The Difference Between Appraisals & Assessments

Lance Evans

BY: Lance Evans

In August, I wrote about assessments.  You may recall that assessments are opinions of value.  An assessor looks at all of the properties in a municipality and comes up with general values that are a component in computing the real property tax. While properties are treated similarly, assessments allow for differences like square footage, lot size, and general condition and upkeep. These variations can affect the assessment.

    How does this differ from how an appraiser works and how does an appraisal end up affecting the price paid for a property?

    Similar to an assessment, an appraisal is an opinion of value.  However, instead of looking at many properties within a jurisdiction, appraisers look at one property (subject property) and then find comparable sales (“comps”) that are like the subject property.  Ideally, comps are within a few miles and have sold within the past six months.  Like the assessor, an appraiser adjusts for differences in lot size, square footage, heating systems, etc. between the subject property and the comps to come up with a value. There is no set rule for what adjustments must be made. It is up to the appraiser’s judgement.  Adjustments are based on market reactions to amenities, features, or land size of a property.  Unique property types throw a whole other set of variables, so there is not a “cookie cutter” approach. 

    An appraisal usually varies from an assessment for several reasons. First of all, you may recall that the City of Watertown actually assesses at 92% of value. This means that a house that might be worth $100,000 would be assessed at $92,000. Other municipalities use different percentages.

    The other reason that there may be a difference is that appraisers are using data that is short term (6 months or less) and may cross municipal lines.  This means that an appraiser who has a subject property on the edge of a municipality might be using comps from a nearby town.  These would not figure into the assessor’s decision making process.

    In the North Country, the “6 month rule” does not always hold. Joel Howie, JC Howie Appraisals in Canton, noted that “One thing I consider in St. Lawrence County is a larger ‘market area’ or neighborhood when looking for comps. I may go outside an individual municipality to a competing neighborhood for comps. Because of the sparse population and diverse housing stock, I also may need to consider sales up to 18-24 months. Also, I may be appraising a modern colonial in Canton and I may need to consider a Potsdam sale in order to find sufficient sales data.”

    As I pointed out last month, an assessor works for a municipality.  Appraisers are generally self-employed and work for a variety of clients including lenders, private companies, and individuals.

    Much of an appraiser’s work is contracted by lenders.  The purpose of the appraisal might be for loan approval for a buyer or when a property owner refinances a mortgage.  The lender is required to use a variety of appraisers on a rotating basis and are not allowed to specify a certain appraiser.  However, the list can be limited based on an appraiser’s certification and approvals.  For instance, an appraiser needs to apply to be Veteran’s Administration (VA) certified.

    So what education is needed for appraisers? Like assessors, appraisers have taken special training to get licensed or certified. In addition to course work, they must work with a licensed or certified appraiser for a period of time.  After being licensed, appraisers take twenty-eight hours of Continuing Education every two years. A portion of this education is in Uniform Standards of Professional Appraisal Practice (USPAP).

    Property owners can also hire an appraiser.  The owner may want to find out what his or her property is worth prior to selling the property, it may be needed to help settle an estate, or the owner may want to check the worth against an assessment.

    Appraisals are usually effective as of the date of inspection.  Assessments are based on an earlier date usually as of the date the roll was submitted, which depending on that date could be nearly 2 years prior to the current date. In an increasing or decreasing market, assessment and a current appraisal may be quite different.

    So what is the difference between the assessor’s job and that of an appraiser?  Simply put, the assessor looks at the “forest” of properties and the appraiser looks at individual “trees.”

    In my August article, Last month I made an error in my article on assessment. I stated that if the assessment is $10 per thousand dollars then a property assessed at $92,000, the bill would be $92.  It would be $920.

What is “Assessed Value?”

Lance Evans

By: Lance Evans

The word “assessment” is defined as “the evaluation or estimation of the nature, quality, or ability of someone or something.”  In real estate, the terms “assessment” and “assessed value” are used frequently and are interchangeable.  

                Frequently people ask why a property is on the market for more than the assessment and if, after the property sells, the assessment will be adjusted to reflect the purchase price.

                I  spoke recently with Brian Phelps, the city of Watertown’s assessor for the past eleven years. We talked about his experience, what an assessor is, and what his or her job is. 

                Assessors are certified by the New York State Department of Taxation and Finance. They need to take a basic certification class and then need to take continuing education periodically.

                Mr. Phelps, who has 20 years of experience as an assessor, began his career as one of three elected assessors in the town of Champion. At one point, prior to being hired by the city, he was employed by three different towns in three different counties. This allowed him to see different systems and ways of doing his job along with a wide variety of properties and economic factors.

                Assessments are, at their core, opinions of value. They differ from an appraisal, which looks at an individual property. The assessor looks at the properties as a whole. His/her estimate of the value of real property is converted into an assessment and is one component in the computation of real property tax bills.

                While properties are treated similarly, assessments allow for differences like square footage, lot size, and features like a pool, porch, deck, etc. They also take into account the general condition and upkeep a property has. Variations like a big upgrade or a decline in maintenance can affect the assessment. An assessor  has access to building permits and he evaluates these based on how they impact the quality and condition of the property.

                His job is to “hit the value” with his assessment. Since he has access to property sales, I asked him what happens when a property sells. Does that automatically mean a change in the assessment? His answer was no.

                Before going further, it is important to note that the city of Watertown assessments reflect 92 percent of a property’s value. This means that if a property is assessed at $92,000 and sells for $100,000, the assessment was right on target. 

                When there is a large variance (higher or lower) in the price versus the assessed value, it could trigger a review of the assessment. Mr. Phelps pointed out that what usually has happened is that what was sold is not what was valued in the assessment. There are times when a buyer pays more than a property would normally be valued.

                For instance, in a “hot” market where properties are selling very fast and have multiple offers, the price paid can easily be much higher than the assessment. Similarly, if an area has suddenly experienced a quick drop in market value, properties can sell well below assessment.

                Either way, the assessor looks at the reasons surrounding the difference between the assessed value and the actual sale price and may adjust it accordingly. Mr. Phelps looks at the property as it was valued and what actually sold.

                Outside of a city-wide revaluation, the main way an assessment changes is a physical change to the property like an addition, something that markedly improves the value, or something that causes a dramatic drop in value. 

                Earlier, I noted that the assessment is only one component of how the real property tax bill is calculated. The other portion is the tax levy that the municipality, county Legislature, and local school district set as the amount that needs to be collected. The levy is the amount of money needed to fund government operations after accounting for state aid, sales tax and other income sources.

                According to Mr. Phelps, the total value of property in Watertown is roughly one billion dollars. If the City Council determines that the amount needed from property tax is ten million dollars, then the City’s portion of the property tax will be $10 per thousand dollars of assessed valuation. In the earlier example of a property assessed at $92,000, then the bill would be $92.

                Next month, I will be looking at how appraisals work and how they differ from assessments and how they can help determine the market price for a property.

Realtors Meet with State Legislators

 

Lance Evans

Last month I wrote about our meetings with our United States senators and congresswoman in mid-May. Several days after returning, a number of area Realtors and other interested parties went to Albany to meet with our state representatives on May 23 about several state-specific issues of interest to area homeowners. This was part of the New York State Association of Realtors’ annual Lobby Day. Over 250 Realtors from around the state participated.

    The Tri-County area was represented by Linda and Pat Fields (Linda J. Fields Broker and Professional Institute for Real Estate Training), Lisa L’Huillier (Hefferon Real Estate), Karen Peebles (Berkshire Hathaway HomeServices CNY Realty), Chuck Ruggiero (Hefferon Real Estate), Cheryl Schroy (Key Bank), Vickie Staie (Staie on the Seaway Real Estate Services and Appraisals USA), and Jennifer Stevenson (Blue Heron Realty) along with me. During the day, we met with Senators Joe Griffo (47th District), Betty Little (45th District) and Patty Ritchie (48th District). In addition, we had meetings with members of the Assembly Will Barclay (120th District), Ken Blankenbush (117th District), Marc Butler (118th District) and Addie Jenne (116th District). We informed them about the current housing market and our stances on several issues.

    We began by talking about the NY First Home Program. This is a first-time home buyer savings account program introduced by Senator Little and Assemblyman Phil Ramos (6th District). If passed into law, it would create a new tax-free savings account modeled after the State’s 529 College Savings Program. NY First Home would help New Yorkers achieve the dream of homeownership by creating a dedicated savings account to be used exclusively to cover costs associated with the purchase of a first home in New York state, whether that is a single family residence, condo, cooperative apartment or townhome.

    Using this program, New Yorkers could cover costs associated with the purchase of a first home using this dedicated savings account to deposit up to $5,000 ($10,000 for couples) of after-tax dollars annually, receive a state income tax deduction on the principal investment and grow savings tax-free, and then apply the savings and interest towards the purchase of a first home in New York state.

    The largest inhibitors for hopeful first-time home buyers in New York state are the initial up-front closing costs and high down-payment requirements. Enactment of NY First Home would provide New Yorkers with a practical savings mechanism to make buying a first home more affordable in New York state. This incentive would also have a positive effect on retaining young people in the state and provide a boost to local and state economies.

    A Sienna Research Institute poll in December 2016 found that 84 percent of New Yorkers supported NY First Home and 80 percent agreed that the governor and Legislature should make assisting New Yorkers in saving for a first home a priority.

    This bill passed the Senate during the 2016 session and is working its way through both houses in 2017.

    Our second issue concerned reinstating the STAR Exemption Program and sunset the School Tax Relief credit program that was written into law last year. Although both called “STAR,” the two programs work differently. The previous version provided immediate or “upfront” reductions in school taxes for homeowners.

    The change in 2016 to the STAR credit program led to confusion with new home buyers unsure of whether or not they would see the upfront savings as an exemption or be mailed a check under the credit program. In the worst instances, many homeowners received STAR credit checks later than when their school taxes were due, making it difficult to pay the full school tax bill. It is also still unclear from the Department of Tax and Finance whether or not future STAR credit checks will be taxed as income. This legislation would return the STAR program to a predictable upfront tax benefit to New York’s homeowners.

    The legislation has passed the Assembly and is working its way through the Senate.

    Realtors will continue to watch these issues and advocate for current and future New York property owners with our federal, state, and local officials.

LANCE M. EVANS is the executive officer of the Jefferson-Lewis Board of Realtors and the St. Lawrence County Board of Realtors. Contact him at levans@nnymls.com. His column appears monthly in NNY Business.

Realtors Advocate For Property Owners and Buyers

Lance Evans

The month of May saw Realtors from our area join their counterparts across the state and nation to advocate for consumer friendly real estate issues and oppose measures that would hurt property owners and buyers.

    During the week of May 15 to May 20, the National Association of Realtors (NAR) held its annual Legislative Meetings & Trade Expo in Washington, D.C. Attended by approximately 8,500 attendees from across the country and around the world, the week included about 200 meetings and events that covered many real estate topics and allowed Realtors to take an active role in advancing the real estate industry, public policy, and the Association. 

    The tri-county area attendees included Jennifer Dindl (Humes Realty and Appraisal), Carolyn Gaebel (Bridgeview Real Estate and Gaebel Real Estate Services), Lisa L’Huillier (Hefferon Real Estate), Brittany Matott (County Seat Realty), Al Netto (Weichert Realtors, Thousand Islands Realty), and Jennifer Stevenson (Blue Heron Realty), along with myself. During the week there were NAR and Women’s Council of Realtors committee meetings, idea exchanges with other Realtors and staff, and information and updates that will assist all of us in better serving the area’s real estate consumers.

    On May 18, we met with Congresswoman Elise Stefanik and joined colleagues from around the state while meeting with Senator Kirsten Gillibrand and Senator Charles Schumer. We focused on three main issues.

    The National Flood Insurance Program (NFIP), of particular interest to our area, is slated to expire on September 30. Without reauthorization, NFIP cannot issue or renew policies in 22,000 communities where flood insurance is required for a mortgage. The NFIP was created to provide incentives for communities to rebuild to higher standards and steer development away from flood zones. In exchange, communities gain access to flood maps, mitigation assistance and subsidized insurance to prepay for future damage and recover more quickly from flooding. The NFIP was last up for reauthorization in 2008. There were 18 short-term extensions and a two-month shutdown before Congress reauthorized the program in 2012.

    We asked our representatives to pass the “Flood Insurance Market Parity and Modernization Act,” which passed the House unanimously last year, and to enable consumers to meet federal requirements with private plans that often offer better coverage at a lower cost than the NFIP.

    Tax reform was also on our list of issues. While no tax reform legislation had been introduced as of our meetings, there were several plans that had been discussed. Some of these would lower tax rates and raise the standard deduction, but would pay for these changes by scaling back existing real estate tax provisions. Proposals that limit itemized deductions, even if not directly changing rules applicable to mortgage interest, could have serious negative consequences for homeowners. 

    PricewaterhouseCoopers (PwC) analyzed a blueprint-like tax reform plan and noted that home-owning families with incomes between $50,000 and $200,000 would face average tax hikes of $815 in the first year after enactment, while non-homeowners in the same income range would see an average cut of $516. Currently, homeowners pay 83 percent of all federal income taxes, and this share would go even higher under similar reform proposals. Homeowners should not have to pay a higher share of taxes because of tax reform.

    Further, proposals limiting tax incentives for homeownership would cause home values everywhere to plunge. Estimates provided by PwC show that values could fall in the short run by more than 10 percent, with a larger drop in high-cost areas. It might take years for home values to rebound from such a significant decrease.

    The final issue we spoke about was protecting sustainable homeownership.   We asked our representatives to responsibly reform the secondary mortgage market. Failure to do so, while limiting costs imposed on homeowners, ensure proper loan disclosures, and fund necessary system upgrades for federal housing programs hurts the very fabric and underpinnings of our society.

    Fannie Mae and Freddie Mac act as a backstop for mortgages and help to safeguard 30-year, fixed rate mortgages ensuring families are not shut out of homeownership. We asked that these entities not be dismantled without identifying a viable replacement.

    The week was productive and informative. It is important that our representatives hear from Realtors advocating for property owners. The information we received at the meetings will assist us as we work for housing opportunities in the area.

LANCE M. EVANS is the executive officer of the Jefferson-Lewis Board of Realtors and the St. Lawrence County Board of Realtors. Contact him at levans@nnymls.com. His column appears monthly in NNY Business.

To Buy or Rent, That is the Question!

Lance Evans

A recent Watertown Daily Times article cited a study by SmartAsset comparing average rent to home prices by county nationwide.
    In New York state, Jefferson County ranked 8th in terms of being more viable to buy than rent. According to the study, the break-even point, the point when the amount paid in rent exceeds the cost of purchasing a home, is 1.4 years. For the comparison, SmartAsset used an average price of $222,146 for a Jefferson County home with an average monthly mortgage of $558 versus an average monthly rent of $1,492.

    A little lower on the list was Lewis County at 22nd with a break-even point of two years. The average home price used was $178,887 with a monthly mortgage payment of $464 and $1,066 monthly rent.

    Coming in at 33rd in the state was St. Lawrence County. Using an average home price of $138,283, a monthly mortgage payment of $346 and monthly rent of $1,105, SmartAsset estimated that the break-even point was a little over two years.

    For the analysis, SmartAsset assumed a mortgage rate of 4.5 percent, closing costs of $2,000, and a 20 percent down payment when it created the above comparisons. A higher rate, a lower down payment, etc. would change these calculations.

    A similar study, done by ATTOM Data solutions came out in January 2017 and noted that in about two-thirds of the nation’s counties, it is more affordable to buy a home than rent. ATTOM compared rents of fair market three-bedroom properties to the monthly payments on median priced homes in 540 counties. The calculations included the cost of mortgages, property taxes, and insurance. The report also noted that in about a quarter of the markets surveyed, rents are surging faster than home prices.  In fact it noted that, on average, rents for a three-bedroom property rose 4.2 percent nationwide.   

    While ATTOM did not look at St. Lawrence or Lewis counties, Jefferson County was included.   Like SmartAsset, ATTOM found that it was more affordable to buy than rent in the county. They estimate that a buyer will spend about 26.8 percent of the average wage when buying a median priced home ($129,000) in Jefferson County while it takes 44.8 percent of wages to rent a three-bedroom dwelling at a median rent of $1,492. ATTOM’s study showed that in other areas of the state, for instance many of the Hudson River Valley markets, it is less expensive to rent.

    The analysis incorporated recently released fair market rent data for 2017 from the U.S. Department of Housing and Urban Development, wage data from the Bureau of Labor Statistics, and public record sales deed data from RealtyTrac in counties with at least 900 home sales in 2016.

    A third analysis by realtor.com showed that in all three counties, it is less expensive to buy than rent. In fact, Jefferson and St. Lawrence counties are numbers three and four in the state with Jefferson County buyers using twenty-two percent of income while renters used thirty percent. St. Lawrence County had a narrower gap of 6 percent with a buyer needing to spend 16 percent of income to buy and 20 percent to rent. Lewis County was also less expensive to buy with a 2 percent gap.

    Clearly, it is currently less expensive to buy than to rent in our area. So what should you do? Look at your circumstances including income and debt, consider the alternatives, and if you think you might be interested in buying a property, check with a mortgage professional and an area Realtor.

    Jennifer Stevenson, licensed real estate broker and owner of Blue Heron Realty in Ogdensburg, has been nominated as 2018 secretary-treasurer of the New York State Association of Realtors (NYSAR) a not-for-profit trade organization representing more than 53,000 of New York State’s real estate professionals.

    Ms. Stevenson, a member of the St. Lawrence County Board of Realtors since 1989, has served in many capacities at the local, state, and national levels of the Realtor Association. She is a past president of the St. Lawrence County Board of Realtors and served on the Association’s board of directors for over 25 years. In addition, she has chaired several NYSAR committees, and participates in the National Association of Realtors meetings. Locally she serves on the Ogdensburg City Council, is active in Rotary, and participates on St. Lawrence County’s Fair Housing Task Force among other activities. The elections will take place on September 27 at the NYSAR Board of Directors meeting.

Quarter One Homes Sales Higher than Last

AMANDA MORRISON / NNY BUSINESS

[Read more…]

Tax Breaks You Can Only Claim as a Homeowner

Lance Evans

There are many benefits associated with homeownership. The American Dream offers financial gain, stability, and many social benefits.   One of the biggest benefits associated with homeownership can be found when filing your taxes and, depending on your situation, there may be thousands of dollars coming back your way.

    “Homeownership is an investment in your future,” said Jefferson-Lewis Board of Realtors President Vickie Staie. “It is where we make memories and feel comfortable and secure, it strengthens communities, and it offers homeowners financial security. Tax breaks are just one of many benefits of being a homeowner, and even those who have owned a home for years may be unaware of all of the opportunities for savings.”

    As the deadline to file taxes approaches, the Jefferson-Lewis and the St. Lawrence County Board of Realtors want to remind homeowners of the many tax benefits, savings and deductions they can take advantage of simply by owning a home.

The mortgage interest deduction (MID)

    This may be the most notable and advantageous tax benefit that homeowners enjoy. The MID allows homeowners to deduct the interest paid on a mortgage debt of up to $1 million on a primary residence and one additional residence. It is especially helpful in the early years of a mortgage when the monthly payment goes largely toward interest.

Property taxes

    It is widely known that being a homeowner means paying taxes on your property to local government, whether it is the city, county or state. What you might not know is that these taxes are entirely deductible from your federal income tax, which is more great tax news for homeowners.

Mortgage insurance premium deduction

    Homeowners with incomes of no more than $100,000 can deduct their mortgage insurance premiums if they were required to obtain insurance as a condition of receiving financing for the home. With the current obstacles that prospective homebuyers face, such as student loan debt, the deduction is a benefit that can save homeowners a great deal of money.

    “If you are on the fence about buying a home, taking advantage of these tax benefits can help put your dream home within reach,” said Debbie Gilson, president of the St. Lawrence County Board of Realtors. “By working with a Realtor, a member of the National Association of Realtors, you can better understand the home-buying process and the many benefits that come with owning a home.”

    Congress is considering eliminating or curtailing some or all of these tax benefits.  Members of Congress from both Houses and both parties have expressed a high level of interest in reforming the tax system. Many Washington observers point to Republican-control of the House, Senate, and White House as the primary reason a version of tax reform may finally be enacted. Much work remains before any tax reform plan comes up for any votes. This ongoing debate places a variety of tax laws, including those affecting commercial and residential real estate, under increased scrutiny.

    Realtors are working to preserve these benefits.  American homeowners already pay between 80 and 90 percent of all federal income taxes. Without the MID, for instance, that figure could rise to 95 percent. It’s particularly troubling considering the fact that more than half of families who claim the MID earn less than $100,000 per year.

    The state and local property tax deduction is essential to homeowners as well. While paying property taxes is a part of owning a home, knowing that those payments to state and local governments can be deducted from their federal income tax brings some peace of mind.  Without that deduction, homeowners would get taxed on the income used to pay their property taxes. This is a form of “double taxation” that hits home for lower- and middle-income households.

    The value of these tax incentives is already figured into home prices, meaning there’s a very real likelihood that eliminating those benefits could cause home values to plummet.  Please contact Congresswoman Elise Stefanik and Senators Charles Schumer and Kirsten Gillibrand and let them know that these deductions are important and need to be preserved.

What is the Women’s Council of Realtors?

Lance Evans

On Oct. 13, 2008, the Tri-County (NY) Network of the Women’s Council of Realtors (WCR) was chartered.  It introduced our area to this organization and opened up a new way for Realtors to hone leadership skills, connect with other Realtors and give back to the local area.  So what is WCR and how does it connect to the larger Realtor community?

     In the 1930s, the National Association of Realtors witnessed the growth of women working in real estate and increased participation of women by national conventions, as women were becoming aware of their potential in, and importance to, the industry.

     A Women’s Division had already been created in 1924 by the California Real Estate Association. In 1938, National President Joseph Catherine encouraged the formation of a national Women’s Council after being impressed by the California group. At the Annual Convention in Milwaukee in November 1938, the Board of Directors voted to form a Women’s Division. Thirty-seven women, representing nine states, were at that meeting for the Women’s Council’s inception.

     Through the decades, Women’s Council’s membership growth has reflected the vast number of women choosing to work in real estate as they recognized the immense career benefits combined with a Women’s Council membership, including:

  • Earnings equitable to men’s because “commission is commission.”
  • Flexible work schedules allowing Realtors the ability to raise a family and have a career instead of choosing one or the other.
  • A support system of women in the same field garnering many friendships, networking capabilities and referrals.
  • Confidence through connection with other professional women Realtors.
  • Recognition for their own achievements and success, as well as inspiration and courage to strive for greater successes.

     Despite the name, WCR is open to Realtors of both sexes.  About 10 percent of the more than 12,000 real estate members are male.

     The local network is one of 250 local and state networks nationwide that provide the backbone of WCR.  Most of the work is done by volunteer managers trained to position their groups as a business resource in their Realtor communities.

     Since 1998, incoming network presidents have been trained at the annual Leadership Academy. With its in-depth network management training, the Academy was recognized with the prestigious Leadership Development Trophy in Network Relations from the American Society of Association Executives in its first year. Local networks regularly have networking and educational programs, which are designed to keep members on top of an evolving market. Nationwide, Women’s Council members collectively generate more than $100 million in commissions annually.

     Our local network is made up of 35 Realtors from the Jefferson-Lewis and St. Lawrence County Boards of Realtors and 14 sponsors.  In its short existence, it has established several annual events and made its mark on the area. Every March, it holds a “Got Leadership?” luncheon and panel discussion featuring four or five local female leaders.  This year’s edition will be held at noon on Tuesday March 21 at the Italian-American Civic Association on Bellew Avenue in Watertown. It is open to the public.

     In the fall, the network sponsors a “Meet the Candidates” event and Top Producer award galas held for Realtor members of the St. Lawrence County and Jefferson-Lewis Boards of Realtors.  These honor the top 20 percent of members in terms of units sold and units rented.

     In the summer, the network holds a golf tournament. A portion of the proceeds assist a local nonprofit. Past recipients have included the Victim’s Assistance Center, Family Counseling Service, the Sci-Tech Center, the Watertown Urban Mission, the USO at Fort Drum, and the River Community Wellness Program at River Hospital. In 2017, the seventh annual tournament will be at Highland Meadows Golf Club on Friday, July 28. 

     The Tri-County Network has had a number of successes in addition to its events, including having one of its members, Lisa L’Huillier, serve as state network president.  In addition, it has raised over $7,500 for local charities and raised awareness of the role women play in positions of leadership in the north country.

LANCE M. EVANS is the executive officer of the Jefferson-Lewis Board of Realtors and the St. Lawrence County Board of Realtors. Contact him at levans@nnymls.com. His column appears monthly in NNY Business.

Housing Then and Now: Trends in buying and selling across 35 years

Lance Evans

In December, I gave you some of the highlights of the National Association of Realtors (NAR) 35th Profile of Home Buyers and Sellers. When NAR released its first profile in 1981, mortgage rates were over four times higher than they are today, and first-time buyers made up a much larger share of overall sales.  While many home buyer and seller behaviors and preferences have changed, some have remained constant over the last 35 years.

                “When the Profile of Home Buyers and Sellers made its debut in 1981, consumers and Realtors navigated a much different real estate landscape. The internet hadn’t been invented and the average monthly mortgage rate was 15.12 percent,” said Debbie Gilson, president of the St. Lawrence County Board of Realtors. “One important constant during this time has been the Realtor’s role as the leading advocate for homeownership and a trusted expert in helping buyers and sellers close the deal.”

                With the recent release of the 2016 survey, it’s a great time to look at some of the data and trends in this year’s edition and how they stack up to the last three-and-a-half decades.

                The quickening pace of home sales over the past year included a small rebound from two key segments of buyers who have been missing in action in recent years: first-time buyers and single women.

                After slipping for three straight years, the share of sales to first-time home buyers in the 2016 survey ticked up to 35 percent, which is the highest since 2013 – when it was 38 percent – and a revival from the near 30-year low of 32 percent in 2015. In the 35-year history of NAR’s survey, the long-term average of first-time buyer transactions is 40 percent. 

                Married couples once again made up the largest share of buyers (at 66 percent) and had the highest income of $99,200. However, the survey revealed that single women made up more of the buyer share than in recent years, based on household composition. “After falling to 15 percent of buyers a year ago, which tied the lowest share since 2002, single females represented 17 percent of total purchases, the highest since 2011 at 18 percent,” noted Jefferson-Lewis Board of Realtors President Vickie Staie. “Thirty-five years ago, single females represented 11 percent of purchases.”

                Despite the internet’s growing popularity over the past 20 years, buyers and sellers continue to seek a real estate agent to buy or sell a home. “In NAR’s 2016 survey, nearly 90 percent of respondents worked with a real estate agent to buy or sell a home. This has brought for-sale-by-owner transactions down to 8 percent, their lowest share ever for the second year in a row,” said Ms. Staie.

                Since NAR’s inaugural survey, consumer preferences have evolved and housing costs have gotten more expensive. In 1981, the typical buyer purchased a 1,700-square-foot home costing $70,000 ($201,376 in inflation-adjusted dollars). In the 2016 survey, purchased homes were typically 1,650 square feet and cost $182,500.

                In 1989, when NAR started collecting buyer data on down payments, first-time homebuyers financed their purchase with a 10 percent down payment and repeat buyers financed a loan with a 23 percent down payment. As low-down-payment mortgage programs entered the marketplace and credit standards eased, the typical amount of money put down fell to as low as 2 percent for first-time buyers both in 2005 and 2006. “For repeat buyers, the smallest median down payment was 13 percent both in 2012 and 2014, which is likely due to reduced equity in the home that was sold,” observed Ms. Gilson.

                In recent years, down payment amounts have remained mostly unchanged, coming in at 6 percent for first-time buyers the last two surveys and either 13 percent or 14 percent for repeat buyers in the past four surveys. 

                Contact a member of the Jefferson-Lewis Board of Realtors (jlbor.com) or the St. Lawrence County Board of Realtors (slcmls.com) to connect with a Realtor to learn more about buying or selling a property.

 

Home sales and median price rise in north country last quarter

AMANDA MORRISON / NNY BUSINESS
36114 County Route 46,Theresa, NY 13691 is a cabin on the Indian River.

[Read more…]