A new opportunity for first-time buyers and bargain seekers lies in the country's older homes. RealtyTrac's Aging Home Analysis revealed that 70 percent of all U.S. homes were built before 1990 and 60 percent of homes sold in 2013 so far were homes built before that year.
"The high percentage of homes that are at least 20 years old and likely in need of some major repairs is eye-opening," said RealtyTrac's Chief Economist Jake Adger. "However, given the low inventory of homes available for sale in today's market, this challenge of aging U.S. housing supply can also be an opportunity for buyers looking for a bargain and homeowners looking to update their living space and improve the value of their homes."
Older homes were found to have a lower price point compared to newer homes, although the difference was not significant. Homes that were built before 1990 sold for an average of $233,221 while newer properties had an average price of $256,292.
"The lower price point on older homes is not surprising given many are in need of some rehab and are more likely to have maintenance issues," stated Adger. "But this also presents an opportunity for buyers willing to take on that older inventory. Those buyers can purchase at lower price points and face less competition from institutional investors."
Borrower advantage While older homes may be in need of some repairs and renovation, owners may be eligible for borrowing incentives that will make remodeling more affordable. Qualified homeowners are eligible for refinance options to purchase older properties and upgrade the home with modern amenities such as energy efficient technologies or open floor plans.
"Many consumers may not realize the FHA 203(k) program allows them to roll in the cost of both minor and major rehab into the purchase financing or a refinancing," Dennis Walsh, CEO of REBuildUSA, told RealtyTrac. "This means the entire layout of these older homes can be changed to fit more with modern tastes and sensibilities."
Those who have lived in older homes for longer are sometimes able to get lower rates for refinancing with the FHA 203(k) program. Even if an older home is in need of major repairs, refinancing for upgrades can improve the value in the long run.
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