When is the home buying season?

 (a case study of the Stone Oak area)

The title is a loaded question. So, let’s clear things up by stating that I am asking when is the best time of the year to look for and purchase a home within the Stone Oak area. 

To answer this question, I completed a market analysis of the general Stone Oak area inclusive of all single family homes regardless of size or price over the past three years. As a homeowner and Broker, my opinion tends to focus on price and competition more than on the amount of available inventory.  I like to think I made a good purchase price-wise, and I don’t like to be involved in bidding wars on a property with other buyers.  I understand that many of us are not afforded the luxury of purchasing when we want to but rather when we have too due to jobs schools or what have you.

When looking at the closed transactions over the past three years, July consistently has the largest number of closed transactions, and they were twice, if not three times the number as the corresponding January.  June is just slightly behind with August being third for all but one year.  It is important to keep in mind that these statistics are based on the date the home closed and funded.  Therefore, the homes were escrowed under contract between 30 to 60 days prior in most cases.  With that in mind, April, May and June are noted as the hottest selling months within the Stone Oak Area. 

Another interesting factor concerns price per square foot. Of the three months evaluated, February has the lowest price per square foot sale prices two of the three last years.  Remember, that these sales more than likely occurred during December or November.

So, what‘s the take away?  Well, if you are like me and value price and limited competition, the fall is the beginning of the home shopping season with the best deals being made in November and December.  

Last, I would mention that there is just as much valuable information contained within this study for those wanting to sell their home.  When you are considering a Realtor, remember there are some that really study the market tends and offer much more than a sign in the yard and an internet posting.  I invite you to allow us the opportunity to interview for your business.  You will appreciate our professional approach.

Bill Barkley

Owner & Broker of River Valley Real Estate

19202 Huebner Rd. Suite 100

San Antonio, TX 78258

210-853-5327

bill@rvreco.com

www.rivervalleyre.com

To Rent or to Buy, That is the Question

At some point in your life, you will face this dilemma.  For many, this will be the largest purchase of their lifetime.  There are so many important questions to ask, and an equal amount of advice to be received.  I am a very strong believer in property ownership, however, such fits my lifestyle and long term needs. For the purposes of this blog, I am choosing not to discuss the pros and cons of long term home ownership.  First, I do not think there is a favorable argument against it unless you live in Los Angeles or New York City where price becomes a major obstacle.  Second, I personally feel those in for short term are the ones needing sound advice.  

Who makes up the group considering their first home or a short term home purchase?  Obviously, it includes the first time home buyer.  Additionally, it includes the short term home buying group which comprises those with temporary employment transfers, military members considering purchasing during a three year change of station, students, and the investment property flipper.  I selected the first four groups because more than likely they will be looking to sell within 3 to 5 years or even sooner.  The last group must sell almost immediately to make a profit on the deal especially if the purchase includes financing.  I will not dive into investment purchasing strategies today, but I will utilize some of their investment parameters as examples and guidelines for the other groups.

To begin, let’s all agree that price is a product of the two most basic economic principles being supply and demand.  In this case, SUPPLY will refer to the number of comparable homes available for sale within the immediate and competitive neighborhoods.  DEMAND will refer to the number of active qualified purchasers within that set of parameters.  As Realtors, supply is easy to determine by utilizing our membership in the local MLS system.  Demand, on the other hand, can only be judged by historical information such as recent comparable sales data.  It is critical to understand the premise that when supply is decreasing while demand is constant or increasing, prices will rise.  Many of us as Realtors have witnessed multiple buyers for the same property with a bidding war ensuing to purchase the property.  Likewise, when there is a steady or increasing number of homes on the market with a constant or diminishing number of qualified purchasers, prices will tend to fall. Buyers will often offer less than the actual asking price for the house, and Seller’s will continue to reduce the price of their property until they reach a price to attract a purchaser.  Understanding these simple principles, is the first step in answering the question of whether to rent or buy.  

As a first time home buyer or a member of the military going through a change of station, many will be confronted with the allure to purchase a new home because of favorable financing products with minimal to zero money required for a down payment, and seller concessions such as paying all or part of the buyer’s closing costs, low maintenance and the warranty that goes along with a new home purchase.  The opportunity to move into a new home at virtually no cost for the first 30 to 60 days is attractive to say the least. This is especially true when compared to the prospect of renting a home which requires application fees, a security deposit, first month’s rent and a required pet deposit for the other member of the family.  Depending on the monthly rental rate, this can become a substantial amount, and pales in comparison to the previously mentioned scenario.  However, as attractive as the front end of the purchase looks, just like the investment house flipper, you have to consider and plan your exit strategy.  I would note that you do not see many investment house flippers purchasing in new developments.  This is because they cannot compete with the new construction and pricing in the short term.  The same scenario exists in markets where the prices of existing homes are falling.  The key point to remember when buying in the short term is to make the best possible purchase in the area with the highest demand and lowest inventory.  Also, make sure the demand in that area is constant, and not just a recent one time trend.  You will pay more, but it will be because there is true sustainable value.

For residential purchase to be considered a financial success, you must have appreciation which is to say prices must increase during the term of your ownership.  To sell a residence with a Realtor representing your interests at market rates, you can expect to incur seller expenses of approximately 8% of the sales price.  If you are asked to cover the buyer’s closing expenses this number could swell to between 10% and 12% of the sales price.  So the needed appreciation on the property during your ownership will have to equate to somewhere between 3% and 4% per year.  For example: you purchase a home in 2014 for $200,000.00.  You need to sell the house in 2017, and your equity position due to the lack of a required down payment is 5% or less being approximately $10,000.00, meaning you owe $190,000.00 on the house. At your original purchase price, your anticipated Seller closing costs will range between $16,000.00 and $24,000.00.  Therefore, you will need to sell the home at a price upwards of $220,000.00 just to recoup your equity. Without substantial annual appreciation, this situation will not occur, and as mentioned previously, for prices to rise, supply must decrease while demand remains constant or increases.

It should be noted, that favorable Buyer incentives do not typically exist in hot markets because they are not needed.  Keep that in mind when making the short term purchase.  If you wind up purchasing within an area with substantial inventory, you will experience strong competition when you attempt to sell.  Over the past ten years, I have met with many home owners who happily made a home purchase only to find that the neighborhood did not appreciate, and in fact, prices were comparable to when they purchased.  Such a situation presents three options. You can sell the property and come out of pocket for the difference at a loss. This sounds awful, but sometimes the loss is still less than the cost to rent.  While it may not seem like a win, in reality it is a financial gain.  This situation is contingent on your ability to take the necessary monies to closing to finalize the transaction.  The second option is to hold the property as an investment for lease.  Many clients have investment property portfolios and are quite happy with their growing equity positions and revenue streams.  Again, this was not the original plan, but not an awful plan if your loan allows it.  Make a mental note to check with your lender to make certain you can lease the property under the terms of your mortgage.  Remember with this option, you will need money for your future residence, whether you decide to rent or purchase.  The third is to be foreclosed on the property.  No one ever wants to go down this road if it can be avoided.  

So in conclusion, did I recommend to Buy or to Rent?  I recommended neither.  Every situation is unique to the person, the location, the property and the current market conditions.  What I did provide are the appropriate questions you need answered before you make an educated decision.  A good Realtor is worth their weight in gold, and will answer these questions honestly.  It is their fiduciary duty to protect your best interests.  With that being said, do your homework because just like in any profession we have some lemons as well.  You can educate yourself utilizing information from the internet to start a foundation, and having such knowledge will better prepare you to select a great Realtor.

written by Bill Barkley, President & Broker

Stone Oak Park

Are you an active individual or family who is new to the Stone Oak area? Fortunately for you Stone Oak has an amazing public park that is accommodating to any member of the family. The park is located near Canyon Ridge Elementary off 281 on Stone Oak Parkway. 

The park features hiking trails, covered picnic areas, an open air amphitheater, playscape and complimentary doggie bags. There's also informational workout stations with built in equipmet. Don't forget to check out the bear cave too. Be aware that there is a north and a south entrance located on each side of Stone Oak Parkway.

The north entrance features a 1 mile trail where you can enjoy some of the south Texas wildlife in the middle of stone oak. As you begin the north trail you will pass by the bear cave and walk into a great open area full of deer, cotton tail rabbits and amazing flowers. 

The South entrance features the playscape, amphitheater and then goes into a 1.2 mile trail. This trail is a lot more developed than the North side of the park and is adjacent to some of the homes in the Villages of Stone Oak. You will also get to travel through an underpass that was built at the end of the trail under Evans Rd that just makes this experience unique.

You will be able to enjoy a variety of plants and wildlife as you walk through the trails as well as get to meet and great local residents and their pets.  The park hours are from 7am to sunset and it is open seven days a week. It is a great park for the whole family to enjoy and take in the nature around! 

The Home Purchase

What are the most important aspects of a home?

Whether you are new to real estate or you have bought and sold over twenty times, the one aspect constantly quoted as being most important with regard to property value and resale is location.  Many times I have heard it said that the three most important factors in a property are location, location and location.  Location is important.  There is no denying that fact.  

However, my first employer a Member of the Appraisal Institute, once sat me down to explain a simple premise.   He asked me if there was an area in our community where no one lived.  Did I know of an area where it was void of development?  I answered no to both questions.  He continued to explain that we as people have complex and different taste based on our lifestyle, heritage and family.  He made simple illustrations by describing people we both knew.  Were they happy in their homes? Yes.  Did they all live in the same neighborhood? No.  He followed by demanding I keep my personal opinions at bay when preparing property appraisal valuations because he stated “One person’s Trash is another person’s Treasure”.  In retrospect, I’m not sure trash was the correct noun to use, but I understood its purpose was to over emphasize the point he was making.  From that day forward, I began to look at location in a completely different light.  Location is an extremely important factor in property selection, and its value is primarily determined by the needs and desires of the individual property owner.

Almost twenty years and hundreds of buyers and sellers later, his lesson still holds true, and I have learned there are other aspects of equal importance as location with regard to value and resale.  Several such aspects must allow for the same consideration as location, while others factors are almost universal.  When selling a property, specifically a residence, clean and well maintained are two conditions that are virtually universal.  Never have I had a client looking for their future primary residence request for me to locate a dirty home in need of major repairs.   I have experienced many clients turn and run away from a showing because the home was filthy and poorly maintained.  Structurally sound is another universal aspect.  How many of us want a home that might fall down on our heads while we are sleeping.  I would condition these statements by removing investment purchasers from consideration, and focus this discussion on the intent and desires concerning primary residences.

I have broached the subject of location.  I have identified a couple of simple yet universal conditions of importance concerning value and resale of primary residences, and I’m intentionally omitting a discussion about price because it essentially depends on the willingness of both the buyer and the seller.  So now, I want to bring attention to what I consider to be truly one of the most important factors regarding single family residences and their respective value and resale ability.  Have you ever toured a home, and concluded that you just did not like the house?  But, the reason why escaped you.  I have been in that situation many times.  The home was in a favorable location.  It met all the client’s needs with regard to amenities.  It was clean and well maintained.  It was structurally sound.  I’m thinking this is exactly what you wanted, so why are you not wanting to make an offer.  My client could not explain the reason for their lack of interest in the property any more than to say “it just doesn’t feel right”.  I would guess other Realtors have hit this wall just as I have, and the lack of understanding and frustration is difficult to bear.

Then came the epiphany.  I was showing a new client with refined taste.  This was not their first home purchase as a matter of fact, it wasn’t even their tenth.  Sometimes as a Realtor, you find yourself simply as a glorified door opener when your client has equal or greater experience than you, and they maintain the advantage of having a better understanding of exactly what they are looking for in a home.  As I unlocked the residence to allow entrance and proceeded to turn on all the lights and open all the blinds, I closely studied my client’s process of touring and evaluating the property.  I made mental notes of their comments whether positive or negative. 

Most were typical until the tour had concluded, and she asked if we could sit for a while to get a feel for the comfort of the home.  We sat down in the living room in an uncomfortable silence, at least, is was for me.  She glanced around the home, and looked at her husband, when she said “this home has an excellent flow”.  He nodded in agreement, and I took this conversation as a very positive sign.  We later left the house, and returned to the office to draw up an offer.  It eventually culminated in a closed transaction.  

At a later date, I took my clients to lunch, and we discussed how they were enjoying their new home.  During the conversation, she again directed her appreciation of the house with regard to the flow.  This time she began to explain the value of the floor plan of a home, and how it related to the flow of a family’s lifestyle.  She would point out aspects of the home she considered brilliant with regard to the floor plan design. I began to think of other homes,  homes where buyers did not like or purchase due to reasons they could not explain.  She discussed the different desires of families with children and how they changed according to the ages of the children. Sometimes that meant all of the bedrooms being located closely together, or having the master and additional bedrooms being located at separate ends of the home.  She spoke of half or guest bathrooms, their location, and their need to provide privacy.  She spoke about kitchens, and the changing trends of who is the cook of the family.  She discussed bathrooms and closets, and how they are effected by humidity when located to closely to one another.  She covered doorways, pantries, utility rooms, and he interrupted to mention garages with work space.  Her face lit up when she mentioned windows and natural light.  

By the end of lunch, I felt like I had just received a Master’s Degree in Residential Home Design.  From that day forward, I never approached showing a home the same way again.  Even if we are not cognizant of the fact, the flow of a home directly influences our opinion whether positive or negative.

written by Bill Barkley

1% Matters - How Mortgage Rates Impact Your Buying Power

A history on mortgage interest rates and what it means to your purchasing power.

You have decided it is the right time to purchase your first home, or maybe it is time to get a new home.  Thousands of people make this decision every day.  The first step begins with your lender, and the pre-approval process unless you are paying cash.  When getting a mortgage, the price you quality for is directly related to the current mortgage interest rate you can lock.  Obviously, this impacts you when you are selling as well.  Low interest rates increase purchasing power.

Imagine getting a pre-approval letter saying that you have been approved for a home with a 30 year mortgage with fixed interest rate of 13.7 percent? Believe it or not, those were the average mortgage interest rates experienced in the US in the 1980s for 30 year mortgages. Interest Rates in the last four years have been the lowest we have experienced in over a century. The all-time low historical rate for a 30 year fixed mortgage was in 2012 at an average of 3.7 percent. That is an astonishing 10 percent drop from the average rate seen in the 1980s. The second lowest average rate was in 2013 at 4 percent. So far in 2014, the average rate is at 4.4 percent for the months of January, February and beginning of March. The graph below illustrates the fact that the last time we experienced rates close to the ones we have today was in the 1950s, after World War II. Even then according to the National Bureau of Economic Research, the average rate on a 30-year, fixed-rate, FHA-insured mortgage was 5.15 percent as of December 1956. That was the only point in time when rates even came anywhere near the rates being seen today.

Information courtesy of Dr. Steve Sjuggerud & Federal Reserve Bank of St. Louis

How would you like your buying power going from $300,000 to $267,000 based on an interest rate change of just 1 percent? According to Dan Green, of The Mortgage Reports, he states that a 1 percent change in mortgage rates means a significant change in what you can afford. With a 1 percent change in interest it will mean a 10.75 percent change in affordability for the home buyer. This change in affordability will be seen across the board at any price range and will affect anyone looking to buy. For instance, if you are seeking to purchase a $200,000 home, the 1 percent change in interest rate would lower your purchasing power to $178.500. These examples of the decline in purchasing power are dramatic, and our examples only reflect a 1 percent change.  Can you imagine the effect of a 3 or 4 percent change in interest rates?  It is important to note, that although the Federal Reserve has held interest rates fairly constant over the past few years, interest rates are unpredictable and change on a daily basis.

The chart below provides examples of 30 year fixed rate mortgages and the effects of increasing rates on purchase prices of $300,000 and $267,000.

What is the take away from this article?  With regard to your personal purchasing power, right now is a very advantageous time to purchase a home.

Authored by: Cynthia Cure & Bill Barkley, Broker

Additional Sources: bankrate.com

500 More Reasons to Use River Valley Real Estate Company

To help make us a household name in the San Antonio area, we are offering a $500.00 REBATE on all residences listed and closed by River Valley Real Estate during 2014.  The process is simple.  Choose River Valley Real Estate Company as your representative when listing your home, and at closing we will reduce the amount of commission we receive by $500.00.  Not only will you receive professional and exceptional real estate representation and guidance through the process of selling you home, but we will give you money back.  Additionally, if you are planning on staying in the San Antonio area, and select River Valley as your Buyer's Representative, we will honor this offer on your purchase as well.   

What do you have to do to ensure your Rebate? 

• If you do not have a card you can email Erika@rvreco.com to receive one. 
• Call us at (210) 853-5327 or email us at Erika@rvreco.com to set up an appointment with one of our highly trained agents.  
• Upon meeting with the agent you will receive a comprehensive current market analysis and our step by step guide to getting your home sold. 
• Present your rebate card upon signing your listing agreement. 
• Start your journey to getting your home sold with River Valley Real Estate.

Presently, inventory within the greater San Antonio area is shrinking at a remarkable pace.  We have discussed the present market conditions in our previous blog titled, “Our Top Ten Lists”.  Categorized by zip codes, it details sales history for the last 6 months of 2013. It also explores current inventory as of December 2013, average marketing times, and price increases.  We concluded from this market study that the housing market in 2014 will be strong with shorter selling times and increasing prices. We want to share our efforts and knowledge with our clients and customers. 

River Valley Real Estate Company is committed to providing exceptional representation to our clients.  Honesty, integrity and a wealth of experience set us apart from many of our competitors. Centrally located in the northern portion of San Antonio, at the corner of Blanco and Huebner Road, allows us to be readily available to meet at your convenience. Our focus on the most current marketing platforms will get the exposure you desire for your property. Our constant study of the most recent market conditions allows for optimal financial success. Feel the advantage of having representation with your best interests at heart.

Our mission is to simply ensure every real estate transaction concludes as an enjoyable, memorable and successful experience.

Where is it really hot in the San Antonio housing market?

I keep reading news about the San Antonio real estate market being really strong, and as a real estate broker that is good news. However, in a city with over 1.2 million residents, I wanted to know where the market is truly improving. In considering where to research first, I thought where better than in my neck of the woods. So, I went to work researching the 78258 zip code which incorporated the areas commonly known as Stone Oak.

Before I give out all of the exciting details, I first want to lay out the parameters of my research.  All data utilized came from the SABOR MLS system. This is an important factor because the research will exclude for sale by owner properties and new builder homes not listed in the MLS. Second, I only researched single family detached residences. Next, I considered all closed transactions from January 2010 through October 28, 2013. I also included the pending contracts and active option contracts as of October 28, 2013. In addition, I wanted to know the amount of current inventory available, so I ran the active single family residences in 78258 on October 29, 2013. All sales were considered on a price per square foot basis as this is the best unit of measurement when comparing single family residences. I placed emphasis on the mean or average sales price per square foot and cumulative days on the market as I consider the average a more honest representation of actual market trends.

The first comparison covers the total number of home sales per year, and chart is provided below to illustrate the findings.

As evidenced from the chart above, the number of homes sold per year was relatively the same from 2010 to 2011. However, a dramatic increase of over 22% is noted from year 2011 to 2012. I realize 2013 has not eclipsed 2012 yet, but we are only through October. I did not chart pending contracts and active option contracts as some may very well not close and fund. Currently, there are 56 pending contracts in escrow, and another 25 active option contracts in escrow.  Theses pending sales total 81 additional transactions which if close and fund will bring the 2013 total number of sales to 832 units, which surpasses 2012 by 3.6%. This is a modest increase, but there are two months remaining in the year for the total to continue to increase.

My next case study observes the sales price per square foot per unit within the 78258 zip code. Again, I look at sales price per square foot rather than total sales price to account for the variable of size per home.

This chart really needs no clever explanation. We are experiencing the highest average sale prices per square foot per home during the past four years, and I see no reason for this trend not to continue into 2014. I will explore that reasoning later in this blog.

Next, let’s look at marketing times. Everyone trying to sell the home would like to have an indication of how long it will take, so they can be prepared. We have to find a new home, meet with our lender, pack our house, set up and disconnect utilities. These things take time and planning, so it’s always comforting to be able to construct a time line. When considering marketing times, I always consider the cumulative days on the market. Cumulative days on the market take into account all days listed on the market regardless of the Real Estate Company, agent or number of times listed.

Again, there is no need for lengthy explanation here. In 2013, the total marketing times for homes within the 78258 zip code have reduced on average by over a full month.

So what conclusions did I draw from my research project? First, the total number of homes within the area studied are on the rise. Second, the sales price per square foot per home is increasing. Third, homes are selling faster than ever during the past four years. Independently, each of these three factors suggest the market is improving. However, when combined, all three factors together illustrate the market is improving at a torrid pace. With that being said, I would like to add one more aspect to consider. Currently, there are only 204 single family detached residences actively listed on the market within the 78258 zip code, and that equates to barely 25% of the closed and pending homes sales during 2013. Additionally, the average asking price per square foot of these current listings is $137.00. Now that is HOT!

For our expert opinion on your home call River Valley Real Estate Company at (210)853-5327 or e-mail Bill Barkley at bill@rvreco.com.  We would love the opportunity to present our marketing platform, and discuss your real estate needs.