, is still very popular,” says Tim Gehman, Toll Brothers’ director of design. “Our buyers are savvy buyers. As much as they have different tastes, they also know that they’re buying a commodity, and they’re investing in it. Until the market in general changes its point of view on what is valuable, most are not likely to spend on what they think won’t return value.”

Source: “Americans Could Be Killing the McMansion for Good,” Business Insider (March 6, 2017)

REALTORS® expect modest price gains in home values over the next year. The median expected increase in home prices across the country is 3.5 percent, according to the REALTORS® Confidence Index January 2017 survey, based on the responses of more than 3,800 REALTORS® across the country.

REALTORS® are most bullish about rising home price expectations in Washington, Oregon, and Colorado. Real estate pros in those states believe they will see 4 to 5 percent increases in values over the next year. Meanwhile, oil-producing states like Alaska, North Dakota, and West Virginia had the lowest median expected price changes over the next year.

“Looking at the values over time in selected states, the median expected price change appears to be increasing again from what was expected in the middle of 2016, indicating that respondents expect demand to remain strong,” according to the report. “In more than half of states, expected price change exceeds the price growth that was expected at the end of January 2016, even as home prices continue to rise.” The map below shows REALTORS®’ median expected price change over the next 12 months by state level.

 

Source: “REALTORS® Confidence Index January 2017 Survey,” National Association of REALTORS® (Feb. 22, 2017) 

The U.S. Senate today confirmed retired pediatric neurosurgeon Ben Carson to be the 17th secretary of the Department of Housing and Urban Development. The vote was 58 to 41. A simple majority of 51 votes was needed to confirm him.

In his confirmation hearing before the Senate Banking Committee last month, Carson took a number of positions that align with the market priorities of the National Association of REALTORS®. Among these, he said all Americans should have an opportunity to own a home, and he called the 30-year fixed-rate mortgage one of the cornerstones of the American dream of homeownership. He also said he wants to maintain a federal backstop in the secondary mortgage market while continuing to find ways to get more private insurers in the market. Right now, the bulk of mortgage-backed securities are backed by Fannie Mae and Freddie Mac, the government-sponsored entities presently under federal conservatorship, and Ginnie Mae, the guarantor of the FHA and other federally insured home loans. More on Carson’s confirmation hearing.

Carson, who grew up in public housing in Baltimore, said he wants to  create partnerships that will help improve the lives of people living in underserved communities.

HUD has a fiscal year 2017 budget of $49 billion and is the federal agency that oversees the FHA, enforces federal fair housing laws, and provides financing for privately owned low- and moderate-income rental housing and tenant-based housing assistance. It also provides resources to the country’s stock of public housing. In addition, it administers housing and community development grants to states and localities.

NAR President William Brown congratulated Carson on his confirmation and said he looks forward to working with the secretary on the many challenges facing real estate in the years ahead. “We applaud Dr. Carson’s commitment to the challenges that lie ahead,” Brown said. “We know that the policies set in Washington can make a real difference for individual Americans as they work to realize the dream of homeownership for themselves. We’re committed to helping them get there, which means addressing the hurdles buyers, current homeowners, and investors face in the marketplace. Housing inventories are tight and mortgage credit is hard to come by, and at the same time far too many buyers are saddled with high rents and student debt that stand in the way of saving for a down payment.”

One of the first items NAR would like to see Carson address is the quarter-point reduction in FHA mortgage insurance premiums. In one of its last actions under President Obama, the FHA reduced the annual premium, saying the time is right because the insurance fund is healthy and it would save borrowers an average of $500 a year. The Trump administration suspended the decrease, and Carson, at his confirmation hearing, said he supported the suspension while he determines whether to go forward with it. More on the FHA premium cut.

—Robert Freedman, REALTOR® Magazine

Stagnant economic conditions for middle-class America continue to put some real estate markets on uneven ground.

NAR’s chief economist Lawrence Yun, who presented his latest economic outlook at the 2017 REALTOR® Broker Summit in San Diego, said lifetime wealth is at an all-time high in the U.S. However, this wealth is highly concentrated in the top 10 percent, while middle-income earners’ wealth has seen relatively no gain over the past 16 years.

“As an economist, we always want to know the causes,” said Yun. There’s a clue in the gross domestic product, which has been growing at just under 3 percent for the past 11 years. “What is critical about that horizontal 3 percent line is that it’s a statistical average in the U.S., and we’ve been under that statistical average for 11 straight years,” he said. This equates to stagnant economic growth. And if the U.S. enters a trade war with Mexico in the future, it will send the U.S. back into a recession. “It remains to be seen,” Yun said.

Yet, there are some hopeful signs when it comes to real estate, Yun said. Job openings are up and fewer people are applying for unemployment. Auto sales are also up, which is generally the second most expensive purchase for Americans behind a home purchase. “The housing market is recovering, but not yet to the extent of the auto sales recovery,” Yun said. The stock market is up, but business spending is down. Fundamentally, real estate is not heading into a bubble, Yun said, and if optimism in the economy improves, we’ll continue to see growth.

Even though the U.S. is creating more jobs, manufacturing jobs have been stagnant since 2009. “Ninety percent of job loss in manufacturing is not due to trade, but due to automation and robotics,” Yun said. Construction jobs are coming around slowly, but the real boom is in professional business services, health care, and technology.

On another positive note, the sentiment for owning a home is still high. More people said they plan to buy a home in the future in the fourth quarter of 2016 than in the first quarter of 2016, according to an NAR survey. Rising rents are a motivating factor for people looking to buy a home, Yun said. Yet, younger people are taking greater hit in the homeownership rate decline. Adults under the age of 35 are seeing declining wealth, with many unable to buy a home due to burdensome student loan debt — a variable that has tripled over the past 10 years, Yun said.

But mortgage default rates have declined dramatically, and despite some imbalances in the country’s economic recovery, Yun said, “nothing is implying that we’re turning negative.” Home prices will continue to steadily rise through 2017, as will mortgage rates, but not at an alarming rate, Yun said.

—Erica Christoffer, REALTOR® Magazine