J. Kent Erickson, Broker Associate
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4 Reasons Spring is a Great Time to Buy a Home!

Posted by on Mar 13, 2018 in Uncategorized | 0 comments

4 Reasons Spring is a Great Time to Buy a Home! Here are four great reasons to consider buying a home today instead of waiting. Prices Will Continue to Rise CoreLogic’s latest Home Price Index reports that home prices have appreciated by 6.6% over the last 12 months. The same report predicts that prices will continue to increase at a rate of 4.3% 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. Mortgage Interest Rates Are Projected to Increase Freddie Mac’s Primary Mortgage Market Survey shows that interest rates for a 30-year mortgage hovered close to 4.0% in 2017. Most experts predict that rates will rise over the next 12 months. The Mortgage Bankers Association, Fannie Mae, Freddie Mac and the National Association of Realtors are in unison, projecting that rates will increase by nearly a full percentage point by 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. 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 have 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? 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...

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Homeownership: “The Reports of My Death Have Been Greatly Exaggerated”

Posted by on Mar 7, 2018 in Uncategorized | 0 comments

Homeownership: “The Reports of My Death Have Been Greatly Exaggerated” The famous quote by Mark Twain in the title of this article can be used to describe homeownership in America today. Last week, the Census revealed that the percentage of homeowners in the country increased for the first time in thirteen years. A story in the Wall Street Journal gave these new homeownership numbers some context: “The annual increase marks a crucial turning point because it comes after the federal government reined in bubble-era policies that encouraged banks to ease lending standards to boost homeownership. This time, what’s driving the market is a shift in favor of owning rather than renting. ‘This is market, market and market…There’s no government incentive program in sight that is having this effect,’ said Susan Wachter, a professor of real estate and finance at the Wharton School at the University of Pennsylvania,‘This is back to basics.’” In a separate report comparing the rental population in America to the homeowner population, RentCafé also concluded that the gap is now shrinking. “Undoubtedly, the recession had a great impact on homeownership…However, it looks like it takes more to discourage Americans from buying a house than that. As the years go by, it seems more and more certain that the fact that renting has seen a sudden gain in popularity is more a reaction to the economic crisis than a paradigm shift in the Americans’ attitude toward housing.” America’s belief in homeownership was also evidenced in a recent survey by Pew Research. They asked consumers “How important is homeownership to achieving the American Dream?” The results: 43% said homeownership was essential to the American Dream 48% said homeownership was important to the American Dream Only 9% said it was not important Bottom Line Homeownership has been, is and will always be a crucial element of the American...

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Where Are Mortgage Interest Rates Headed in 2018?

Posted by on Mar 5, 2018 in Uncategorized | 0 comments

Where Are Mortgage Interest Rates Headed in 2018? The interest rate you pay on your home mortgage has a direct impact on your monthly payment. The higher the rate the greater the payment will be. That is why it is important to know where rates are headed when deciding to start your home search. Below is a chart created using Freddie Mac’s U.S. Economic & Housing Marketing Outlook. As you can see, interest rates are projected to increase steadily over the course of the next 12 months. How Will This Impact Your Mortgage Payment? Depending on the amount of the loan that you secure, a half of a percent (.5%) increase in interest rate can increase your monthly mortgage payment significantly. According to CoreLogic’s latest Home Price Index, national home prices have appreciated 7.0% from this time last year and are predicted to be 4.2% higher next year. If both the predictions of home price and interest rate increases become reality, families would wind up paying considerably more for their next home. Bottom Line  Even a small increase in interest rate can impact your family’s wealth. Let’s get together to evaluate your ability to purchase your dream...

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Millionaire to Millennials: Don’t Rent a Home… Buy!

Posted by on Mar 3, 2018 in Uncategorized | 0 comments

Millionaire to Millennials: Don’t Rent a Home… Buy! In a CNBC article, self-made millionaire David Bach explained that: “The biggest mistake millennials are making is not buying their first home.” He goes on to say that, “If you want to build real financial security, real wealth for your lifetime, then you need to buy a home.” Bach went on to explain: “Homeowners are worth 40 times more than renters. Now, that first home doesn’t need to be a dream home, it can be a very small home. You might literally have to buy a small studio apartment, but that’s how you get started.”  Then he explains the secret in order to buy that home! “Don’t do a 30-year mortgage. You want to take that 30-year mortgage and instead pay it off early, do a 15-year mortgage. What happens if you do a 15-year mortgage? Well, one, youpay the mortgage off 15-years sooner, that means you’ll be able to retire in your fifties. Number two, you’ll save a fortune (on potentially hundreds of thousands of dollars in interest payments).” What will it cost to pay your mortgage in fifteen years? He explains further: “For fifteen years, you got to brownbag your lunch. Think about that! Brownbag your lunch literally for fifteen years. You can retire ten years sooner than your friends. You’ll have real wealth, because you bought a home – you’re not a renter. And you’ll be financially secure for life.” Bottom Line Whenever a well-respected millionaire gives investment advice, people usually clamor to hear it. This millionaire gave simple advice – if you don’t yet live in your own home, go buy...

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Whether You Rent or Buy, Either Way You’re Paying a Mortgage!

Posted by on Mar 1, 2018 in Uncategorized | 0 comments

Whether You Rent or Buy, 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, however, 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 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 as opposed to 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 building 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 4.22% 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...

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Bidding Wars Abound… How Long Will They Continue?

Posted by on Feb 27, 2018 in Uncategorized | 0 comments

Bidding Wars Abound… How Long Will They Continue? Just like with any product or service, the law of supply and demand impacts home prices. Any time that there is less supply than the market demands, prices increase. In many areas of the country, the supply of homes for sale in the starter and trade-up home markets is so low that bidding wars have ensued, and the busy spring-buying season is just around the corner. CoreLogic recently conducted an analysis on national home prices at the time of sale for their January 2018 MarketPulse Report and found that a third of homes sold for at least list price. “The share selling above list price was almost three times the trough in January 2008 and represented more than one-fifth of total sales.” Many markets in the western part of the country and around major cities are experiencing higher shares of homes selling above list price. “San Francisco had the largest share of homes—76 percent—that sold for at least the list price, and Seattle and Los Angeles followed with 63 and 51 percent, respectively. Miami had the lowest share—16 percent—of homes selling at or above the list price.” Increased demand during the spring and summer months, the traditionally busier seasons for real estate, will no doubt influence how many homes continue to sell over list price. This should not be seen by sellers as permission to overprice their homes, though. Buyers are becoming more and more educated, especially those who have been searching for their dream homes for a while now while waiting for new inventory to come to market. 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.” Bottom Line Without a large wave of new listings coming to market, buyers will continue competing with each other for the homes that are available. If you are thinking of selling your home, now may be the time to do so before more competition comes this spring. Let’s get together to determine the demand for your house in our...

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Study Shows “Millennials Deserve More Credit”

Posted by on Feb 25, 2018 in Uncategorized | 0 comments

Study Shows “Millennials Deserve More Credit” When it comes to talking about millennials, there are many stereotypes out there that have influenced the way the public feels about the generation. Whether it’s the assumption that millennials are irresponsible with money and would rather buy avocado toast than save for a down payment, or that millennials jump from job to job, the majority of these stereotypes paint the generation in a negative light. A new study by Bank of America entitled Better Money Habits Millennial Reportrecently came to the defense of the generation when it reported that: “Millennials deserve more credit – both from themselves and from others – for their mindfulness when it comes to money and their lives.” Here are some key takeaways from the study proving that millennials deserve more credit for what they are already doing: 63% are saving – (47% have $15,000 or more in savings) 54% are budgeting – (73% who have a budget stick to it every month) 57% have a savings goal – (67% who have a goal stick to it every month) 46% have asked for a raise in the past 2 years – (80% who asked for a raise got one) 59% feel financially secure – (16% have $100,000 or more in savings) Many have wondered if millennials even want to own their own homes or if they would choose to rent instead. Well, not only do they want to own their own homes, but many already do and are looking to trade up! A recent studyby realtor.com shows that 49% of Americans who plan to sell their home in the next 12 months are millennials! Danielle Hale, realtor.com’s Chief Economist, gave some insight into why millennials are looking to sell, “The housing shortage forced many first-time homebuyers to consider smaller homes and condos as a way to literally get their foot in the door. Our survey data reveals that we may see more of these homes hitting the market in the next year.” Bottom Line Not every millennial fits into the stereotypes that are so prominent in our society. Those who have risen above the stereotype are ready and willing to buy a home of their own, and many others already...

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2 Major Myths Holding Back Home Buyers

Posted by on Feb 23, 2018 in Uncategorized | 0 comments

2 Major Myths Holding Back Home Buyers Urban Institute recently released a report entitled, “Barriers to Accessing Homeownership,” which revealed that “eighty percent of consumers either are unaware of how much lenders require for a down payment or believe all lenders require a down payment above 5 percent.” Myth #1: “I Need a 20% Down Payment” Buyers often overestimate the down payment funds needed to qualify for a home loan. According to the same report: “Consumers are often unaware of the option to take out low-down-payment mortgages. Only 19% of consumers believe lenders would make loans with a down payment of 5% or less… While 15% believe lenders require a 20% down payment, and 30% believe lenders expect a 20% down payment.” These numbers do not differ much between non-owners and homeowners; 39% of non-owners believe they need more than 20% for a down payment and 30% of homeowners believe they need more than 20% for a down payment. While many believe that they need at least 20% down to buy their dream home, they do not realize that programs are available that allow them to put down as little as 3%. Many renters may actually be able to enter the housing market sooner than they ever imagined with programs that have emerged allowing less cash out of pocket. Myth #2: “I Need a 780 FICO® Score or Higher to Buy” Similar to the down payment, many either don’t know or are misinformed 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. As you can see in the chart above, 53.5% 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...

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U.S. Housing Inventory Crunch Continues… List Your House Today!

Posted by on Feb 21, 2018 in Uncategorized | 0 comments

U.S. Housing Inventory Crunch Continues… List Your House Today! Every winter, families across the country decide if this will be the year that they sell their current houses and move into their dream homes. Mortgage rates hovered around 4% for all of 2017 which forced many buyers off the fence and into the market, resulting in incredibly strong demand RIGHT NOW! At the same time, however, inventory levels of homes for sale have dropped dramatically as compared to this time last year. Trulia reported that “in Q4 2017, U.S. home inventory decreased by 10.5%. That is the biggest drop we’ve seen since Q2 2013.” Here is a chart showing the decrease in inventory levels by category: The largest drop in inventory was in the starter home category which saw a 19% dip in listings. Bottom Line Demand for your home is very strong right now while your competition (other homes for sale) is at a historically low level. If you are thinking of selling in 2018, now may be the perfect...

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If You’re Considering Selling, ACT NOW!!

Posted by on Feb 19, 2018 in Uncategorized | 0 comments

If You’re Considering Selling, ACT NOW!! Definitely an aggressive headline. However, as the final data on the 2017 housing market rolls in, we can definitely say one thing: If you are considering selling, IT IS TIME TO LIST YOUR HOME! How did we finish 2017? New-home sales were at their highest level in a decade. Sales of previously owned homes were at their highest level in more than a decade. Starts of single-family homes were their strongest in a decade and applications to build such properties advanced to the fastest pace since August 2007. And Bloomberg Business just reported: “America’s housing market is gearing up for a robust year ahead. Builders are more optimistic, demand is strong and lean inventory is keeping prices elevated.” And the National Association of Realtors revealed that buyer traffic is stronger this winter than it was during the spring buying season last year. The only challenge to the market is a severe lack of inventory. A balanced market would have a full six-month supply of homes for sale. Currently, there is less than a four-month supply of inventory. This represents a decrease in supply of 9.7% from the same time last year. Bottom Line With demand increasing and supply dropping, this may be the perfect time to get the best price for your home. Let’s get together to see whether that is the case in your...

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