Homeowner’s insurance is a must-have to protect what’s probably your biggest investment – your home. And while you never want to think about worst-case scenarios, the right coverage is basically your safety net if something goes wrong. Here’s how it helps you.
Covers Repairs and Rebuilding Costs: If your home is damaged by fire, storms, or other covered events, your policy helps pay for repairs or even a full rebuild.
Protects Your Belongings: Many policies can also cover personal items like furniture, electronics, and clothing if they’re stolen or damaged.
Provides Liability Coverage: If someone gets injured on your property, homeowner’s insurance can help cover medical bills or legal expenses.
In the simplest sense, it gives you peace of mind. Knowing you have protection against unexpected events helps you worry less. And with such a big purchase, having that reassurance is a big deal.
And while your first insurance payment will be wrapped into your closing costs, you’ll want this to be a part of your budget beyond closing day too. That’s because it’s a recurring expense you’ll have once you get the keys to your home.
Here’s what you need to know to help you budget for this important part of homeownership today.
Costs and Claims Are Rising
In recent years, insurance costs have been climbing. According to Insurance.com, there are four big reasons behind the jump in premiums:
More severe weather events and wildfires are leading to higher claims.
Insurance companies are pulling out of high-risk areas, reducing options for homeowners in some states.
Past rate increases haven’t kept up with the rise in claims.
The cost to rebuild or repair homes has gone up due to higher material and labor costs.
Basically, disasters are happening more often, repairs cost more, and insurers have to adjust their rates to keep up. Data from ICE Mortgage Technology helps paint the picture of how the average yearly premium has climbed over the last decade (see graph below):
What You Can Do About It
Homeowner’s insurance is a must to protect your home and your investment. But with costs rising, you’ll want to do your homework to balance the best coverage you can get at the best price possible.
Homeowner’s insurance rates vary widely based on location, provider, and coverage. Shop around and compare quotes before settling on a policy. And don’t forget to ask about discounts. Things like security systems or bundling with auto insurance could help lower your insurance costs.
Bottom Line
When you’re planning to buy a home, it’s important to look beyond just your mortgage payment. You’ll also want to budget for your homeowner’s insurance policy. It gives you a lot of protection against the unexpected. And while it’s true those costs are rising, there are things you can do to try to get the best price possible.
What’s your biggest concern when it comes to budgeting for homeownership? Let’s talk through it and make sure you’re set up for success.
Ground rent is a distinctive characteristic of Maryland real estate law, especially common in Baltimore City and surrounding counties. It involves a homeowner owning the physical structure of a property but not the land beneath it. Instead, the homeowner leases the land from a ground lease holder and pays a recurring ground rent, typically a small, fixed fee paid twice a year, ranging from $50 to $150 annually . This practice, with origins in feudal England, has a long and intricate history in Maryland, dating back to colonial times . This report explores the historical development, evolution, and current status of ground rent in Maryland, including its impact on homeowners and communities.
Origin and Historical Context of Ground Rent in Maryland
The roots of ground rent in Maryland trace back to 1632 when King Charles I of England granted Cecilius Calvert, the second Lord Baltimore, ownership of all the land in present-day Maryland . Calvert collected rents from colonists who settled and built on his land, establishing a system of land leasing that laid the foundation for the modern ground rent system. Following the American Revolution, the Maryland legislature broadened this system, granting any landowner the right to demand rent . In the early days, some landowners accepted alternative forms of payment, such as tobacco or even a single red rose, reflecting the historical significance of these tributes .
Ground rent played a crucial role in Baltimore’s growth as an industrial powerhouse in the early 20th century. It facilitated the development of affordable housing, particularly rows of red-brick rowhouses with their iconic white marble steps. Developers recognized that working-class families could achieve homeownership more easily if they weren’t burdened with the cost of the land. By leasing the land at a minimal cost, developers could use the ground rent payments to generate profits and fuel further construction, expanding affordable housing options in the city .
It’s important to understand the homeowner’s responsibilities in a ground rent arrangement. While they own the house itself, they are also responsible for maintaining the land and any improvements made to it, including the house . This means that homeowners are not only required to pay ground rent but also bear the costs of property upkeep and renovations.
However, the ground rent system has always been a subject of debate. While intended to promote homeownership, concerns arose about developers potentially exploiting the system for profit and the possibility of substandard housing conditions emerging due to the separation of land and structure ownership . This tension between affordability and potential exploitation, particularly its contribution to racial disparities in housing, has been a recurring theme in the history of ground rent in Maryland .
When considering a property purchase in Maryland, it’s essential to understand the distinction between “Fee Simple” and “Ground Rent” listings. “Fee Simple” indicates that the purchase price includes both the house and the land, while “Ground Rent” signifies that the buyer will be required to pay a fee to the landowner .
Evolution of Ground Rent Laws and Regulations in Maryland
Maryland’s ground rent laws have evolved significantly over time, with notable changes occurring in recent decades. The Maryland legislature has taken steps to address concerns about homeowner protection and transparency in ground rent arrangements. Here’s a timeline of key legislative changes:
Post-American Revolution: The Maryland legislature empowered any landowner to demand ground rent, expanding the system beyond the original grants by Lord Baltimore .
1959: Delegate Joseph A. Acker introduced a bill to phase out ground rents by requiring that they be sold along with the homes, although this bill did not become law .
2007: The Maryland General Assembly passed comprehensive legislation aimed at reforming the ground rent system . This legislation introduced several key changes:
Mandatory registration of ground leases: Ground lease holders were required to register their ground rent properties with the State Department of Assessments and Taxation (SDAT) . Initially, failure to register could result in the extinguishment of the ground rent, but this provision was later ruled unconstitutional .
Elimination of ejectment: The law initially sought to eliminate the ground lease holder’s right to eject a homeowner for non-payment of ground rent . However, this provision was later overturned by the Maryland Court of Appeals .
Notice and cure period: Ground lease holders were required to provide homeowners with a 60-day notice and an opportunity to cure any default before taking legal action .
Redemption of irredeemable ground rents: Previously irredeemable ground rents were required to file a notice of intent to preserve irredeemability, or they would become redeemable .
2023: Further legislation was enacted to enhance homeowner protections and simplify the process of redeeming ground rent . These changes included:
Expanded notice requirements: Ground lease holders are now required to use specific forms developed by SDAT when billing for ground rent, demanding payment, or taking legal action . This ensures that homeowners receive clear and consistent information about their rights and obligations.
Clarification of registration: A ground lease is not considered registered until it is posted on the SDAT online registry . This promotes transparency and ensures that homeowners can easily verify the registration status of their ground lease.
Repeal of waiting periods: Certain waiting period requirements for homeowners seeking to redeem their ground rent were repealed . This streamlines the redemption process and makes it easier for homeowners to gain full ownership of their property.
Public interest declaration: The Maryland General Assembly declared that it is in the public interest for ground rents to be redeemed . This statement underscores the legislative intent to phase out ground rent arrangements and promote full homeownership.
These legislative changes reflect a growing trend towards empowering homeowners and phasing out the ground rent system in Maryland.
Potential Impact of Ground Rent on Homeowners and Communities in Maryland
Ground rent can have both advantages and disadvantages for homeowners and communities in Maryland.
Positive Impacts:
Increased affordability: Ground rent can make homeownership more attainable by lowering the upfront purchase price . This can be particularly helpful for first-time homebuyers and those with limited financial means.
Negative Impacts:
Financial burden: Ground rent constitutes an ongoing financial obligation for homeowners, which can pose challenges for those with fixed incomes or facing financial difficulties .
Risk of foreclosure: Failure to pay ground rent can result in legal action, including liens and foreclosure, potentially leading to the loss of the home . To illustrate this risk, consider the case of Deloris McNeil, a Baltimore resident who lost her home of 20 years due to falling behind on ground rent payments .
Complexity and confusion: The ground rent system can be intricate and difficult to navigate, especially for those unfamiliar with its specific rules and regulations . This complexity can lead to misunderstandings and disputes between homeowners and ground lease holders. The opaque nature of ground rent can further disadvantage homeowners and contribute to racialized dispossession .
Racial disparities: Studies indicate that ground rent disproportionately affects Black communities and low-income households in Baltimore, exacerbating racial disparities in wealth and housing security .
Redeeming Ground Rent in Maryland
Homeowners in Maryland generally have the right to redeem their ground rent, which means purchasing the land from the ground lease holder . This allows homeowners to gain full ownership of their property and eliminate the ongoing obligation of ground rent payments.
The process for redeeming ground rent involves notifying the ground lease holder and submitting an application to the State Department of Assessments and Taxation (SDAT), along with the required fee . The redemption amount is calculated based on a formula that considers the annual ground rent and the year the lease was created .
Here’s a table summarizing the capitalization rates used to determine the redemption amount:
Lease Execution Year Range
Capitalization Rate
July 2, 1982 – Present
12%
April 6, 1888 – July 1, 1982
6%
April 8, 1884 – April 5, 1988
4%
Prior to April 9, 1884
Negotiable and possibly non-redeemable
For example, if the annual ground rent is $100 and the lease was established in 1945, the redemption amount would be calculated as $100 divided by 0.06, resulting in $1,666.67. It’s important to note that legal fees and taxes may also apply during the redemption process .
To further assist homeowners, the Maryland General Assembly has created a program that provides loans to eligible homeowners to help them redeem their ground leases . This program aims to make it financially feasible for more homeowners to achieve full ownership of their property.
Significant Legal Cases and Disputes Related to Ground Rent in Maryland
Ground rent in Maryland has been the subject of numerous legal challenges and disputes, often revolving around the respective rights and responsibilities of ground lease holders and homeowners. These legal battles reflect the conflicting interests at play and the ongoing efforts to balance those interests within the framework of Maryland law .
Here are some notable legal cases related to ground rent in Maryland:
Muskin v. State Department of Assessments and Taxation (2011): This case challenged the constitutionality of the 2007 law that sought to extinguish unregistered ground rents. The Maryland Court of Appeals ruled that this provision was unconstitutional because it infringed upon the property rights of ground lease holders without due process or just compensation .
State of Maryland v. Stanley Goldberg, et al. (2014): This case examined the validity of the 2007 law that aimed to eliminate ejectment as a remedy for non-payment of ground rent. The Court of Appeals held that this provision was invalid because it interfered with the ground lease holder’s reversionary interest in the property, which includes the right to reclaim possession if the ground rent is not paid .
Westminster Management v. Smith (2024): This case provided clarity on the definition of “rent” in residential leases, including ground leases. The Supreme Court of Maryland ruled that “rent” refers only to the fixed, periodic payments made for the use and occupancy of the property. Landlords cannot allocate rent payments to cover other obligations, and penalties for late rent payments are limited to 5% of the monthly rent due .
Class action lawsuit in Anne Arundel County: This lawsuit challenges the constitutionality of ground rent reforms, arguing that they have rendered ground rent leases worthless and constitute an unconstitutional taking of private property without just compensation .
These cases illustrate the complexities of ground rent law in Maryland and the ongoing efforts to ensure fairness and balance for both ground lease holders and homeowners.
Current Status of Ground Rent in Maryland
Ground rent remains a legal and relevant aspect of Maryland real estate, primarily concentrated in Baltimore City and some surrounding counties. The state continues to regulate ground rent arrangements, with a strong emphasis on protecting homeowners and ensuring transparency. Recent legislation reflects a clear policy direction towards promoting the redemption of ground rents as a means of phasing out the system .
Here are some key aspects of the current status of ground rent in Maryland:
Registration requirement: Ground lease holders must register their ground rents with SDAT to legally collect payments . This requirement helps ensure that homeowners are aware of their ground rent obligations and can identify the rightful owner of the ground lease.
Redemption rights: Homeowners generally have the right to redeem their ground rent, purchasing the land from the ground lease holder . This allows homeowners to gain full ownership of their property and eliminate the ongoing ground rent payments.
Limited ejectment: While ejectment is still a legal option for non-payment of ground rent, ground lease holders must adhere to strict notice requirements and provide homeowners with an opportunity to cure the default . This protects homeowners from losing their homes without proper notification and a chance to rectify the situation.
Financial assistance: The Maryland General Assembly has established a program to provide loans to eligible homeowners to help them redeem their ground leases . This program aims to make it financially feasible for more homeowners to achieve full ownership of their property.
Irredeemable Ground Rents Registry: All previously irredeemable ground rents became redeemable after April 1, 2023 . This significant change provides homeowners with the opportunity to gain full ownership of their property, even if their ground rent was previously considered irredeemable.
Despite the reforms and legal challenges, ground rent continues to have a significant impact on homeowners and communities in Maryland.
Conclusion
Ground rent in Maryland has a long and intricate history, influenced by legal precedents, legislative reforms, and social and economic factors. While initially intended to promote affordable housing, the system has faced criticism and undergone significant changes over time. The current legal framework strives to balance the interests of ground lease holders and homeowners, with a focus on protecting homeowners from exploitation and promoting transparency. However, ground rent continues to present challenges and raise concerns about its impact on homeowners and communities, particularly in Baltimore City.
Recent legislation in Maryland demonstrates a clear shift towards encouraging the redemption of ground rents and ultimately phasing out the system. This reflects a growing recognition of the potential burdens and complexities associated with ground rent, as well as a commitment to promoting full homeownership and greater equity in housing.
The future of ground rent in Maryland is likely to involve continued debate and potential further reforms. As Maryland addresses issues of housing affordability, equity, and community development, the ground rent system will undoubtedly be a key consideration in shaping housing policy and ensuring fair and sustainable homeownership opportunities for all residents.
Richard Iarossi, REALTOR®
Coldwell Banker Realty
1300 Main Chapel Way, Gambrills, MD 21054
443.995.9595 Cell
410.721.0103 Office
richard.iarossi@cbmove.com
richsellshomes.com
There’s no denying affordability is tough right now. But that doesn’t mean you have to put your plans to buy a home on the back burner. Many buyers can consider purchasing a fixer upper.
If you’re willing to roll up your sleeves (or hire someone who will), buying a house that needs some work could open the door to homeownership. Here’s everything you need to know so you can decide if this is the right move for you.
What’s a Fixer Upper?
A fixer-upper is a home that’s livable but requires some renovations. Think cosmetic updates like wallpaper removal and new flooring or more extensive repairs like replacing a roof or updating plumbing.
While fixer-uppers need a little TLC, here’s why they may be worth considering, especially right now:
They Usually Have a Lower Price Point. Because of the repairs involved, these homes are usually less expensive up front than move-in-ready options. According to a survey from StorageCafe, fixer-uppers come with price tags that are about 29% lower, making them a solid choice if you’re having trouble finding anything in your budget.
Less Competition. When you’re ready to make an offer, you’re less likely to deal with competition from other buyers who are focused on move-in-ready homes.
Build Equity Faster. From choosing how to redo the floors to picking which cabinets you want in the kitchen, a fixer-upper allows you to design a space that fits your needs and style. And with smart renovations, you can increase your home’s value faster and potentially see a big return on your investment.
As The Mortgage Reports notes:
“If you’re a house hunter who’s not afraid of sweat equity, buying a fixer-upper could be your ticket to homeownership. Doing so could lead to big savings, even in some of the nation’s largest and most popular housing markets. Plus, adding the right features could help your investment.”
What To Know About Buying a Fixer-Upper
The possibilities that come with a fixer-upper are exciting, but there are a few things to think about first.
Do You Have a Gameplan? Consider if you have the time, skills, or budget to tackle renovations. Be honest about what you can handle yourself, what you’ll need to hire out, and if a fixer-upper is truly a good fit for your lifestyle. Remember, you’ll likely be living in a construction zone at least for a little while.
Prioritize the Repairs and Upgrades: Don’t stress yourself out thinking you’ve got to do all the work up front. Space out renovations over time in a way that makes sense for your budget and what’s most important to tackle first.
Location Matters: You want the money you’re spending to fix up a house to be worth the investment. So, make sure the home is in an area with increasing home values and amenities locals love, like parks and restaurants.
Get a Home Inspection: Hiring an inspector to do a thorough inspection before you buy is a must. What they find will help you understand what needs to be updated, renovation costs, and if it’s a project you want to take on.
Budget for Surprises: Renovations rarely go as planned. So, be sure to set aside extra money to cover things like extended repair timelines, an increase in the cost of materials, or other unknowns that may come up.
Talk to a Lender About Financing Options: There are some renovation mortgages designed for homes that need a little work. But they may have requirements like spending and timeline limits, so talk to a trusted lender to understand the fine print.
Bottom Line
Fixer-uppers aren’t for everyone, but if you’re open to doing a bit of work, they can be a great way to overcome today’s affordability hurdles and find something in your budget.
With the right mindset and careful planning, you could turn a less-than-perfect house into the perfect home for you.
If you found a fixer-upper that fits your budget and goals, would you consider taking the plunge? If so, let’s connect to explore what’s out there.
Richard Iarossi, REALTOR
Coldwell Banker Realty
1300 Main Chapel Way, Gambrills, MD 21054
443.995.9595 Cell
410-721-0103 Office richsellshomes.com
rich@richsellshomes.com
The 3 Biggest Mistakes Sellers Are Making Right Now
If you want to sell your house, having the right strategies and expectations is key. Don’t make some common seller mistakes. But some sellers haven’t adjusted to where the market is today. They’re not factoring in that there are more homes for sale or that buyers are being more selective with their budgets. And those sellers are making some costly mistakes.
Here’s a quick rundown of the 3 most common missteps sellers are making, and how partnering with an expert agent can help you avoid every single one of them.
1. Pricing the Home Too High
Of all the seller mistakes, this is the number one. According to a survey by John Burns Real Estate Consulting (JBREC) and Keeping Current Matters (KCM), real estate agents agree the #1 thing sellers struggle with right now is setting the right price for their house (see graph below):
And more often than not, homeowners tend to overprice their listings. If you aren’t up to speed on what’s happening in your local market, you may give in to the temptation to price high so you can have as much wiggle room as possible to negotiate. You don’t want to do this.
Today’s buyers are more cautious due to higher rates and tight budgets, and a price that feels out of reach will scare them off. And if no one’s looking at your house, how’s it going to sell? This is exactly why more sellers are having to do price cuts.
To avoid this headache, trust your agent’s expertise from day 1. A great agent will be able to tell you what your neighbor’s house just sold for and how that impacts the value of your home.
2. Skipping Repairs
Another common mistake is trying to avoid doing work on your house. That leaky faucet or squeaky door might not bother you, but to buyers, small maintenance issues can be red flags. They may assume those little flaws are signs of bigger problems — and it could cost you when offers come in lower or buyers ask for concessions. As Investopedia says:
“Sellers who do not clean and stage their homes throw money down the drain. . . Failing to do these things can reduce your sales price and may also prevent you from getting a sale at all. If you haven’t attended to minor issues, such as a broken doorknob or dripping faucet, a potential buyer may wonder whether the house has larger, costlier issues that haven’t been addressed either.”
The solution? Work with your agent to prioritize anything you’ll need to tackle before the photographer comes in. These minor upgrades can pay off big when it’s time to sell.
3. Refusing To Negotiate
Buyer’s today are feeling the pinch of high home prices and mortgage rates. With affordability that tight, they may come in with an offer that’s lower than you want to see. Don’t take it personally. Instead, focus on the end goal: selling your house. Your agent can help you negotiate confidently without letting emotions cloud your judgment.
At the same time, with more homes on the market, buyers have options — and with that comes more negotiating power. They may ask for repairs, closing cost assistance, or other concessions. Be prepared to have these conversations. Again, lean on your agent to guide you. Sometimes a small compromise can seal the deal without derailing your bottom line. As U.S. NewsReal Estate explains:
“If you’ve received an offer for your house that isn’t quite what you’d hoped it would be, expect to negotiate . . . the only way to come to a successful deal is to make sure the buyer also feels like he or she benefits . . . consider offering to cover some of the buyer’s closing costs or agree to a credit for a minor repair the inspector found.”
The Biggest Mistake of All? Not Using a Real Estate Agent
Notice anything? For each of these mistakes, partnering with an agent helps prevent them from happening in the first place. That makes trying to sell your house without an agent’s help the biggest mistake of all.
Bottom Line
Avoid these common seller mistakes by starting with the right plan — and the right agent. Let’s connect so you don’t fall into any of these traps.
Richard Iarossi, REALTOR
Coldwell Banker Realty
1300 Main Chapel Way
Gambrills, MD 21054
443-995-9595 Cell
410-721-0103 Office
richsellshomes.com
rich@richsellshomes.com
Have you been wondering whether you should keep renting or finally make the leap into homeownership? Buy or rent is an age old real estate question. It’s a big decision, and let’s be real — renting can feel like the easier option, especially if buying a home feels out of reach.
But here’s the thing: a recent report from Bank of America highlights that 70% of prospective buyers fear the long-term consequences of renting, including not building equity and dealing with rising rents.
Maybe you’re feeling that too — concerned about where renting might leave you down the road, but still unsure if you’d even be able to buy right now. The truth is, if you’re able to make the numbers work, buying a home has powerful long-term financial benefits.
Let’s break down why homeownership is worth considering in 2025 and beyond, and how it can help set you up for the future.
Buying Builds Wealth Over Time
Buying a home allows you to turn your monthly housing costs into a long-term investment. That’s because, as shown in data from the Census and the Department of Housing and Urban Development (HUD), home prices tend to increase over time (see graph below):
Home price appreciation over the uears
Rising home prices directly benefit homeowners. That’s because when you own a home, you build equity — meaning your ownership stake in your home grows as you pay down your mortgage and your home’s value appreciates. And that, in turn, makes your net worth grow too.
Maybe that’s why, according to the National Association of Realtors (NAR), 79% of buyers believe owning a home is a good financial investment.
Renting Comes with Rising Costs
Renting may feel more affordable in the short term, especially right now with today’s home prices and mortgage rates. But the reality is, over time, rent almost always goes up too. Take a look at the data and you can see that play out. According to Censusdata, rents have significantly increased over the decades (see graph below):
Rental increases over the years
This means if you decide to rent, you’ll likely face growing expenses each time you renew or sign a new lease – and that’ll happen without building any wealth in return. Plus, those rising costs may make it harder to save up to buy a home down the road.
Renting vs. Buying: The Long-Term Impact
When you own a home, your payments are an investment in your future. Renting, on the other hand, means your money is gone for good — it helps your landlord build equity, not you.
Renting works for those not ready (or able) to buy today. But if you are able to make the numbers work, buying a home builds equity and sets you up for long-term financial success. So, even though renting may seem easier now, it can’t match the benefits of homeownership.
Bottom Line
If you can afford it, take control of your financial future by making homeownership part of your plan. It’s an investment you won’t regret.
Do you want to see what starter homes are available in our market? Let’s connect today to explore your options.
Buyer Bright Spot: The Housing Inventory is Growing
The past few years have been challenging for homebuyers, especially with higher home prices and mortgage rates. And if you’re trying to buy a home, it’s easy to worry you won’t be able to find something in your budget. The housing inventory has been increasing since 2024.
But here’s what you need to know. The housing inventory has grown a whole lot lately and that’s true for both existing (previously lived-in) and newly built homes. Here’s a look at those two bright spots for buyers right now and why they may make it a bit easier to find the home you’re been looking for.
1. There Are 22% More Existing Homes for Sale
Data from Realtor.com says the number of existing homes for sale improved by an impressive 22% in 2024. And experts say your pool of options is expected to get even better this year. Forecasts show inventory is projected to grow another 11-15% by the end of this year (see graph below):
Here’s why this is so good for your search. If you haven’t seen a house with all the features you need, just know that, as the number of homes for sale grows, you’ll have more options to choose from. That means a better chance of finding a home that checks all your boxes. As Ralph McLaughlin, Senior Economist at Realtor.com,says:
“It could be a particularly good time to get out into the market . . . you’re going to have more choice. And that’s not something that buyers have really had much over the past several years.”
2. There Are More Newly Built Homes on the Market
According to data from the Census and the National Association ofRealtors (NAR), 31.1%, or roughly 1 in 3, homes on the market right now are newly built homes. That’s more than the norm (see charts below). But don’t worry, that’s not because builders are overdoing it – it’s just that they’re trying to catch up after years of underbuilding.
And the best part is, since builders have been focusing on smaller homes with lower price points, you may actually find out new builds are less expensive than you’d expect. So, while a lot of people write off new construction because it’s easy to assume the costs are way higher, lately, that price gap isn’t as big as you’d think. As CNET says:
“If you live in an area where there’s a lot of new construction happening . . . you might be able to purchase a new house for a price similar to or even less than a pre-owned one.”
If you haven’t been able to find a home that’s in your budget, it’s time to ask your agent about new builds. If you don’t, you may have been cutting your pool of options by about a third.
Bottom Line
More choices could be the key to unlocking your homebuying goals in 2025. Reach out if you want to see what’s available in and around our area.
What features are you looking for in your next home? Let me know and I’ll put together a list of homes you’d love.
Smaller Homes, Bigger Opportunities: The Homebuilder Trend Buyers Love
It’s no secret that affordability is tough with where mortgage rates and home prices are right now. And that may have you worried about how you’ll be able to buy a home. But, if you don’t need a ton of space, you may find you have more cost-effective options in an unexpected place: new home communities.
Builders Are Building Smaller Homes
Since smaller homes typically come with smaller price tags, buyers have turned their attention to homes with less square footage — and builders have shifted their focus to capitalize on that demand. As U.S. News notes:
“The combination of higher home prices and mortgage rates has strained a lot of people’s budgets. And that’s something builders recognize. To this end, they may be leaning toward smaller spaces . . .That, in turn, can lead to savings for buyers.”
Data from the Census shows the overall builder trend toward smaller, single-family homes has been over the last couple of years (see graph below):
As the graph shows, the average size of a brand-new home has dropped from 2,309 square feet in Q3 2022 to 2,171 square feet in Q3 2024. That’s a difference of 138 square feet.
At the end of the day, builders want to build what they know will sell. And the number one thing homebuyers are looking for right now is less expensive options to help offset today’s affordability challenges. As Multi-Housing News notes:
“The growing trend toward smaller homes is evident. These homes are less expensive to build and more attainable for many middle-income families, meeting both housing needs and modern lifestyle preferences.”
The Benefits of These Brand-New Homes
So, if you’re having trouble finding a home in your budget, it might be worth exploring newly built homes with a smaller footprint.
Not to mention, since newly built homes come with brand new everything, they have fewer maintenance needs and some of the latest features available, like energy-efficient appliances and HVAC. That’ll help you save on repair costs and your monthly utility bills. Sounds like an all-around win.
Bottom Line
Today’s builders are focusing their efforts on smaller homes at lower price points. That could give you more opportunity to find something that fits your budget. If you’re planning to buy soon, let’s connect to explore what’s on the market in your area and get your homeownership goals over the finish line.
If Your Home Pricing Is Not Compelling, It’s Not Selling
There’s one big mistake you need to avoid when you sell your house this year: setting home pricing too high. It might seem like overpricing gives you room to negotiate or could really boost your profit, but the reality is, it usually backfires.
In fact, Realtor.com says almost 20% of sellers — that’s one in five — have to reduce their price to get their house sold. And you don’t want to be one of them. Here’s why starting too high can lead to trouble, and how to avoid it.
Overpricing Pushes Buyers Away
With mortgage rates and home prices where they are right now, buyers are already stretching their budgets to make a move. So, when they see a house that’s priced too high, they’re not thinking, “I can negotiate.” They’re more likely to think, “next” and skip over your house entirely. An article from the National Association of Realtors (NAR) explains:
“Some sellers are pricing their homes higher than ever just because they can, but this may drive away serious buyers . . .”
And if they skip over your listing, you’ll miss out on the chance to get them through the door. That’s the last thing you want because fewer showings mean fewer chances to receive an offer.
The Longer Your House Sits, the More Skeptical Buyers Will Get
Here’s the other issue. An overpriced house tends to sit on the market longer. And the longer a house lingers, the more buyers start to wonder what’s wrong with it. Is there a problem with the house itself? Are you difficult to work with? Even if the only issue is the price, that extra time creates doubt. As U.S. News says:
“. . . setting an unrealistically high price with the idea that you can come down later doesn’t work in real estate . . . A home that’s overpriced in the beginning tends to stay on the market longer, even after the price is cut, because buyers think there must be something wrong with it.”
At that point, you’ll have no choice but to lower your price to drum up interest. But that price reduction comes with its own downside: buyers may see it as another red flag, that there’s an issue with the house.
The Key To Finding the Right Price for Your House
So, what’s the secret to avoiding all these headaches? It’s simple. Work with a local real estate agent who knows the market inside and out, and who’s going to be honest with you about how your home pricing.
You don’t want to partner with someone who just agrees to whatever number you throw out there. That’s not an expert who’s going to get you the best results.
You want an agent who recommends a price based on their expertise. The right agent will use real-time data from your local market to help you land on a price that makes sense — one that grabs attention, attracts buyers, and still helps you walk away with a great return. Someone who has been there and done that – and done it well. That’s the agent you want to work with.
Bottom Line
Remember, if the price isn’t compelling, it’s not selling. Instead of shooting too high and scaring off buyers, work with a local agent who knows how to price it right.
Let’s team up and make sure your house hits the market with the right price, gets noticed, and gets sold.
Turning a dream into reality starts with one thing: a plan. And if buying your first home is on your list of goals, now’s the perfect time to put a plan in motion to help you save.
And the best part? Reaching your savings goal doesn’t mean making huge sacrifices overnight – small, consistent steps can get you there over time. Here are a few strategies that can help speed up the process.
Step 1: Build a Budget That Works for You
Knowing where your money’s going is the first step to saving more of it. Take some time to track the money you’ve got coming in and going out. This helps you spot areas where you’re spending more than you realize. It also helps to give yourself some guidelines on what you want to spend for groceries, gas, and more – try to stick to whatever caps you put on each spending category.
Step 2: Cut Down on Any Extras (It Adds Up)
Once you’ve got a clear budget, it’s time to tighten up. Look for areas where you can cut down your costs – like services you don’t really need – or ways you can reduce recurring expenses and put that money in your house fund instead. Every dollar you save now brings you closer to your future house. As Bankrate says:
“If you’re saving for a house, cutting back on your spending can help. Start with cutting unnecessary expenses, like subscription services, entertainment, delivery services or eating out. If possible, negotiate down recurring monthly or annual expenses, such as getting a better car insurance rate or reducing an internet bill . . . .”
Step 3: Automate Your Savings
Consistency is the real game-changer. If you have to transfer money manually, you may forget to do it. That’s why setting up automatic transfers to a dedicated savings account makes it easier to save regularly. Even apps that round up purchases to the nearest dollar and save the difference can help you build momentum without effort. As an article from Forbes explains:
“Automating your savings helps to keep your progress toward your goal consistent. Set up automatic transfers from your checking account to a dedicated savings account. This will help you prioritize saving and minimize the chances of spending your money on other things.”
Step Four: Put Any Extra Money To Work
Got a tax refund, work bonus, or a cash gift? Don’t fall into the temptation to spend it on something you don’t actually need. Use those unexpected boosts to make big strides toward your savings goal. Treating this extra cash as an opportunity, not just a nice surprise, will help you get there faster.
Bottom Line
Saving for your first house isn’t about perfection – it’s about progress. A solid plan, a little discipline, and a clear goal will take you further than you think. If you’re ready to make homeownership happen, let’s connect. We’ll map out the next steps together to get you closer to the keys to your first home.
Richard Iarossi, REALTOR®
Coldwell Banker Realty
1300 Main Chapel Way
Gambrills, MD 21054
443-995-9595 Cell
410-721-0103 Office
richsellshomes.com
rich@richsellshomes.com
More homeowners are realizing they need an agent’s help in this complex market – and that’s why a record-low number of people are selling without a pro by their side.
Without an agent’s help, tackling pricing, staging and repairs, paperwork, negotiation, and more can be a real headache.
Selling without a pro isn’t worth the hassle. Let’s connect to see if we’d work well together.
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