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3 Things to Know in the Housing Market Today!

Posted by on Jun 22, 2019 in Mortgage & Finances, Real Estate Market | 0 comments

A lot is happening in the world, and it’s having a direct impact on the housing market. The reality is this: some of it is positive and some of it may be negative. Some we just don’t know yet. The following three areas of the housing market are critical to understand: interest rates, building materials, and the outlook for an economic slowdown. 1. Interest Rates One of the most important things to consider when buying a home is the interest rate you will be charged to borrow the money. In our recent post we posed the question, “Are Low Interest Rates Here To Stay?” The latest information from Freddie Mac makes it appear they are. We are currently at a 21-month low in interest rates. 2. Building Materials Talk of tariffs could also affect the housing market. According to a recent article, the National Association of Home Builders reports that as much as $10 billion in goods imported from China are used in homebuilding. Depending on the outcome of the tariff and trade discussions between several countries, there could be as much as a 25% boost in the cost of building materials. 3. Economic Slowdown In a prior blog post on this topic, we began the year with many economic leaders thinking we could expect a recession in late 2019 or early 2020. As spring approached, we reported that economists had started to push that projection past 2020.  Now, three leading surveys indicate that it may begin in the next eighteen months. Bottom Line We are in a strong housing market. Wages are increasing, home prices are appreciating, and mortgage rates are the lowest they have been in 21 months.  Whether you are thinking of buying or selling, it’s a great time to be in the...

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Time for Your Dream Home, Gen X!

Posted by on Jun 20, 2019 in Buying a Home, Home Ownership | 0 comments

During the housing market crash, Gen X homeowners lost more wealth than other generations. However, things are changing now! A strong economy, increasing home prices, and the recovery of the housing market are helping this generation to regain their lost wealth. According to Pew Research Center, “Their fortunes have rebounded more than those of other generations during the post-recession economic expansion and as home and stock prices have risen. Since 2010, the median net worth of Gen X households has risen 115%. In fact, in 2016, the most recent year with available data, the net worth of a typical Gen X household had surpassed what it was in 2007 ($84,200 vs. $63,400)”. The same report also mentioned, “15% of Gen X’s homeowners were ‘underwater’ on their homes in 2010 (meaning they owed more than they owned). By 2016 only 3% were underwater.” As a result of homes regaining market value and their increasing net worth, many Gen Xers are presented with the opportunity of selling their current home in order to move up to the house they always dreamed of! According to the 2019 Home Buyers and Sellers Generational Trends Report by the National Associations of Realtors, in 2018 Gen Xers made up the second largest share of home buyers by generation at 24%. The report also provided some highlights about their purchase: Greatest share that purchased a multi-generational home (16%). Largest share that purchased a detached single-family home (88%). Highest median household income ($111,100). Bought the most expensive homes of all the generations. Job-related relocation was identified as the primary reason to buy. But this generation is not only buying- they are selling too! Largest share of home sellers (25%). Highest median household income among sellers ($123,600). Tenure in the previous home was a median of 9 years. House too small was indicated as the primary reason to sell. 91% sold the home using a real estate professional. Bottom Line If you are a Gen Xer who would like to know exactly how much your house is worth today so you can move up to the home of your dreams, let’s get together to analyze your current...

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Top 4 Renovations for the Greatest Return on Investment! [INFOGRAPHIC]

Posted by on Jun 18, 2019 in Home Ownership, Selling a Home | 0 comments

Some Highlights: If you are planning on listing your house for sale this year, these four home improvement projects will net you the most Return on Investment (ROI). Minor renovations can go a long way toward improving the quality of your everyday life and/or impressing potential buyers. Whether you plan to stay in your house for a long time or just a few years, it’s smart to know which home renovations add the most...

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How Homeownership Delivers Unsurpassed Family Wealth

Posted by on Jun 4, 2019 in Home Ownership, Mortgage & Finances, Real Estate Market | 0 comments

There are many financial benefits to homeownership, but probably none more important than its ability to create family wealth. How Housing Matters is a joint project of the Urban Land Institute and the MacArthur Foundation. It is an online resource for research and information on how homeownership contributes to individual and community success. Their article, The First Rung on the Ladder to Economic Opportunity Is Housing, explains the importance of homeownership to a family’s financial health. In that article, they simply stated: “The ladder to economic success can stretch only so high without the asset-building power of homeownership.” To this point, National Association of Realtors’ (NAR) Economists’ Outlook Blog revealed in a recent post: “Housing wealth contributes positively to the homeowner’s and children’s economic condition, because home equity can be tapped for expenditures such as investing in another property (which can generate rental income), home renovation (which further increases the home value), a child’s college education, emergency or major life events, or expenses in retirement… Housing wealth (or net worth or equity) is built up over time via the home price appreciation and the principal payments that the homeowner makes on the loan.” Here is a graph showing the build-up of wealth over time:Just last month, NAR’s Chief Economist, Lawrence Yun, explained that even though home appreciation has slowed, homeowners are still building wealth: “Homeowners in the majority of markets are continuing to enjoy price gains, albeit at a slower rate of growth. A typical homeowner accumulated $9,500 in wealth over the past year.” Later in life, this wealth is crucial… This wealth is important to a family’s retirement plans. In a recent report from the Joint Center for Housing Studies at Harvard University titled, Housing America’s Older Adults 2018, they revealed that a renter 65 years old or older has a net worth of $6,710. Meanwhile, a homeowner 65+ years old has a net worth of $319,200. That huge difference will allow for a dramatic upgrade in one’s lifestyle during your retirement years. Bottom Line Homeownership builds wealth. This, in turn, allows families to have more and better options when it comes to their children and their life in...

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Multigenerational Homes Are on the Rise

Posted by on Jun 2, 2019 in Real Estate Market | 0 comments

As loved ones start to get older, we start to wonder: how long will they be able to live alone? Will they need someone there to help them with daily life? There’s a reason to ask those questions now more than ever, as the average life expectancy in the U.S. is 78 years old! As a result, 41% of Americans in the market are searching for a home that can accommodate a multigenerational family. The graph below shows the number of people by generation that purchased a multigenerational home because they will either be taking care of an aging parent or they just want to spend time together.Of those buyers, 26% indicated they will be taking care of an aging parent, and 14% said they want to spend time with an aging parent. These numbers do not come as a surprise. According to Pew Research Center, 64 million Americans (20% of the population) lived in a multigenerational household in 2016 (Last numbers available).An increasing number of studies affirm the benefits of being part of a multigenerational household. These benefits aren’t just for the grandchildren, but for the grandparents as well. According to these two resources: The University of Oxford “Children who are close to their grandparents have fewer emotional and behavioral problems and are better able to cope with traumatic life events, like a divorce or bullying at school”. Boston College “Researchers found that emotionally close ties between grandparents and adult grandchildren reduced depressive symptoms in both groups”. This research gives helpful insight into why 41% of Americans are in the market to buy a multigenerational home. Bottom Line If you have a home that could accommodate a multigenerational family and are thinking about selling, now is the perfect time to put it on the market! The number of buyers looking for this type of home will only continue to...

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The Ultimate Truth about Housing Affordability

Posted by on May 31, 2019 in Mortgage & Finances, Real Estate Market | 0 comments

There have been many headlines decrying an “affordability crisis” in the residential real estate market. While it is true that buying a home is less affordable than it had been over the last ten years, we need to understand why and what that means. On a monthly basis, the National Association of Realtors (NAR), produces a Housing Affordability Index. According to NAR, the index… “…measures whether or not a typical family earns enough income to qualify for a mortgage loan on a typical home at the national and regional levels based on the most recent price and income data.” Their methodology states: “To interpret the indices, a value of 100 means that a family with the median income has exactly enough income to qualify for a mortgage on a median-priced home. An index above 100 signifies that family earning the median income has more than enough income to qualify for a mortgage loan on a median-priced home, assuming a 20 percent down payment.” So, the higher the index, the more affordable it is to purchase a home. Here is a graph of the index going back to 1990: It is true that the index is lower today than any year from 2009 to 2017. However, we must realize the main reason homes were more affordable. That period of time immediately followed a housing crash and there were large numbers of distressed properties (foreclosures and short sales). Those properties were sold at large discounts. Today, the index is higher than any year from 1990 to 2008. Based on historic home affordability data, that means homes are more affordable right now than any other time besides the time following the housing crisis. With mortgage rates remaining low and wages finally increasing, we can see that it is MORE AFFORDABLE to purchase a home today than it was last year! Bottom Line With wages increasing, price appreciation moderating, and mortgage rates remaining near all-time lows, purchasing a home is a great move based on historic affordability...

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2 Things You Need to Know to Properly Price Your Home

Posted by on May 28, 2019 in Home Inspection, Mortgage & Finances, Real Estate Market, Selling a Home | 0 comments

In today’s housing market, home prices are increasing at a slower pace (3.7%) than they have over the last eight years (6-7%). However, they are still are above historical norms. Low supply of listed homes and high demand from buyers has pushed prices to rise rapidly. In the mind of the homeowner, annual home price appreciation over 6% has become the new normal. This becomes a challenge when a homeowner looks to refinance or sell their home, as the expectation of what the homeowner believes the home should be worth does not always line up with the bank’s appraisal. Every month, the Home Price Perception Index (HPPI) measures the disparity between what a homeowner seeking to refinance their home believes their house is worth and what an appraiser’s evaluation of that same home is. Over the last five months, the gap between the homeowner’s opinion and the bank’s appraisal has widened to -0.78%. This is important for homeowners to note, as even a 0.78% difference in appraisal can mean thousands of dollars that a buyer or seller would have to come up with at closing (depending on the price of the home). The chart below illustrates the changes in home price estimates over the last 12 months. While the appraisal gap widens, another trend is also becoming more common. According to realtor.com, “the share of homes which had their prices cut increased by 2% compared to last year”. Thirty-seven out of the 50 largest US housing markets saw an increase in overall price reductions. In today’s market, you need an expert agent who can help price your house right from the start. Homeowners who make the mistake of overpricing their homes will eventually have to drop the price. This leaves buyers wondering if the price drop was caused by something wrong with the house. In reality, nothing is wrong- the price was just too high! Bottom Line If you are planning on selling your house in today’s market, let’s get together to set your listing price properly from the...

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4 Most Popular Bottom Line Investments in America

Posted by on May 26, 2019 in Mortgage & Finances, Real Estate Investments | 0 comments

Every year, Gallup surveys Americans to determine their choice for the best long-term investment. Respondents are given a choice between real estate, stocks, gold, and savings accounts. For the sixth year in a row, real estate has come out on top as the best long-term investment! That has not always been the case. Gallup explains: “Between 2008 and 2010, covering most of the Great Recession period that saw plummeting home and stock values, Americans were as likely to name savings accounts or CDs as the best long-term investment as they were to name stocks or real estate.” This year’s results showed that 35% of Americans chose real estate, followed by stocks at 27%. The full results are shown in the chart below. Bottom Line Now that the real estate market has recovered, so has the belief of the American people in the stability of housing as a long-term...

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Boomerang Buyers: Don’t Be Afraid to Buy a Home Again!

Posted by on May 24, 2019 in Buying a Home, Real Estate Market | 0 comments

According to CoreLogic, from 2006 to 2014 “there were 7.3 million housing foreclosures and 1.9 million short sales.” The hesitation some Americans feel after experiencing a foreclosure brings to mind the old saying: “Fool me once- shame on you. Fool me twice- shame on me.” According to the 2019 Home Buyer Report from NerdWallet, “Thirteen percent of Americans have lost a home due to a financial event such as foreclosure in the past 10 years. More than 6 in 10 of them (61%) have not bought a home since, and 20% of those who haven’t repurchased say they never plan to again.” This makes sense. They don’t want to go through the same pain again. As a cornerstone of the American dream, nobody wants to lose homeownership. But let’s illustrate this simply: Recall learning to ride your first bike during your childhood. Did you stop riding it because you fell on the ground and scraped your knees? Or did you get back on and try again until you were able to ride without falling? Purchasing a home is not as simple as learning to ride a bike, but the concept is the same! There are many things necessary to learn that affect the ability to get the financing needed to purchase a home. Past occurrences can determine if there is a waiting period. In other words, you need to let your knees heal before you try again! As we’ve mentioned in the past, homeownership has many financial and non-financial benefits. Each person needs to go over the pros and cons, taking the time to figure out what is best for their family. Should they continue renting, or should they try to buy again? The good news is that some “boomerang buyers” are getting back into the market. They’re getting back on their bike! “Of 2.8 million former homeowners whose foreclosures, short sales or bankruptcies dropped off their credit reports from January 2016 to November 2018, 11.5% have obtained a new mortgage, according to a study by credit rating agency Experian for USA Today.” NerdWallet’s report also mentioned: 6% plan to buy a house this year. 39% intend to buy over the next 3 years. 58% say they will purchase within 5 years. Bottom Line If you lost a home due to a financial event but would like to review your options, let’s get together to help you create a plan to obtain a home in the...

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Are Older Generations Really Not Selling Their Homes?

Posted by on May 22, 2019 in Real Estate Market, Selling a Home | 0 comments

Many studies suggest one of the main reasons for the inventory shortage in today’s market of homes for sale is that older generations have chosen to “age in place” over moving. The 2019 Home Buyers & Sellers Generational Trend Report by NAR clarifies this point! NAR’s findings show that Baby Boomers (43%) and the Silent Generation (12%) made up 56% of sellers in 2018! This means the majority of sellers last year were over the age of 54. This also shows these generations ARE moving! The report also shared the reasons why they chose to move. According to the research, the top reason was a desire to be closer to friends and family. Below is a full breakdown: As we can see, they have plenty of reasons to sell their current home! But what type of homes are they trading in? Once again, the report demonstrated that older generations are not keeping that 3-bedroom, 2-bath colonial home. Instead, they are putting it on the market and moving on with their lives! Bottom Line If you are living in a house that no longer fits your needs, let’s get together to help you find a home that...

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