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How to Get a Better Perspective on Affordability

Posted by on Feb 19, 2019 in Uncategorized | 0 comments

Headlines spotlight the fact that buying a home is less affordable today than it was at any other time in more than a decade. Those headlines are accurate. Understandably, buying a home is more expensive now than immediately following one of the worst housing crashes in American history. Over the past decade, the market was flooded with distressed properties (foreclosures and short sales) selling at 10-50% discounts. There were so many that this lowered the prices of non-distressed homes in the same neighborhoods. As a result, mortgage rates were kept low to help the economy. Prices have since recovered. Mortgage rates have increased as the economy has gained strength. This has impacted housing affordability. However, it’s necessary to give historical context to the subject of affordability. Two weeks ago, CoreLogic reported on what they call the “typical mortgage payment”. As they explain: “One way to measure the impact of inflation, mortgage rates and home prices on affordability over time is to use what we call the ‘typical mortgage payment.’ It’s a mortgage-rate-adjusted monthly payment based on each month’s U.S. median home sale price. It is calculated using Freddie Mac’s average rate on a 30-year fixed-rate mortgage with a 20 percent down payment… The typical mortgage payment is a good proxy for affordability because it shows the monthly amount that a borrower would have to qualify for to get a mortgage to buy the median-priced U.S. home… When adjusted for inflation, the typical mortgage payment puts homebuyers’ current costs in the proper historical context.” Here is a graph showing the results of CoreLogic’s research: As the graph indicates, the most recent calculation remained 28% below the all-time peak of $1,275 in June 2006. That’s because the average mortgage rate at that time was 6.68%. As seen in the graph, both today’s typical payment and CoreLogic’s projection for the end of the year are less than it was in January 2000. Bottom Line Even though home prices are appreciating at a slower rate, home affordability will likely continue to slide. However, this does not mean that buying a house is an unattainable goal in most markets. It is still less expensive today than it was prior to the housing bubble and...

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One More Time… You Do Not Need 20% Down to Buy a Home

Posted by on Feb 17, 2019 in Uncategorized | 0 comments

The largest obstacle renters face when planning to buy a home is saving for a down payment. This challenge is amplified by rising rents, which has eaten into the amount of money renters have leftover for savings each month after paying expenses. In combination with higher rents, survey after survey has shown that non-homeowners (renters and those living rent-free with family or friends) believe they need to save upwards of 20% for their down payment! According to the “Barriers to Accessing Homeownership” study commissioned in partnership between the Urban Institute, Down Payment Resource, and Freddie Mac,39% of non-homeowners and 30% of those who already own a home believe they need more than a 20% down payment. The percentage of those who are aware of low down payment programs (those under 5%) is surprisingly low at 12% for non-homeowners and 13% for homeowners. In a recent Convergys Analytics report, they found that 49% of renters believe they need at least a 20% down payment. The median down payment on loans approved in 2018 was only 5%! Those waiting until they have over 20% may already have enough saved to buy now! There are over 45 million millennials (33%) who are mortgage ready right now, meaning their income, debt, and credit scores would all allow them to qualify for a mortgage today! Bottom Line If your five-year plan includes buying a home, let’s get together to determine what it will take to make that plan a reality. You may be closer to your dream than you...

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Whose Mortgage Do You Want to Pay? Yours or Your Landlord’s?

Posted by on Feb 15, 2019 in Uncategorized | 0 comments

There are some people who haven’t purchased homes because they are uncomfortable taking on the obligation of a mortgage. However, 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 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.” With home prices rising, many renters are concerned about their house-buying power. Mike Fratantoni, Chief Economist at MBA, explained: “The spring homebuying season is almost upon us, and if rates stay lower, inventory continues to grow, and the job market maintains its strength, we do expect to see a solid spring market.” 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. As mentioned before, 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 4.46% 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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Do You Know How Much Your Home Has Increased in Value?

Posted by on Feb 13, 2019 in Uncategorized | 0 comments

Last year we saw headlines about a possible housing market bubble, and many wondered if Americans still felt confident about the value of their homes. Recently, the 2018 Houzz & Home Study revealed: “Homeowners with mortgages have seen their home equity more than double since 2011, increasing to a record-setting $8.3 trillion in 2017.” The average homeowner gained $16,200 in home equity between Q2 2017 and Q2 2018 according to the latest release of CoreLogic’s Home Equity Report. Since 2011 home values have increased significantly throughout the country, with prices rising by 5.1% in 2018 alone. When surveyed, homeowners revealed the top four reasons why they felt their homes had increased in value. Desirable Location Improved National Economy Improved Local Economy Low Home Inventory in My Area As we can see, not only does the data show that the homes have appreciated, but homeowners also believe they know why. Many have taken advantage of the opportunity to use their newly found equity to sell their current house and move up to their dream home! 2019 will be a good year for the homeowners that still want to take advantage of their home equity! CoreLogic forecasts that home prices will increase by 4.8% by the end of the year. Bottom Line If you are a homeowner who would like to find out your current home value, let’s get together to discuss the hidden opportunities in your...

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Is Student Loan Debt A Threat to Homeownership? No!

Posted by on Feb 11, 2019 in Uncategorized | 0 comments

Over the course of the last thirty years, a shift has happened. An entire generation has been raised to believe that a college education is their key to unlocking opportunities that were not available to their parent’s or grandparent’s generations. Due to this, student loan debt has soared to $1.5 trillion and represents the largest category of debt, surpassing credit card and auto loan debt in 2010 and never looking back. As more and more Americans continue their education amongst rising tuition costs, this number will no doubt increase. Many housing experts have blamed student loans for a drop in the homeownership rate for young families, and to an extent, they’ve been right. Increased debt at the time of graduation has no doubt limited young people from being able to afford a home at the same rate as their parents or grandparents did at the same age. In a recent Forbes article, the author explained that “in just the class of 2017, the average student has about $40,000 in debt — almost enough for a 20% down payment on a median-priced home.” The Federal Reserve set out to determine exactly how much impact student loan debt has had on the homeownership rate of those 18-34 (millennials). Their results found that, “Every $1,000 in student loan debt delays homeownership by about 2.5 months, but it doesn’t prevent homeownership entirely.  In fact, by the time college grads reach their 30s, those with student loan debt have a homeownership rate nearly identical to those who didn’t take out loans.” (emphasis added) In the Wall Street Journal’s coverage of the Fed report, they found that recent graduates prioritize paying off their student loans over saving for a down payment, despite their desire to be a homeowner. Many with debt want to “get that monkey off (their) back (before they) make any new investments.” This has just delayed the wave of young home buyers from hitting the market. But as Danielle Hale, the Chief Economist at realtor.com warns, “2020 will be peak millennial, the year when the largest number of millennials will turn 30.”  By age 30, those who attained a bachelor’s degree right after high school will be one or two years away from paying off their loans and will have been in their career long enough to earn a higher salary. In the long run, research shows that attaining a bachelor’s degree or more actually increases the chances that someone will become a homeowner. Bottom Line If you are one of the many millennials who has prioritized paying down your student loans over saving for a down payment, you’re not alone. Even if you are a couple years away from paying off your loans, let’s get together to help you determine if waiting really is the best decision for...

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Why It Makes No Sense to Wait for Spring to Sell

Posted by on Feb 9, 2019 in Uncategorized | 0 comments

The price of any item (including residential real estate) is determined by the theory of ‘supply and demand.’ If many people are looking to buy an item and the supply of that item is limited, the price of that item increases. The supply of homes for sale dramatically increases every spring, according to the National Association of Realtors (NAR). As an example, here is what happened to housing inventory at the beginning of 2018: Putting your home on the market now, rather than waiting for increased competition in the spring, might make a lot of sense. Bottom Line Buyers in the market during the winter are truly motivated purchasers and they want to buy now. With limited inventory currently available in most markets, sellers are in a great position to...

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Think You Should For Sale By Owner? Think Again! [INFOGRAPHIC]

Posted by on Feb 7, 2019 in Uncategorized | 0 comments

Some Highlights: For Sale By Owner (FSBO) is the process of selling real estate without the representation of a real estate broker or real estate agent. According to the National Association of Realtors’ Profile of Home Buyers & Sellers,36% of homeowners who decided to FSBO last year did so to avoid paying a commission or fee. But, homes sold with an agent net 6% more than those sold as a FSBO according to Collateral Analytics! Before you decide to take on the challenges of selling your house on your own, let’s get together to discuss the advantages of having an agent on your...

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3 Things You Need in a Shifting Real Estate Market

Posted by on Feb 5, 2019 in Uncategorized | 0 comments

Whether you are thinking of selling your house or buying a home, today’s real estate headlines can be confusing – perhaps even concerning. What is actually happening with mortgage rates? Are home values dropping or are they just rising at a slower pace? What impact will the economy have on the housing market? If you are either a buyer or seller (or both), you need to know what it will mean to your family if you go ahead with the move. You need to understand three things: 1. What is happening in the housing market right now? Consumers must get past those fear-mongering headlines and gain a deep understanding of what is truly happening. How strong is buyer demand right now? How much competition do listings have today compared to what they will have in the spring? People want to make an educated decision on what is probably their family’s greatest financial asset. 2. Why is it happening? Understanding the individual pieces that impact the sale or purchase of real estate is important. Understanding how those pieces impact each other is critical. How does the amount of a down payment impact the mortgage rate a buyer will be offered? Can you still price your house a ‘little ahead’ of the market and still be sure it will sell? 3. How do the first two affect your local market? Basically, you want an understanding of the overall housing market and a simple and effective explanation of how it will impact your personal real estate goals. Bottom Line The best way to get all three is to work with a professional who understands this shifting real estate market and can expertly guide you on the journey to reach your housing goals. Let’s get together to discuss what today’s market means for...

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The Importance of Homeownership to the American Dream

Posted by on Feb 3, 2019 in Uncategorized | 0 comments

For centuries, people in this country have seen homeownership as part of the American Dream. Whether they were born here or immigrated from another country, they wanted to own a piece of America. With so many prominent societal changes over the last few decades, it is fair to ask if people in America still feel the same way about owning a home. The answer was made abundantly clear in two separate reports released earlier this month. In their market trends report, As Housing Trends Shift, So Does Renter, Buyer and Seller Sentiment, Trulia revealed that: “After two years of no change, the share of Americans who say that homeownership is part of their personal “American Dream” ticked up from 72 percent to 73 percent of Americans.” At the same time, the National Association of Realtors released their Aspiring Home Buyers Profile. As the report explained: “For both homeowners and non-homeowners alike, homeownership is strongly considered a part of the American Dream. For non-owners, roughly 75 percent reported that homeownership is part of their American Dream. For owners, nine in 10 believe it is part of their American Dream.” Bottom Line The belief among the vast majority of Americans, whether they rent or own, is that purchasing a home still remains a major step toward accomplishing the American...

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Do You Prefer the Charm of an Existing Home?

Posted by on Feb 1, 2019 in Uncategorized | 0 comments

When homebuyers begin their research, they want to see all their available options! In many cases, they will include both new construction and existing homes in their search; but is a new construction home really the house of their dreams? According to a recent survey by Zillow, of the 38% of total buyers that added new construction to their list, only 11% ultimately purchased a newly constructed home! They added that 71% of these buyers are repeat buyers who are financially secure, with 45% using the money from the sale of their previous homes to make a purchase. Below are some reasons why buyers are interested in purchasing a new build: Everything in the house is new/never used (49%) To be close to family (41%) The home is the best value for their money (37%) Appealing home features (34%) Desirable location (34%) So, then why did most of the buyers surveyed choose not to purchase a new home? 1) Location Buyers could not find new construction in the desired neighborhood, and some felt that new construction is not established (e.g., landscaping, community, neighbors). 2) Timing Buyers face the end of a lease or sale of their previous property and could not wait for a house to be built. 3) Price Some buyers felt that new construction base prices were deceiving. Adding upgrades and HOA fees no longer made the home fit in their price range. 4) Appeal For some buyers, new construction homes are too “cookie cutter,” and models are limited. Others feel that the charm and uniqueness of an existing house trumps one that’s never been lived in. Bottom Line Not all buyers are looking for a newly built house! There are many buyers looking for “the charm and uniqueness” of an existing home. If you are considering selling your house, don’t wait! Let’s get together to come up with a plan to feature the charming details of your house to future...

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