George Seaverns has been a real estate agent for more than 30 years, so he has seen all kinds of markets. But the current market, he asserted recently, is the "opportunity of a lifetime."
"We will never see interest rates this low again," the RE/MAX Suburban broker in Buffalo Grove says, "and demand is very strong. We are finally seeing first-time buyers coming out who have been sitting on the sidelines for years. They heard their parents talking about how bad an investment real estate had been for them, so they didn't want to buy a house.
"But now all of that has turned around and we have returned to real estate being a great investment again," he says. "So they are literally coming out of the woodwork to buy because rents have gotten so high they are understanding that it is now cheaper to pay a mortgage than to pay rent.
For example, on a $250,000 mortgage, the monthly payment (at a 3.75 percent interest rate) is $1,157 per month. But if that interest rate rises to a historically "normal" rate of 7.5 percent, the payment on that same loan would be $1,852 per month.
"For all intents and purposes, we lost about nine years of first-time buyers and now they are finally coming out," Seaverns says. "But they need to be more concerned about interest rates than about prices. If interest rates go up even one percentage point, the amount they can afford will drop by 25 percent."
You can also look at it this way, Seaverns says. With a 3.75 percent interest rate, a monthly payment of $1,748 would allow you to afford a mortgage of $377,000. That is $127,000 more purchasing power with a 3.75 percent mortgage today versus a 7.5 percent mortgage, he says.
"That is a pretty dramatic difference," Seaverns says. "People right now are so worried about the house price but they need to realize that if they can afford a $250,000 house right now, in two years -- because of rising interest rates -- they may only be able to afford a $200,000 house."
Now is also the time for people who have been living in condominiums and townhouses to make their move, Seaverns believes. "Their home prices have risen to the point that they will no longer have to take a check to the closing and interest rates are low on the single-family house they probably want to buy."
Every suburban market is different, Seaverns stresses, but across the board, prices are rising and there is a shortage of home inventory.
"But this is the listing season. We have had seven listing appointments in just the last four or five days, so momentum is starting to pick up. Sellers know that many buyers want to close at the end of the school year, so now is a good time to list their homes," Seaverns says.
The average time on market for homes in the $250,000 to $350,000 price range in Buffalo Grove is now 49 days, but those homes that are priced right and well-prepared for showings sell much more quickly -- often in only one or two days.
"The average is brought up by the sellers who just don't understand that they need to paint their home interior in neutral colors, declutter it and let us help them stage it for showings. You don't want prospective buyers going through and mentally deducting money for painting, new carpet and other improvements. Instead, you want them to be walking through and picturing their furniture in the home," he says.
Seaverns and his team give each seller a checklist of adjustments they need to make before listing and those who follow their suggestions sell quickly, he says. "Television shows like HGTV have raised buyers' expectations. They are much more discriminating than they were in the past and the young buyers generally want everything move-in ready."
The more expensive homes are still recovering, but the move-up phenomenon sparked by first-time buyers finally entering the market should reach them, too.
"A little more time is needed for that, however," Seaverns said. "I am very encouraged by our huge fourth quarter in 2016 and equally big first quarter in 2017. The economy is absolutely turning around at last."
Seaverns can be reached at (847) 353-7606, (847) 962-5659 or through www.georgeseaverns.com.