Where to Buy: Price-to-Rent Ratio in 76 US Cities

Original Article

Price, Rent, BUY, COMPETEREA, EXP, NANA SMITH

The price-to-rent ratio is a measure of the relative affordability of renting and buying in a given housing market. It is calculated as the ratio of home prices to annual rental rates. So, for example, in a real estate market where, on average, a home worth $200,000 could rent for $1000 a month, the price-rent ratio is 16.67. That’s determined using the formula: $200,000 ÷ (12 x $1,000).

Price-to-Rent Ratio by City

Using U.S. Census data, SmartAsset calculated the price-to-rent ratio in every U.S. city with a population over 250,000. Applying that ratio, we also calculated a projected average home price for a house or apartment that rents for $1,000 in each market.

Note that actual home values will vary based on factors such as proximity to commercial centers, access to transit and home size—rentals tend to be smaller (and therefore less expensive) than for-sale properties, so these values may overestimate true market prices.

Renting vs. Buying

The cities with the highest price-to-rent ratios are San Francisco, Honolulu and New York City, which means that they are least friendly to buyers. San Fran’s price-rent ratio of 45.02 is reflective of a market that is highly unfavorable to buyers, although with rents soaring that may soon change.

In NYC, an apartment that rents for $1,000 should cost around $433,920. That, however, represents the entire market—all five boroughs. In Manhattan and Brooklyn, the numbers look even worse. Here are the price-to-rent ratios for the five New York boroughs individually (prices for $1,000 rental in parenthesis):

Manhattan – 49.98 ($599,760)

Brooklyn – 42.31 ($507,720)

Queens – 30.05 ($360,600)

The Bronx – 32.54 ($390,480)

Staten Island – 35.83 ($429,960)

Based on its ratio of rental costs to home values, Manhattan is probably the most expensive place to buy a home in the country. At the other end of the spectrum are places like Houston, San Antonio and Dallas. These Texan markets are very favorable to home-buyers, with ratios below the national average price-to-rent ratio of 18.92.

The city with the lowest ratio in the United States is Detroit, with a price-to-rent ratio of 5.60. That means that a $1,000 rental in Detroit should sell for just $67,200. Indeed, Wayne County, in which Detroit is located, is the best county for buyers in Michigan.

Historical Price-to-Rent Ratio

National and city price-to-rent ratios have risen and fallen over the years depending on the state of the housing market. In the years before the housing crisis, as the housing market heated up, the national ratio rose from 22.73 (in 2005) to 24.50 (in 2007). Then, however, after the real estate market turned, as home prices fell and rentals grew more expensive, the ratio began to fall, dipping below 20 in 2011, down to the current rate of 18.92.

Before the housing bubble and subsequent crisis, the average hovered somewhere around 15. That indicates that we are still in a time period that is more favorable to renters than buyers from a historical perspective.

What Price-to-Rent Ratio Says About Affordability

While the price-to-rent ratio is useful for comparing buying to renting, it does not reflect the overall affordability of buying or renting in a given market. In theory, a place where renting and buying are very expensive could have the same price-to-rent ratio as a place where both renting and buying are very cheap.

Take San Francisco for example. San Fran has the highest price-to-rent ratio in the country, which indicates that renting should be more affordable than buying in the City by the Bay. However, as we all know, rentals in San Francisco are very expensive. The city’s high price-rent ratio is only reflective of the fact that buying is relatively more expensive than renting. It does not saying anything about absolute affordability of either buying or renting in that city.

PRICE-TO-RENT RATIO
City Price-to-Rent
Ratio
Home Price
(for a $1,000 Rental)
San Francisco, California 45.02 $540,240
Honolulu, Hawaii 40.2 $482,400
New York, New York 36.16 $433,920
Oakland, California 35.73 $428,760
Los Angeles, California 34.69 $416,280
San Jose, California 34.56 $414,720
Seattle, Washington 33.47 $401,640
Long Beach, California 32.62 $391,440
Washington, D.C. 32.09 $385,080
San Diego, California 29.52 $354,240
Portland, Oregon 28.7 $344,400
Anaheim, California 28.55 $342,600
Boston, Massachusetts 27.56 $330,720
Denver, Colorado 26.46 $317,520
Chula Vista, California 26.02 $312,240
Jersey City, New Jersey 24.75 $297,000
Santa Ana, California 23.97 $287,640
Austin, Texas 22.67 $272,040
Anchorage, Alaska 22.51 $270,120
Colorado Springs, Colorado 22.02 $264,240
Raleigh, North Carolina 21.83 $261,960
Miami, Florida 21.76 $261,120
Lexington, Kentucky 21.67 $260,040
Albuquerque, New Mexico 21.53 $258,360
Sacramento, California 21.42 $257,040
Atlanta, Georgia 21.35 $256,200
Chicago, Illinois 21.07 $252,840
Minneapolis, Minnesota 21.06 $252,720
Newark, New Jersey 20.85 $250,200
Greensboro, North Carolina 20.44 $245,280
Virginia Beach, Virginia 20.38 $244,560
Lincoln, Nebraska 20.11 $241,320
Louisville, Kentucky 20.08 $240,960
Riverside, California 20.07 $240,840
New Orleans, Louisiana 19.97 $239,640
Bakersfield, California 19.95 $239,400
Plano, Texas 19.46 $233,520
Fresno, California 19.32 $231,840
Nashville, Tennessee 19.32 $231,840
Oklahoma City, Oklahoma 19.17 $230,040
St. Paul, Minnesota 18.93 $227,160
Phoenix, Arizona 18.71 $224,520
Cincinnati, Ohio 18.68 $224,160
Mesa, Arizona 18.15 $217,800
Henderson, Nevada 18.15 $217,800
Charlotte, North Carolina 18.12 $217,440
Wichita, Kansas 17.77 $213,240
Omaha, Nebraska 17.61 $211,320
Aurora, Colorado 17.32 $207,840
Stockton, California 17.26 $207,120
Tulsa, Oklahoma 17.19 $206,280
Kansas City, Missouri 16.92 $203,040
Las Vegas, Nevada 16.4 $196,800
Tucson, Arizona 16.24 $194,880
Baltimore, Maryland 16.15 $193,800
St. Louis, Missouri 16.09 $193,080
Columbus, Ohio 15.76 $189,120
Arlington, Texas 15.72 $188,640
Tampa, Florida 15.63 $187,560
Indianapolis, Indiana 15.3 $183,600
Fort Wayne, Indiana 15.29 $183,480
Philadelphia, Pennsylvania 15.28 $183,360
Dallas, Texas 14.97 $179,640
Houston, Texas 14.77 $177,240
El Paso, Texas 14.71 $176,520
Milwaukee, Wisconsin 14.49 $173,880
Fort Worth, Texas 14.18 $170,160
Jacksonville, Florida 14.06 $168,720
San Antonio, Texas 13.96 $167,520
Corpus Christi, Texas 13.09 $157,080
Toledo, Ohio 12.56 $150,720
Pittsburgh, Pennsylvania 12.19 $146,280
Memphis, Tennessee 12.06 $144,720
Cleveland, Ohio 10.97 $131,640
Buffalo, New York 10.73 $128,760
Detroit, Michigan 5.6 $67,200

Top Ten Reasons Why It Is Great To Be an Appraiser

appraisal, appraiser, stamford, ct
Top ten reasons why it is great to be an appraiser:
1. Dazzle your friends with your knowledge of external obsolescence.
2. Enjoy the wonderful world of rats, bats, and spiders.
3. Join the profession blamed for the collapse of the financial world.
4. See places in people’s houses that usually require a search warrant to access.
5. Arouse the suspicion of an entire neighborhood when inspecting comparable sales.
6. Get a chance to irritate annoying real estate salespeople.
7. Walk around holding a clipboard just like “Skipper” at the Jiffy Lube.
8. Spend hours researching comps to justify the market value of a property you decided on when you pulled into the driveway.
9. Find out that some people really do hang black velveteen pictures of Elvis in their living room.
10. Be one of a handful of people who know that USPAP is not a medical term.”

By Kimberly Tanzer-Schneider‎
Chino Hills, CA •

 

Housing Market is Healthiest in Years!

nana smith, stamford selling agent

According to Nationwide’s recently unveiled, Health of Housing Market (HoHM) Report, the US housing market is at it’s healthiest levels since the index’s creation in 2001.

The index analyzes the health of the housing market across the country and in 373 metro areas every quarter. Using the data that they have collected over the past 15 years, Nationwide will look to give a “data-driven view of the near-term performance of housing markets based upon current health indicators.”

The fourth quarter of 2014 ended with the highest indicator score in over 15 years of data analyzed by the study at 109.8. The report explains:

“An index value over 100 suggests that the national housing market is healthy, with lower chances of a housing downturn over the next year as the index moves increasingly above the 100 breakeven value.”

Employment, demographics, the mortgage market, and housing prices are all used to evaluate the health of each market. The top 10 healthiest housing markets according to the index are:

  1. Pittsburgh, PA
  2. Cleveland-Elyria, OH
  3. Philadelphia, PA
  4. Rockford, Ill.
  5. Burlington, NC
  6. Scranton-Wilkes-Barre, PA
  7. Fayetteville-Springdale, AR
  8. Idaho Falls, ID
  9. Tulsa, OK
  10. Kennewick-Richland, WA

The two ‘least healthy’ markets were Bismark, ND and Atlantic City, NJ who received“just slightly negative performance rankings”.

David Berson, Nationwide’s Chief Economist and Senior Vice President, says “the quarterly report should serve as a resource to gauge how healthy housing markets are today but, perhaps more important, what to expect in the future and why.”

Bottom Line:

The housing market continues to recover and surpass recent history. Meet with an agent in your local market to determine if you are able to take advantage of the opportunities available in real estate today.

Industry Experts Agree: Housing Supply Too Low

Compete REA, Nana Smith selling agent, Nana Smith Stamford real estate

Last week, we reported on the lack of housing supply and how that was impacting the real estate market. Today, we want to let you know what other industry experts are saying.

Daren Blomquist, RealtyTrac Vice President:

“It’s kind of a seesaw right now between supply and demand. One of the reasons for fewer sales is not so much a lack of demand but a lack of supply, especially in the price range the majority of buyers were looking for.”

Diana Olick, CNBC’s Realty Check:

“Total sales are still running below expectations for the year. Don’t blame winter weather, though. Blame the lack of supply.”

Bill McBride, Founder of Calculated Risk:

“Inventory is still very low (down 0.5% year-over-year in February). This will be important to watch over the next month at the start of the spring buying season.”

Lawrence Yun, Chief Economist at the National Association of Realtors:

“Insufficient supply appears to be hampering prospective buyers in several areas of the country and is hiking prices to near unsuitable levels. Stronger price growth is a boon for homeowners looking to build additional equity.”

Realtor.com

“The National Housing Trend Report shows that inventory has decreased 10.9 percent year over year.”

And some experts are actually calling it a “seller’s market”

Forbes.com

“Tight inventory is a main reason the ball is still in the sellers’ court.”

Bill Banfield, VP of Quicken Loans:

“We’re a bit low on the supply-side which could force prices up for buyers, further hammering home that we’re in a seller’s market.”

Bottom Line

If you are debating putting your home on the market this year, now may be the time. The number of buyers ready and willing to make a purchase is at the highest level in years. Contact a local professional in your area to get the process started.

Path to Success

nana smith, nana smith listing agent, stamford ct real estate

Yes, the real estate industry is changing dramatically. It’s no longer about information; it’s about your ability to analyze that information so well that you can teach it to others. That’s your job now. That’s what the real estate industry is about now. The agents that embrace this New Market Reality are going to be the dominant agents moving forward. They are ones who will win the race! As you move forward into your real estate career, remember to plot out these three steps along the way:

• Step 1 – Continually educate yourself. Whether you use the KCM membership or some other educational means, know what’s going on and why it’s happening. As Albert Einstein said, “Wisdom is not a product of schooling but of the life-long attempt to acquire it.”

• Step 2 – Be able to communicate what you learn. Think of it as the ability to sing versus being on iTunes. If you can sing, but deliver your message on the equivalent of 8-track tapes, no one will listen to you. If, however, you can sing and you publish your music digitally (the modern format), you’ll have a much higher likelihood of reaching your audience. In real estate, this means making sure your client presentations are filled with impactful, relevant information that will help them gain clarity from the confusion in the market. Make your presentations overly visual and so simple that anyone—even a child—can understand what is happening in the current market. Graphs, charts, and infographics are great formats to use.

• Step 3 – Keeping current matters! You can have a tremendous understanding of key factors and wonderful visual materials to help make it easy for your clients, but if you’re not updating these things on a constant basis, you’re lost. How valuable would a physician be if she didn’t update her advice and recommendations based on the newest medical research? Don’t be caught with outdated information in your presentations and conversations. Do your homework and be on top of all the major news that will impact the current real estate market. For most families, buying or selling a home is the most important personal decision and possibly the largest financial decision they’ll ever make. They are looking for a true professional to help them through this process. Make sure they get one when you walk into their lives.

 

The Difference A Year Can Make

Payment-Difference-KCM

Some Important Points To Consider:

  • The latest Freddie Mac Primary Mortgage Market Survey reports the 30-year fixed rate at 3.7%.
  • Freddie Mac’s projection for Q2 2016 is that the rate will be 4.7% (a full percentage point higher)
  • The Home Price Expectation Survey predicts that home prices will appreciate by 4.4% during this same time

The impact waiting a year to purchase your dream home can make on your monthly payment is significant. Contact a local real estate professional today to discuss your options before the experts’ predictions become reality!

Selling Your House? Price it Right Up Front

Price-It-Right (1)

In today’s market, where demand is outpacing supply in many regions of the country, pricing a house is one of the biggest challenges real estate professionals face. Sellers often want to price their home higher than recommended, and many agents go along with the idea to keep their clients happy. However, the best agents realize that telling the homeowner the truth is more important than getting the seller to like them.

There is no “later.”

Sellers sometimes think, “If the home doesn’t sell for this price, I can always lower it later.” However, research proves that homes that experience a listing price reduction sit on the market longer, ultimately selling for less than similar homes.

John Knight, recipient of the University Distinguished Faculty Award from the Eberhardt School of Business at the University of the Pacific, actually did research on the cost (in both time and money) to a seller who priced high at the beginning and then lowered the their price. In his article, Listing Price, Time on Market and Ultimate Selling Pricepublished in Real Estate Economics revealed:

“Homes that underwent a price revision sold for less, and the greater the revision, the lower the selling price. Also, the longer the home remains on the market, the lower its ultimate selling price.”

Additionally, the “I’ll lower the price later” approach can paint a negative image in buyers’ minds. Each time a price reduction occurs, buyers can naturally think, “Something must be wrong with that house.” Then when a buyer does make an offer, they low-ball the price because they see the seller as “highly motivated.” Pricing it right from the start eliminates these challenges.

Don’t build “negotiation room” into the price.

Many sellers say that they want to price their home high in order to have “negotiation room.” But, what this actually does is lower the number of potential buyers that see the house. And we know that limiting demand like this will negatively impact the sales price of the house.

Not sure about this? Think of it this way: when a buyer is looking for a home online (as they are doing more and more often), they put in their desired price range. If your seller is looking to sell their house for $400,000, but lists it at $425,000 to build in “negotiation room,” any potential buyers that search in the $350k-$400k range won’t even know your listing is available, let alone come see it!

A better strategy would be to price it properly from the beginning and bring in multiple offers. This forces these buyers to compete against each other for the “right” to purchase your house.

Look at it this way: if you only receive one offer, you are set up in an adversarial position against the prospective buyer. If, however, you have multiple offers, you have two or more buyers fighting to please you. Which will result in a better selling situation?

The Price is Right

Great pricing comes down to truly understanding the real estate dynamics in your neighborhood. Look for an agent that will take the time to simply and effectively explain what is happening in the housing market and how it applies to your home. You need an agent that will tell you what you need to know rather than what you want to hear. This will put you in the best possible position.

15 Words That Could Add Value to Your Listing

 

crea real estate, nana smith real estate, exprealty

When it comes to writing an effective listing description,

don’t hold back. If you’ve got it, flaunt it!

If one of the following words accurately describes your home, you might want to consider adding it to your listing.

1. Luxurious

As mentioned above, lower-priced listings with the word “luxurious” sold for 8.2 percent more on average than expected. “Luxurious” signals that a home’s finishes and amenities are high-end. This is a huge selling point, particularly in this price range.

2. Captivating

Top-tier listings described as “captivating” sold for 6.5 percent more on average than expected. Unlike the word “nice,” “captivating” provides a richer, more enticing description for buyers. Plus, it’s less open to interpretation. Anything can be seen as “nice,” but “captivating” sets a high bar.

3. Impeccable

On average, listings in the bottom tier with the word “impeccable” sold for 5.9 percent more than expected. Like “captivating,” “impeccable” is a rich adjective. It also implies something about the quality of a home: The features are desirable and the home is move-in ready.

4. Stainless

“Stainless” is typically used to describe kitchens with “stainless steel appliances.” It’s in your favor to talk up these features in your listing — especially if your home is in the bottom price tier. In our analysis, lower-priced homes with the word “stainless” sold for 5 percent more on average than expected.

5. Basketball

On average, lower-priced homes with the word “basketball” sold for 4.5 percent more than expected. This may seem like an odd word to include in this list, but when you consider the context it makes sense. Among lower-priced homes, a basketball court — or even better, an indoor basketball court — is a huge selling point. While it may not stand out as much among higher-priced homes, it’s definitely worth mentioning in this price range.

6. Landscaped

It’s just as valuable to describe your yard as your house. In all price tiers, listings with the word “landscaped” sold for more than expected on average. The biggest premium was seen among lower-priced listings, which on average sold for 4.2 percent more than expected.

7. Granite

In the same vein as “stainless,” “granite” is typically used to describe countertops or another high-end home feature. Listings with the word “granite” sold, on average, for 1 to 4 percent more than expected across all price tiers.

8. Pergola

Not only should you include high-end home features in your listing description, you should also mention features not found in every home. They’ll help your listing stand out, especially if buyers are searching for homes online by keyword. The data shows mid-priced listings with the word “pergola” sold for 4 percent more on average than expected.

9. Remodel

Was your home recently remodeled? It may be worth mentioning. On average, bottom-tier listings with the word “remodel” sold for 2.9 percent more, middle-tier homes for 1.8 percent more and top-tier homes for 1.7 percent more than expected.

10. Beautiful

While beauty is in the eye of the beholder, a beautiful feature like a view may be worth noting. Lower-priced listings with the word “beautiful” sold for 2.3 percent more on average than expected.

11. Gentle

“Gentle” may seem like a weird adjective to have in a listing description. It’s typically used to describe “gentle rolling hills” or something about a home’s location. Top-tier listings with the word “gentle” sold for 2.3 percent more, on average, than expected.

12. Spotless

You may think all homes are spotless when a buyer moves in, so it’s not worth mentioning in a listing. But when it comes to lower-priced homes, cleanliness isn’t always a given. In this price range, listings described as “spotless” sold for 2 percent more on average than expected.

13. Tile

Much like “stainless” and “granite,” “tile” is a great word when it comes to describing the features of your home. A newly tiled backsplash or updated bathroom tile not only indicates a home’s aesthetic value but also sends a message to buyers that the home’s been well cared for by the current owners. Bottom-tier homes with the word “tile” in the listing sold for 2 percent more on average than expected.

14. Upgraded

On average, lower-priced listings with the word “upgraded” sold for 1.8 percent more than expected. Most buyers will agree that upgrades are a selling point. They indicate a home not only looks nice but also functions well. Spelling out which features have been updated is a good approach, so buyers have the right expectations when they see your home.

15. Updated

“Updated” sends a similar message to “upgraded.” But in addition to speaking to the quality of a home, it signals that something old has been replaced with something new. This is a great fact to communicate to potential buyers, as evidenced by the data. Mid-priced homes with “updated” in the listing sold for 0.8 percent more on average than expected.

Original Post is Here:

Housing Market to “Spring Forward”

Spring-Forward

Just like our clocks this weekend in the majority of the country, the housing market will soon “spring forward”! Similar to tension in a spring, the lack of inventory available for sale in the market right now is what is holding back the market.

Many potential sellers believe that waiting until Spring is in their best interest, and traditionally they would have been right.

Buyer demand has seasonality to it, which usually falls off in the winter months, especially in areas of the country impacted by arctic temperatures and conditions.

That hasn’t happened this year.

Demand for housing has remained strong and is currently three times stronger than last year at this time.

The National Association of REALTORS (NAR) recently reported that the top 10 dates sellers listed their homes in 2014 all fell in April, May or June.

Those who act quickly and list now could benefit greatly from additional exposure to buyers prior to a flood of more competition coming to market in the next few months.

Bottom Line

If you are planning on selling your home in 2015, meet with a local real estate professional to evaluate the opportunities in your market.

Selling Your Home? The Importance of Using an Agent

exprealty, CompleteREA, CREA, Nana Smith

When a homeowner decides to sell their house, they obviously want the best possible price with the least amount of hassles. However, for the vast majority of sellers, the most important result is to actually get the home sold.

In order to accomplish all three goals, a seller should realize the importance of using a real estate professional. We realize that technology has changed the purchaser’s behavior during the home buying process. For the past two years, 92% of all buyers have used the internet in their home search according to the National Association of Realtors’ most recent Profile of Home Buyers & Sellers.

However, the report also revealed that for the second year in a row 96% percent of buyers that used the internet when searching for a home purchased their home through either a real estate agent/broker or from a builder or builder’s agent. Only 2% purchased their home directly from a seller whom the buyer didn’t know.

Buyers search for a home online but then depend on an agent to find the actual home they will buy (53%) or negotiate the terms of the sale & price (31%) or understand the process (63%).

Stephen Phillips, the Chief Operating Officer for HSF Affiliates LLC, put it best:

“Home buyers are more informed than ever with their Internet searches and ongoing research; however, there’s a critical need to transform that information into analysis and advice that helps consumers make the best home-buying and selling decisions.

The plethora of information now available has resulted in an increase in the percentage of buyers that reach out to real estate professionals to “connect the dots”. This is obvious as the percentage of overall buyers who used an agent to buy their home has steadily increased from 69% in 2001.

Bottom Line

If you are thinking of selling your home, don’t underestimate the role a real estate professional can play in the process.

If you need your house sold…CALL ME!
203-858-6727 cell

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