All about Real Estate

Thinking about selling or buying but you're not sure where to start? Here you have all the facts and hacks!

Aug. 12, 2017

Hey, Millennial Homeowners!! It May Be Time to Sell

Hey, Millennial Homeowners!! It May Be Time to Sell | Simplifying The Market

 

Contrary to what many believe, Millennials are not the ‘renter’ generation. Millennials purchased a larger percentage (34%) of homes in the U.S. than any other age group in 2017 and the most recent Census Bureau report shows that the homeownership rate among Millennials is finally on the rise.

Many Millennials took advantage of post housing crash prices and the First-Time Homebuyers’ Tax Credit and jumped into homeownership in 2010. If you are one of these buyers, now may be the time to sell for many reasons. Here are a few:

 

1. Equity Build-Up

Home prices have been on the rise since the beginning of 2012 and your house may have appreciated by more than you think. ATTOM Data Solutions, in their Q2 2017 U.S. Home Sales Report revealed that:

“…homeowners who sold in the second quarter realized an average price gain of $51,000 since purchase — the highest average price gain for home sellers since Q2 2007, when it was $57,000.

The average home seller price gain of $51,000 in Q2 2017 represented an average return of 26 percent on the previous purchase price of the home, the highest average home seller return since Q3 2007, when it was 27 percent.”

The average home seller price gain of $51,000 in Q2 2017 represented an average return of 26 percent on the previous purchase price of the home, the highest average home seller return since Q3 2007, when it was 27 percent.”

2. Projected Home Price Increases

If you just got married or just found out you are about to become a parent, you may have plans to move up a bigger home or perhaps move to a different area. Waiting to buy a more expensive home in this market probably doesn’t make sense. The experts contacted for the Home Price Expectation Survey are projecting home prices to increase by nearly 5% over the next year. Yes, your house’s price will increase but not as much as a home currently valued higher than yours.

3. Projected Interest Rate Increases

The Mortgage Bankers’ Association, Freddie Mac, Fannie Mae and the National Association of Realtors are each projecting mortgage rates to increase over the next year.

Higher PRICES + Higher INTEREST RATES = LARGER MORTGAGE PAYMENTS.

Bottom Line

If you are lucky enough to be one of those Millennials who purchased a house in 2010 (or even later), now might be the perfect time to move up to the home of your dreams!

Aug. 9, 2017

How Long Do Most Families Stay in Their Home?

The National Association of Realtors (NAR) keeps historical data on many aspects of homeownership. One of the data points that has changed dramatically is the median tenure of a family in a home, meaning how long a family stays in a home prior to moving. As the graph below shows, for over twenty years (1985-2008), the median tenure averaged exactly six years. However, since 2008, that average is almost nine years – an increase of almost 50%.

How Long Do Most Families Stay in Their Home? | Simplifying The Market

Why the dramatic increase?

The reasons for this change are plentiful!

The fall in home prices during the housing crisis left many homeowners in a negative equity situation (where their home was worth less than the mortgage on the property). Also, the uncertainty of the economy made some homeowners much more fiscally conservative about making a move.

With home prices rising dramatically over the last several years, 93.9% of homes with a mortgage are now in a positive equity situation with 78.8% of them having at least 20% equity, according to CoreLogic.

With the economy coming back and wages starting to increase, many homeowners are in a much better financial situation than they were just a few short years ago.

One other reason for the increase was brought to light by NAR in their 2017 Home Buyer and Seller Generational Trends Report. According to the report,

Sellers 36 years and younger stayed in their home for six years…”

These homeowners who are either looking for more space to accommodate their growing families or for better school districts are more likely to move more often (compared to 10 years for typical sellers in 2016). The homeownership rate among young families, however, has still not caught up to previous generations, resulting in the jump we have seen in median tenure!

What does this mean for housing?

Many believe that a large portion of homeowners are not in a house that is best for their current family circumstance; They could be baby boomers living in an empty, four-bedroom colonial, or a millennial couple living in a one-bedroom condo planning to start a family.

These homeowners are ready to make a move, and since a lack of housing inventory is still a major challenge in the current housing market, this could be great news.

 

Aug. 3, 2017

Be Careful Not to Get Caught in The Rental Trap!

Be Careful Not to Get Caught in The Rental Trap! | Simplifying The Market

 

There are many benefits to homeownership. One of the top benefits is being able to protect yourself from rising rents by locking in your housing cost for the life of your mortgage.

Don’t Become Trapped 

A recent article by ConsumerAffairs addressed the continuous rise in rents, stating:

“The cost of putting a roof over your head continues to go up. Not only are home prices still rising, but the cost of rent rose 0.5% in June.”

Additionally, in the Joint Center for Housing Studies at Harvard University’s 2017 State of the Nation’s Housing Report, it was revealed that,

“Despite a slight improvement from 2014, fully one-third of US households paid more than 30 percent of their incomes for housing in 2015. Renters continue to be more likely to face cost burdens…the number of cost-burdened renters (21 million) considerably outstrips the number of cost-burdened owners (18 million) even though nearly two-thirds of US households own their homes.”

These households struggle to save for a rainy day and pay other bills, including groceries and healthcare.

It’s Cheaper to Buy Than Rent 

As we have previously mentioned, the results of the latest Rent vs. Buy Report from Trulia shows that homeownership remains cheaper than renting with a traditional 30-year fixed rate mortgage in the 100 largest metro areas in the United States.

The updated numbers show that the range is an average of 3.5% less expensive in San Jose (CA), all the way up to 50.1% less expensive in Baton Rouge (LA), and 33.1% nationwide!

Know Your Options

Perhaps you have already saved enough to buy your first home. A nationwide survey of about 24,000 renters found that 80% of millennial renters plan to eventually buy a house, but 72% cite affordability as their primary obstacle. Aside from affordability, one in three millennial renters have concerns about their credit scores, and another 53% said that a down payment is an obstacle.

Many first-time homebuyers who believe that they need a large down payment may be holding themselves back from their dream homes. As we have reported before, in many areas of the country, a first-time home buyer can save for a 3% down payment in less than two years. You may have already saved enough!

Bottom Line

Don’t get caught in the trap that so many renters are currently in. If you are ready and willing to buy a home, find out if you are able. Let’s get together to determine if you can qualify for a mortgage now!

July 29, 2017

A ‘Buyer’ in Hand is Worth Two in the Bush

A ‘Buyer’ in Hand is Worth Two in the Bush | Simplifying The Market

 

In today’s highly competitive seller’s market where there are more buyers than there are homes for them to buy, some sellers may feel like the ball is in their court.

And they would be right when it comes to choosing which offer to accept, the closing date, or even which improvements they are willing to make to their house prior to selling.

One thing to remember though, is that there is always a line that shouldn’t be crossed.

Interest rates can change, financing might not go through, the appraisal might not come back at the price that you have agreed to. These are all opportunities to work with your buyer to make sure that the sale still happens.

You may think that, because buyer demand is so high right now, you can choose to make your buyer jump through hoops. But what happens if they reach their limit and need to walk away? You’re starting over… weeks, maybe months later… and other buyers may wonder what’s wrong with the house since the last deal fell through.

The Golden Rule 

We were all taught from a young age to “treat others as you would like to be treated.” This shouldn’t change once you have a buyer who seems as though they would do anything to buy your home.

 

Posted in For Sellers
July 25, 2017

84% of Americans Believe Buying a Home is a Good Financial Decision

84% of Americans Believe Buying a Home is a Good Financial Decision | Simplifying The Market

According to the National Association of Realtors®’ 2017 National Housing Pulse Survey, 84% of Americans now believe that purchasing a home is a good financial decision. This is the highest percentage since 2007 – before the housing crisis. Those surveyed pointed out five major reasons why they believe homeownership is a good financial decision:
 
  1. Homeownership means the money you spend on housing goes towards building equity, rather than to a landlord
  2. Homeownership creates the opportunity to pay off a mortgage and own your home by the time you retire
  3. Homeownership is an investment opportunity that builds long-term wealth and increases net worth
  4. Homeownership means a stable and predictable monthly mortgage payment
  5. Homeownership allows for various deductions on federal, state, and local income taxes
The survey also revealed that the majority of Americans strongly agree that homeownership helps create safe, secure, and stable environments.
 
Bottom Line
 
Homeownership has always been and still is a crucial part of the American Dream.
July 19, 2017

3 Questions to Ask Before You Buy Your Dream Home

3 Questions to Ask Before You Buy Your Dream Home | Simplifying The Market

If you are debating purchasing a home right now, you are probably getting a lot of advice. Though your friends and family will have your best interests at heart, they may not be fully aware of your needs and what is currently happening in the real estate market.
 
Ask yourself the following 3 questions to help determine if now is a good time for you to buy in today’s market.
 
1. Why am I buying a home in the first place? 
 
This is truly the most important question to answer. Forget the finances for a minute. Why did you even begin to consider purchasing a home? For most, the reason has nothing to do with money.
 
For example, a survey by Braun showed that over 75% of parents say, “their child’s education is an important part of the search for a new home.”
 
This survey supports a study by the Joint Center for Housing Studies at Harvard University which revealed that the top four reasons Americans buy a home have nothing to do with money. They are:
 
  • A good place to raise children and for them to get a good education
  • A place where you and your family feel safe
  • More space for you and your family
  • Control of that space
  • What does owning a home mean to you? What non-financial benefits will you and your family gain from owning a home? The answer to that question should be the biggest reason you decide to purchase or not.
 
2. Where are home values headed?
 
According to the latest Existing Home Sales Report from the National Association of Realtors (NAR), the median price of homes sold in May (the latest data available) was $252,800, which is up 5.8% from last year. This increase also marks the 63rd consecutive month with year-over-year gains.
 
If we look at home prices year over year, CoreLogic is forecasting an increase of 5.3% over the next twelve months. In other words, a home that costs you $250,000 today will cost you an additional $13,250 if you wait until next year to buy it.
 
What does that mean to you?
 
Simply put, with prices increasing each month, it might cost you more if you wait until next year to buy. Your down payment will also need to be higher in order to account for the higher price of the home you wish to buy. 
 
3. Where are mortgage interest rates headed?
 
A buyer must be concerned about more than just prices. The ‘long-term cost’ of a home can be dramatically impacted by even a small increase in mortgage rates.
 
The Mortgage Bankers Association (MBA), NAR, and Fannie Mae have all projected that mortgage interest rates will increase over the next twelve months, as you can see in the chart below:
 
3 Questions to Ask Before You Buy Your Dream Home | Simplifying The Market
Bottom Line
 
Only you and your family will know for certain if now is the right time to purchase a home. Answering these questions will help you make that decision.
July 14, 2017

The High Impact of Low Interest Rates on Your Purchasing Power

The High Impact of Low Interest Rates on Your Purchasing Power | Simplifying The Market

 

According to Freddie Mac’s latest Primary Mortgage Market Survey, interest rates for a 30-year fixed rate mortgage are currently at 3.96%, which is still near record lows in comparison to recent history!

The interest rate you secure when buying a home not only greatly impacts your monthly housing costs, but also impacts your purchasing power.

Purchasing power, simply put, is the amount of home you can afford to buy for the budget you have available to spend. As rates increase, the price of the house you can afford will decrease if you plan to stay within a certain monthly housing budget.

The chart below shows what impact rising interest rates would have if you planned to purchase a home within the national median price range, and planned to keep your principal and interest payments between $1,850-$1,900 a month.

The High Impact of Low Interest Rates on Your Purchasing Power | MyKCM

 

With each quarter of a percent increase in interest rate, the value of the home you can afford decreases by 2.5% (in this example, $10,000). Experts predict that mortgage rates will be closer to 5% by this time next year.

Act now to get the most house for your hard-earned money.

 

July 8, 2017

Be Thankful You Don’t Have to Pay Mom and Dad’s Interest Rate

Be Thankful You Don’t Have to Pay Mom and Dad’s Interest Rate | Simplifying The Market

 

Interest rates have hovered around 4% for the majority of 2017, which has given many buyers relief from rising home prices and has helped with affordability. Experts predict that rates will increase by the end of 2017 and will be about three-quarters of a percentage point higher, at 4.5%, by the end of 2018. 

Last week’s Freddie Mac Primary Mortgage Market Survey revealed that interest rates for a 30-year fixed rate mortgage have fallen to their lowest mark this year, at 3.88%. This is great news for homebuyers looking to purchase and homeowners looking to refinance.

The rate you secure greatly impacts your monthly mortgage payment and the amount you will ultimately pay for your home.

Let’s take a look at a historical view of interest rates over the last 45 years.

Be Thankful You Don’t Have to Pay Mom and Dad’s Interest Rate | Simplifying The Market

Bottom Line

Be thankful that you can still get a better interest rate than your older brother or sister did ten years ago, a lower rate than your parents did twenty years ago, and a better rate than your grandparents did forty years ago.

June 30, 2017

75% OF HOMEOWNERS THINK NOW IS A GOOD TIME TO SELL!

75% of Homeowners Think Now is a Good Time to Sell! | Keeping Current Matters

 

The survey revealed that 75% of homeowners think now is a good time to sell, compared to 70% last quarter. This is a considerable increase from more than a year ago when 66% agreed.

Even though homeowners believe that now is a good time to sell, many have not taken the step to list their homes, as inventory shortages still exist across the country. Lawrence Yun, NAR’s Chief Economist, had this to say:

“There are just not enough homeowners deciding to sell because they’re either content where they are, holding off until they build more equity, or hesitant seeing as it will be difficult to find an affordable home to buy…

As a result, inventory conditions have worsened and are restricting sales from breaking out while contributing to price appreciation that remains far above income growth.”

Bottom Line

If you are wondering if now is a good time to sell your house, meet with a local real estate professional who can show you the conditions in your market.

Posted in For Sellers
June 27, 2017

2 Myths Holding Back Home Buyers

2 Myths Holding Back Home Buyers | Keeping Current Matters

In Realtor.com’s recent article, “Home Buyers’ Top Mortgage Fears: Which One Scares You?” they mention that “46% of potential home buyers fear they won’t qualify for a mortgage to the point that they don’t even try.”

Myth #1: “I Need a 20% Down Payment”

Buyers overestimate the down payment funds needed to qualify for a home loan. According to the First Quarter 2017 Homeownership Program Index (HPI) from Down Payment Resource, saving for a down payment was the barrier that kept 70% of renters from buying.

Rob Chrane, CEO of Down Payment Resource had this to say,

There are many mortgage-ready renters today, but they don’t know it. Often, homebuyers remain sidelined for years due to the down payment.

Many believe that they need at least 20% down to buy their dream home, but programs are available that allow buyers put down as little as 3%. Many renters may actually be able to enter the housing market sooner than they ever imagined with new programs that have emerged allowing less cash out of pocket.

Myth #2: “I Need a 780 FICO® Score or Higher to Buy”

The survey revealed that 59% of Americans either don’t know (54%) or are misinformed (5%) about what FICO® score is necessary to qualify.

Many Americans believe a ‘good’ credit score is 780 or higher.

To help debunk this myth, let’s take a look at Ellie Mae’s latest Origination Insight Report,which focuses on recently closed (approved) loans.

2 Myths Holding Back Home Buyers | Keeping Current Matters

As you can see in the chart above, 53.2% of approved mortgages had a credit score of 600-749.

Bottom Line

Whether buying your first home or moving up to your dream home, knowing your options will make the mortgage process easier. Your dream home may already be within your reach.