Consumer Confidence in Economy & Housing is Soaring

 

The success of the housing market is strongly tied to the consumer’s confidence in the overall economy. For that reason, we believe 2017 will be a great year for real estate. Here is just a touch of the news coverage on the subject.

HousingWire:

“Consumers’ faith in the housing market is stronger than it’s ever been before, according to a newly released survey from Fannie Mae.”

Bloomberg:

“Americans’ confidence continued to mount last week as the Bloomberg Consumer Comfort Index reached the highest point in a decade on more-upbeat assessments about the economy and buying climate.”

Yahoo Finance:

“Confidence continues to rise among America’s consumers…the latest consumer sentiment numbers from the University of Michigan showed that in March confidence rose again.”

MarketWatch:

“U.S. consumers are the most confident in the U.S. economy in 15 years, buoyed by the strongest job market since before the Great Recession. The survey of consumer confidence rose…according to the Conference Board, the private company that publishes the index. That’s the highest level since July 2001.”

Ivy Zelman, in her recent Z Report, probably best capsulized the reports:

"The results were incredibly strong and…offer one of the most positive consumer takes on housing since the recovery started.”

Source: Keeping Current Matters | The KCM Crew 033117

Looking to Move-Up to a Luxury Home? Now’s the Time!

If your house no longer fits your needs and you are planning on buying a luxury home, now is a great time to do so! We recently shared data from Trulia’s Market Mismatch Study which showed that in today’s premium home market, buyers are in control.

The inventory of homes for sale in the luxury market far exceeds those searching to purchase these properties in many areas of the country. This means that homes are often staying on the market longer, or can be found at a discount.

Those who have a starter or trade-up home to sell will find buyers competing, and often entering bidding wars, to be able to call your house their new home.

The sale of your starter or trade-up house will aid in coming up with a larger down payment for your new luxury home. Even a 5% down payment on a million-dollar home is $50,000.

But not all who are buying luxury properties have a home to sell first.

In a recent Washington post article, Daryl Judy, an associate broker with Washington Fine Properties, gave some insight into what many millennials are choosing to do:

“Some high-earning millennials save money until they are in their early 30s to buy a place and just skip over that starter-home phase. They’ll stay in an apartment until they can afford to pay for the place they want.”

Bottom Line

The best time to sell anything is when demand is high and supply is low. If you are currently in a starter or trade-up house that no longer fits your needs, and are looking to step into a luxury home… Now’s the time to list your house for sale and make your dreams come true.

Source: Keeping Current Matters 033017

Renting or Buying… Either Way You’re Paying a Mortgage

There are some people who have not purchased homes because they are uncomfortable taking on the obligation of a mortgage. Everyone should realize that, unless you are living with your parents rent-free, you are paying a mortgage - either yours or your landlord’s.

As Entrepreneur Magazine, a premier source for small business, explained this month in their article, “12 Practical Steps to Getting Rich”:

“While renting on a temporary basis isn't terrible, you should most certainly own the roof over your head if you're serious about your finances. It won't make you rich overnight, but by renting, you're paying someone else's mortgage. In effect, you're making someone else rich.”

Christina Boyle, Senior Vice President and head of the Single-Family Sales & Relationship Management organization at Freddie Mac, explains another benefit of securing a mortgage vs. paying rent:

“With a 30-year fixed rate mortgage, you’ll have the certainty & stability of knowing what your mortgage payment will be for the next 30 years – unlike rents which will continue to rise over the next three decades.”

As an owner, your mortgage payment is a form of ‘forced savings’ which allows you to build equity in your home that you can tap into later in life. As a renter, you guarantee the landlord is the person with that equity.

Interest rates are still at historic lows, making it one of the best times to secure a mortgage and make a move into your dream home. Freddie Mac’s latest report shows that rates across the country were at 4.23% last week.

Bottom Line

Whether you are looking for a primary residence for the first time or are considering a vacation home on the shore, now may be the time to buy.

Source: Keeping Current Matters | KCM Crew 031727

How Low Supply & High Demand Impacts the Real Estate Market

Some Highlights:

• The concept of Supply & Demand is a simple one. The best time to sell something is when the supply of that item is low & the demand for that item is high!
• Anything under a 6-month supply is a Seller’s Market!
• There has not been a 6-months inventory supply since August 2012!
• Buyer Demand continues to outpace Seller Supply!

Source: Keeping Current Matters | The KCM Crew 032417

The Foreclosure Crisis: 10 Years Later

CoreLogic recently released a report entitled, United States Residential Foreclosure Crisis: 10 Years Later, in which they examined the years leading up to the crisis all the way through to present day.

With a peak in 2010 when nearly 1.2 million homes were foreclosed on, over 7.7 million families lost their homes throughout the entire foreclosure crisis.

Dr. Frank Nothaft, Chief Economist for CoreLogic, had this to say,

“The country experienced a wild ride in the mortgage market between 2008 and 2012, with the foreclosure peak occurring in 2010. As we look back over 10 years of the foreclosure crisis, we cannot ignore the connection between jobs and homeownership. A healthy economy is driven by jobs coupled with consumer confidence that usually leads to homeownership.”

Since the peak, foreclosures have been steadily on the decline by nearly 100,000 per year all the way through the end of 2016, as seen in the chart below.

If this trend continues, the country will be back to 2005 levels by the end of 2017.

Bottom Line

As the economy continues to improve, and employment numbers increase, the number of completed foreclosures should continue to decrease.

Source: Keeping Current Matters | KCM Crew 032317

It’s a Seller’s Market! Should I Downsize Now?

A study by Edelman Berland reveals that 33% of homeowners who are contemplating selling their houses in the near future are planning to scale down. Let’s look at a few reasons why this might make sense for many homeowners, as the majority of the country is currently experiencing a seller’s market.

In a blog, Dave Ramsey, the financial guru, highlighted the advantages of selling your current house and downsizing into a smaller home that better serves your current needs. Ramsey explains three potential financial advantages to downsizing:

1. A smaller home means less space, but it also means less time, stress and money spent on upkeep.
2. Let’s assume you save $500 a month on your mortgage payment. In 30 years, you could have an additional $1–1.6 million in the bank to get you through your golden years.
3. Use the proceeds from selling your current home to pay cash for a smaller one. Just imagine what you could do with no mortgage holding you down! If you can’t pay cash, aim for a 15-year fixed rate mortgage and put at least 10–20% down on your new home. Apply the $500 you saved from downsizing to your new monthly payment. At 3% interest, you could pay off a $200,000 mortgage in less than 10.5 years, saving almost $16,000 in the process.

Realtor.com also addressed downsizing in an article. They suggest that you ask yourself some questions before deciding if downsizing is right for you and your family. Here are two of their questions followed by their answers (in italics) and some additional information that could help.

Q: What kind of lifestyle do I want after I downsize?

A: “For some folks, it’s a matter of living a simpler life focused on family. Some might want to cross off travel destinations on their bucket lists. Some might want a low-maintenance community with high-end upgrades and social events. Decide what you want to achieve from your move first, and you’ll be able to better narrow down your housing options.”

Comments: Many homeowners are taking the profits from the sales of their current homes and splitting it in order to put down payments on smaller homes in their current locations, as well as on vacation/retirement homes where they plan to live when they retire.

This allows them to lock in the home price and mortgage interest rate at today’s values which makes sense financially as both home prices and interest rates are projected to rise.

Q: Have I built up enough equity in my current home to make a profit?

A: “For most homeowners, the answer is yes. This is if they’ve held on to their properties long enough to have positive equity that will be sizable enough to put a large down payment on their next home.”

Comments: A study by Fannie Mae revealed that only 37% of Americans believe that they have significant equity (> 20%) in their current home. In actuality, CoreLogic’s latest Equity Report revealed that 78.9% have greater than 20% equity. That equity could enable you to build the life you’ve always dreamt about.

Bottom Line

If you are debating downsizing your home and want to evaluate the options you currently have, meet with a real estate professional in your area who can help guide you through the process.

Source: Keeping Current Matters | KCM Crew 032217

Don’t Let Your Luck Run Out

Some Highlights:

• The “Cost of Waiting to Buy” is defined as the additional funds it would take to buy a home if prices and interest rates were to increase over a period of time.
• Freddie Mac predicts that interest rates will increase to 4.8% by this time next year, while home prices are predicted to appreciate by 4.8% according to CoreLogic.
• Waiting until next year to buy could cost you thousands of dollars a year for the life of your mortgage!

Source: Keeping Current Matters | KCM Crew 032117

4 Great Reasons to Buy This Spring!

Here are four great reasons to consider buying a home today instead of waiting.

1. Prices Will Continue to Rise

CoreLogic’s latest Home Price Index reports that home prices have appreciated by 6.9% over the last 12 months. The same report predicts that prices will continue to increase at a rate of 4.8% over the next year.

The bottom in home prices has come and gone. Home values will continue to appreciate for years. Waiting no longer makes sense.

2. Mortgage Interest Rates Are Projected to Increase

Freddie Mac’s Primary Mortgage Market Survey shows that interest rates for a 30-year mortgage have remained around 4% over the last couple months. The Mortgage Bankers Association, Fannie Mae, Freddie Mac & the National Association of Realtorsare in unison, projecting that rates will increase by at least a half a percentage point this time next year.

An increase in rates will impact YOUR monthly mortgage payment. A year from now, your housing expense will increase if a mortgage is necessary to buy your next home.

3. Either Way, You are Paying a Mortgage 

There are some renters who have not yet purchased a home because they are uncomfortable taking on the obligation of a mortgage. Everyone should realize that, unless you are living with your parents rent-free, you are paying a mortgage - either yours or your landlord’s.

As an owner, your mortgage payment is a form of ‘forced savings’ that allows you to build equity in your home that you can tap into later in life. As a renter, you guarantee your landlord is the person with that equity.

Are you ready to put your housing cost to work for you?

4. It’s Time to Move on with Your Life

The ‘cost’ of a home is determined by two major components: the price of the home and the current mortgage rate. It appears that both are on the rise.

But what if they weren’t? Would you wait?

Look at the actual reason you are buying and decide if it is worth waiting. Whether you want to have a great place for your children to grow up, you want your family to be safer or you just want to have control over renovations, maybe now is the time to buy.

If the right thing for you and your family is to purchase a home this year, buying sooner rather than later could lead to substantial savings.

Source: Keeping Current Matters | KCM CREW 032017

Which Homes Have Appreciated the Most?

Home values have risen dramatically over the last twelve months. The latest Existing Home Sales Report from the National Association of Realtors puts the annual increase in the median existing-home price at 7.1%. CoreLogic, in their most recent Home Price Insights Report, reveals that national home prices have increased by 6.9% year-over-year.

The CoreLogic report broke down appreciation even further into four different price categories:

1. Lower Priced Homes: priced at 75% or less of the median
2. Low-to-Middle Priced Homes: priced between 75-100% of the median
3. Middle-to-Moderate Priced Homes: priced between 100-125% of the median
4. High Price Homes: priced greater than 125% of the median

Here is how each category did in 2016:

Bottom Line

The lower priced homes (which are more in demand) appreciated at greater rates than the homes at the upper ends of the spectrum.

Source: Keeping Current Matters | KCM Crew 031617

A Tale of Two Markets: Inventory Mismatch Paints a More Detailed Picture

The inventory of existing homes for sale in today’s market was recently reported to be at a 3.6-month supply according to the National Association of Realtors latest Existing Home Sales Report. Inventory is now 7.1% lower than this time last year, marking the 20th consecutive month of year-over-year drops.

Historically, inventory must reach a 6-month supply for a normal market where home prices appreciate with inflation. Anything less than a 6-month supply is a sellers’ market, where the demand for houses outpaces supply and prices go up.

As you can see from the chart below, the United States has been in a sellers’ market since August 2012, but last month’s numbers reached a new low.

Recently Trulia revealed that not only is there a shortage of homes on the market in general, but the homes that are available for sale are not meeting the needs of the buyers that are searching.

Homes are generally bucketed into three groups by price range: starter, trade-up, and premium.

Trulia’s market mismatch score measures the search interest of buyers against the category of homes that are available on the market. For example: “if 60% of buyers are searching for starter homes but only 40% of listings are starter homes, [the] market mismatch score for starter homes would be 20.”

The results of their latest analysis are detailed in the chart below.

Nationally, buyers are searching for starter and trade-up homes and are coming up short with the listings available, leading to a highly competitive seller’s market in these categories. Ninety-two of the top 100 metros have a shortage in trade-up inventory.

Premium homebuyers have the best chance of less competition and a surplus of listings in their price range with an 11-point surplus, leading to more of a buyer’s market.

“It leaves Americans who are in the market for a home increasingly chasing too fewer options in lower price ranges, and sellers of premium homes more likely to be left waiting longer for a buyer.”

 Lawrence Yun, NAR’s Chief Economist doesn’t see an end to this coming any time soon: 

“Competition is likely to heat up even more heading into the spring for house hunters looking for homes in the lower- and mid-market price range.”

Bottom Line

Real estate is local. If you are thinking about buying OR selling this spring, sit with a local real estate professional who can share with you the exact market conditions in your area.

SOURCE: Keeping Current Matters | KCM Crew 031517

Mortgage interest rates, as reported by Freddie Mac, have increased over the last several weeks. Freddie Mac, along with Fannie Mae, the Mortgage Bankers Association and the National Association of Realtors, is calling for mortgage rates to continue to rise over the next four quarters.

This has caused some purchasers to lament the fact they may no longer be able to get a rate below 4%. However, we must realize that current rates are still at historic lows.

Here is a chart showing the average mortgage interest rate over the last several decades.

Bottom Line

Though you may have missed getting the lowest mortgage rate ever offered, 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.

Source: Keeping Current Matters | KCM Crew 031417

How to Get the Most Money When Selling Your Home

Every homeowner wants to make sure they get the best price when selling their home. But how do you guarantee that you receive maximum value for your house? Here are two keys to ensuring you get the highest price possible.

1. Price it a LITTLE LOW 

This may seem counterintuitive. However, let’s look at this concept for a moment. Many homeowners think that pricing their home a little OVER market value will leave them room for negotiation. In reality, this just dramatically lessens the demand for their house (see chart below).

Instead of the seller trying to ‘win’ the negotiation with one buyer, they should price it so that demand for the home is maximized. By doing this, the seller will not be fighting with a buyer over the price, but will instead have multiple buyers fighting with each otherover the house.

Realtor.com gives this advice:

“Aim to price your property at or just slightly below the going rate. Today’s buyers are highly informed, so if they sense they’re getting a deal, they’re likely to bid up a property that’s slightly underpriced, especially in areas with low inventory.”

2. Use a Real Estate Professional

This, too, may seem counterintuitive, as the seller likely believes that he or she will net more money if they don’t have to pay a real estate commission. With that being said, studies have shown that homes typically sell for more money when handled by a real estate professional.

Research posted by the National Association of Realtors revealed that:

“The median selling price for all FSBO homes was $185,000 last year. When the buyer knew the seller in FSBO sales, the number sinks to the median selling price of $163,800. However, homes that were sold with the assistance of an agent had a median selling price of $245,000 – nearly $60,000 more for the typical home sale.”

Bottom Line

Price your house at or slightly below the current market value and hire a professional. This will guarantee that you maximize the price you get for your house.

Source: Keeping Current Matters | KCM CREW 031317