No Bubble Here! How New Mortgage Standards Are Helping

Posted on December 13, 2018

Real estate is shifting to a more normal market; the days of national home appreciation topping 6% annually are over and inventories are increasing which is causing bidding wars to almost disappear. Some see these as signs that the market will soon come tumbling down as it did in 2008. As it becomes easier for […] Read More >>

Don’t Get Caught in the Rental Trap in 2019

Posted on December 12, 2018

Every year around this time, we take time to reflect and plan for next year. If you are renting your current home but have dreams of homeownership, your plan for the new year may include buying, and you wouldn’t be alone! According to the 2018 Bank of America Homebuyer Insights Report, 74% of renters plan on […] Read More >>

How to Simply Increase Your Family Wealth by Paying for Housing

Posted on December 11, 2018

Everyone should realize that unless you are living somewhere rent-free, you are paying a mortgage – either yours or your landlord’s. Buying your own home provides you with a form of ‘forced savings’ that allows you to use your monthly housing costs to increase your family’s wealth. Every month that you pay your mortgage, you are paying off a […] Read More >>

What If I Wait A Year to Buy a Home?

Posted on December 10, 2018

National home prices have increased by 5.4% since this time last year. Over that same time period, interest rates have remained near historic lowswhich has allowed many buyers to enter the market and lock in low rates. As a seller, you will likely be most concerned about ‘short-term price’ – where home values are headed over the next six months. As a buyer, however, you must not be concerned about price but instead about the ‘long-term cost’ of the home. The Mortgage Bankers Association (MBA), Freddie Mac, and Fannie Mae all project that mortgage interest rates will increase by this time next year. According to CoreLogic’s most recent Home Price Insights Report, home prices will appreciate by 4.8% over the next 12 months. What Does This Mean as a Buyer? If home prices appreciate by 4.8% over the next twelve months as predicted by CoreLogic, here is a simple demonstration of the impact that an increase in interest rate would have on the mortgage payment of a home selling for approximately $250,000 today: Bottom Line If buying a home is in your plan for this year, doing it sooner rather than later could save you thousands of dollars over the terms of your loan. Read More >>

The Tale of Two Markets [INFOGRAPHIC]

Posted on December 07, 2018

Some Highlights: An emerging trend for some time now has been the difference between available inventory and demand in the premium and luxury markets and that in the starter and trade-up markets and what those differences are doing to prices! Inventory continues to rise in the luxury and premium home markets which is causing prices to cool. Demand continues to rise with lower-than-normal inventory levels in the starter and trade-up home markets, causing prices to rise on a year-over-year basis for 80 consecutive months. Read More >>

2008 vs. Now: Are Owners Using Their Homes as ATMs Again?

Posted on December 06, 2018

Over the last six years, we have experienced strong price appreciation which has increased home equity levels dramatically. As the number of “cash-out” refinances begins to approach numbers last seen during the crash, some are afraid that we may be repeating last decade’s mistake. However, a closer look at the numbers shows that homeowners are being much more responsible with their home equity this time around. What happened then… When real estate values began to surge last decade, people started using their homes as personal ATMs. Homeowners would refinance their houses and convert their equity into instant cash (known as “cash-out” refinances). Because homes were appreciating so rapidly, many homeowners tapped into their equity multiple times. This left homeowners with little-or-no equity left in their homes, so when prices started to fall many homeowners found their houses in a negative equity situation (where the mortgage amount was greater than the value of the home). When some of these homeowners saw that there was no value left in their houses, they just stopped paying their mortgages altogether. Banks eventually foreclosed on those homes and the foreclosures drove prices down even further and put more homes in the negative equity category. This cycle continued, leading to the worst housing crash in almost one hundred years. What’s happening now… Again, Americans are seeing their home equity grow. Today, over 48% of all single-family homes in the country have over 50% equity, and yes, some families are tapping into that equity. However, this time around, homeowners are not making irresponsible decisions. According to the latest information from Freddie Mac, the total equity being “cashed out” is a fraction of what it was leading up to the crash. Here are the numbers: Bottom Line The recklessness that accompanied the build-up in equity prior to the last crash does not exist today. That makes this housing market much more secure than the one we had heading into 2008. Read More >>

Where Are Interest Rates Headed in 2019?

Posted on December 05, 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 throughout 2019. 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. But don’t let the prediction that rates will increase stop you from purchasing your dream home this year! Let’s take a look at a historical view of interest rates over the last 45 years. 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. Read More >>

Homeowners Aged 65+ Have 48x More Net Worth Than Renters

Posted on December 04, 2018

Every three years, the Federal Reserve conducts their Survey of Consumer Finances in which they collect data across all economic and social groups. Their latest survey data covers responses from 2013-2016. The study revealed that the median net worth of a homeowner was $231,400 – a 15% increase since 2013. At the same time, the median net worth of renters decreased by 5% ($5,200 today compared to $5,500 in 2013). These numbers reveal that the net worth of a homeowner is over 44 times greater than that of a renter. There are many who see that statistic and point toward how broad the range of respondents are for the Federal Reserve survey. Their study includes all economic and social groups and also includes all age groups. The argument is that older respondents have a higher likelihood of being homeowners, while the homeownership rate among younger survey takers is much lower. Recently, the Joint Center for Housing Studies at Harvard University focused on homeowners and renters over the age of 65. Their study revealed that the difference in net worth between homeowners and renters at this age group was actually 47.5 times greater! Homeowners over the age of 65 are much more financially prepared for retirement and often own their homes outright if they were fortunate enough to purchase their homes before the age of 36. Their 30 years of mortgage payments have paid off as they gained equity through their monthly payments and as home values appreciated. It is no surprise that lifelong-renters have had a hard time accruing net worth as the latest Census report shows that the Median Asking Rent has been climbing consistently over the last 30 years. Bottom Line As a homeowner you put your monthly mortgage payment to work for you, building your net worth with every payment. Read More >>

4 Reasons to Buy A Home This Winter!

Posted on December 03, 2018

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 Insight report revealed that home prices have appreciated by 5.6% over the last 12 months. The same report predicts that prices will continue to increase at a rate of 4.7% 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 hovered around 4.8%. 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 in 2019. 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 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 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 building 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. Read More >>

Home Prices Up 6.34% Across the Country! [INFOGRAPHIC]

Posted on November 30, 2018

Some Highlights: The Federal Housing Finance Agency (FHFA) recently released their latest Quarterly Home Price Index report. In the report, home prices are compared both regionally and by state. Based on the latest numbers, if you plan on relocating to another state, waiting to move may end up costing you more! Read More >>

Further Proof It’s NOT 2008 All Over Again

Posted on November 29, 2018

Home sales numbers are leveling off, the rate of price appreciation has slowed to more historically normal averages, and inventory is finally increasing. We are headed into a more normal housing market. However, some are seeing these adjustments as red flags and are suggesting that we are headed back to the same challenges we experienced in 2008. Today, let’s look at one set of statistics that prove the current market is nothing like the one that preceded the housing crash last decade. The previous bubble was partially caused by unhealthy levels of mortgage debt. New purchasers were putting down the minimum down payment, resulting in them having little if any equity in their homes. Existing homeowners were using their homes as ATMs by refinancing and swapping their equity for cash. When prices started to fall, many homeowners found themselves in a negative equity situation (where their mortgage was higher than the value of their home) so they walked away which caused prices to fall even further. When this happened, even more homeowners found themselves in negative equity situations which caused them to walk away as well, and so a vicious cycle formed. Today, the equity situation is totally different. According to a new reportfrom ATTOM Data Solutions more than 1-in-4 homes with a mortgage have at least 50% equity. The report explains: “…nearly 14.5 million U.S. properties were equity rich — where the combined estimated amount of loans secured by the property was 50 percent or less of the property’s estimated market value…The 14.5 million equity rich properties in Q3 2018 represented 25.7 percent of all properties with a mortgage.” In addition, according to the U.S. Census Bureau, 30.3% of homes in the country have no mortgage on them. Almost 50% of all homes have at least 50% equity. If we take both numbers, the 30.3% of all homes without a mortgage and the 17.9% with at least 50% equity (25.7% of the 69.3% of homes with a mortgage), we realize that 48.2% of all homes in the country have at least 50% equity. Bottom Line Unlike 2008, almost half of the homeowners in the country are sitting on massive amounts of home equity. They will not be walking away from their homes if the housing market begins to soften. Read More >>

Buyers: Don’t Be Surprised by Closing Costs!

Posted on November 26, 2018

Many homebuyers think that saving for their down payment is enough to buy the house of their dreams, but what about the closing costs that are required to obtain a mortgage? By law, a homebuyer will receive a loan estimate from their lender 3 days after submitting their loan application and they should receive a closing disclosure 3 days before the scheduled closing on their home. The closing disclosure includes final details about the loan and the closing costs. But what are closing costs anyway? According to Trulia: “Closing costs are lender and third-party fees paid at the closing of a real estate transaction, and they can be financed as part of the deal or be paid upfront. They range from 2% to 5% of the purchase price of a home. (For those who buy a $150,000 home, for example, that would amount to between $3,000 and $7,500 in closing fees.)” Keep in mind that if you are in the market for a home above this price range, your costs could be significantly greater. As mentioned before, Closing costs are typically between 2% and 5% of your purchase price. Trulia continues to give great advice, saying that: “…understanding and educating yourself about these costs before settlement day arrives might help you avoid any headaches at the end of the deal.” Bottom Line Speak with your lender and agent early and often to determine how muchyou’ll be responsible for at closing. Finding out that you’ll need to come up with thousands of dollars right before closing is not a surprise anyone is ever looking forward to. Read More >>

Existing Home Sales Slowed by a Lack of Listings [INFOGRAPHIC]

Posted on November 23, 2018

Some Highlights: Existing home sales are currently at an annual pace of 5.22 million, which is up 1.4% over last month. This reverses the six-month trend of dips in sales every month. The inventory of existing homes is still below the 6-month supply needed for a normal market and is now at a 4.3-month supply. NAR’s Chief Economist, Lawrence Yun, had this to say: “After six consecutive months of decline, buyers are finally stepping back into the housing market. As more inventory enters the market and we head into the winter season, home price growth has begun to slow more meaningfully. This allows for much more manageable, less frenzied buying conditions.” Read More >>

Will Your Side Hustle Buy You a House This Year?

Posted on November 21, 2018

The top concern for most first-time home buyers is their ability to save for a down payment. According to a new survey, 36% of millennials took on a second job to make their dreams of homeownership a reality in 2017. Among millennials with incomes over $100,000 a year, the top ways to come up with the necessary funds were to sell stocks (20%) or to sell cryptocurrency (16%). The most popular method of savings was the most traditional; 60% of those saving for a down payment used a percentage of their paychecks to achieve their goal, while 75% of those with salaries over $100k were able to save this way. For those who have not yet begun to save for their down payment, 32% plan on pursuing additional employment, while 15% plan on driving for a ride-share service as their second job. Many first-time buyers are mistaken about the down payment needed in today’s real estate market. In fact, “In a 2017 survey, 68% of renters cited saving for a down payment as an obstacle to homeownership. Thirty-nine percent of renters believe that more than 20% is needed for a down payment and many renters are unaware of low-down payment programs.” The many benefits of homeownership make the extra jobs, sacrificing new clothes, or skipping vacations well worth it. Bottom Line If you have been saving for your down payment for a while now and are curious how much further you have to go, let’s get together to help you determine what priced home you can afford and what size down payment you’ll need. Read More >>

Females Are Making It a Priority to Invest in Real Estate!

Posted on November 20, 2018

Everyone wants a place to call home; a place that gives them a sense of security. We are currently seeing major interest from females who want to achieve this dream, and the numbers are proving it! In 2018, for the second year in a row, single female buyers accounted for 18% of all buyers. In 2017, 60% of millennial women listed as the primary borrowers on mortgages were single. According to the 2018 Home Buyer and Seller Generational Trends Report by the National Association of Realtors, one in five homebuyers in the U.S. were single females (most of them part of the baby boomer generation) as you can see in the graph below: This does not come as a surprise since 50.8% of the U.S. population is female and 15.6% of them are 65 years and over, according to the Census Bureau. What are the reasons for this demographic’s booming interest in homeownership? Bankrate published an article with what they believe to be some of the reasons: Divorce rate: Known as the “Gray Divorce,” the divorce rate has doubled for those ages 50 and over and tripled for those ages 65 and over. Average life expectancy: For women it’s 81, four years longer than men. To build home equity: Women want to build equity through their home. As mentioned by Bankrate, “some are hoping to escape rising rents, some might be downsizing or looking for a new start,” especially those going through a gray divorce. Are they only downsizing and buying small homes? Not really; The Institute of Luxury Home Marketing recently stated that: “The number of female billionaires grew faster globally in 2017 than the number of male billionaires. This redistribution of wealth has seen an impact on luxury real estate both in its purchase and design attributes – and obviously, this is important for realtors to recognize when relating to their clients.” Bottom Line Whether you are a millennial who wants to buy a starter home, a billionaire looking for that luxury home you’ve always wanted, or maybe even someone who just went through a gray divorce, let’s get together to help you create your real estate portfolio so that you can start investing your money in real estate today! Read More >>

7 Reasons to List Your House For Sale This Holiday Season

Posted on November 19, 2018

Every year at this time there are many homeowners who decide to wait until after the holidays to list their homes for the first time, while others who already have their homes on the market decide to take them off until after the holidays. Here are seven great reasons not to wait: Relocation buyers are out there. Many companies are still hiring throughout the holidays and need their new employees in their new positions as soon as possible. Purchasers who are looking for homes during the holidays are serious buyers and are ready to buy now. You can restrict the showings on your home to the times you want it shown. You will remain in control. Homes show better when decorated for the holidays. There is minimal competition for you as a seller right now. Inventory of homes for sale traditionally slows in the late fall, early winter. Let’s take a look at listing inventory as compared to the same time last year: The desire to own a home doesn’t stop when the holidays come. Buyers who were unable to find their dream homes during the busy spring and summer months are still searching! The supply of listings increases substantially after the holidays. Also, in many parts of the country, new construction will continue to surge and reach new heights which will lessen the demand for your house in 2019. Bottom Line  Waiting until after the holidays to sell your home probably doesn’t make sense. Read More >>

The Cost of Renting vs. Buying a Home [INFOGRAPHIC]

Posted on November 16, 2018

Some Highlights: Historically, the choice between renting or buying a home has been a tough decision. Looking at the percentage of income needed to rent a median-priced home today (28.4%) vs. the percentage needed to buy a median-priced home (17.5%), the choice becomes obvious. Every market is different. Before you renew your lease again, find out if you can put your housing costs to work by buying this year! Read More >>

Wage Increases Make Home Buying More Affordable

Posted on November 15, 2018

Everyone knows that housing affordability has been negatively impacted by rising prices and increasing mortgage rates, but there is another piece to the affordability equation – wages. How much a family earns obviously impacts how easy or difficult it is for them to afford to own a home. Because of an improving economy, wages are finally beginning to increase – and that dramatically affects home affordability. According to the National Association of Realtors’ (NAR) September 2018 Housing Affordability Index, wages have increased in every region of the country: After applying current salaries, home prices, and mortgage rates to their Home Affordability Index equation, the index, though still lower than this time last year (160.1 to 146.7), increased over the last month (141.2 to 146.7). For the complete methodology used by NAR, click here. The percentage of income needed to own a home has also decreased each of the last three months. It currently sits at 17% which is substantially lower than historic numbers. Bottom Line If you are a first-time buyer or a move-up buyer who believes that purchasing a home is not within your budget, let’s get together to determine if that is still true. Google announced on October 8th, 2018 that they will begin transitioning away from Google+ for consumers and will fully remove the service by August 2019 due to low usage and engagement in the platform. Due to these changes, we will be removing the Google+ share button from the KCM Member Area as of November 22nd. If you have any questions, please feel free to contact our Member Support Team. Read More >>

Home Sellers in Q3 Netted $61K at Resale

Posted on November 14, 2018

According to a recent report by ATTOM Data Solutions, home sellers who sold their homes in the third quarter of 2018 benefited from rising home prices and netted an average of $61,232. This is the highest average price gain since the second quarter of 2007 and represents a 32% return on the original purchase prices. After the Great Recession, many homeowners were left in negative equity situations but home price appreciation in the recovery period since then has given homeowners something to smile about. The results from ATTOM fall right in line with data from the latest edition of the National Association of Realtors’ (NAR) Profile of Home Buyers and Sellers. Below is a chart that was created using NAR’s data to show the percentage of equity that homeowners earned at the time of sale based on when they purchased their homes. Even though those who purchased at the peak of the market netted less than those who bought before and after the peak, the good news is that there was a double-digit profit to be had! Many homeowners believe that they are still underwater which has led many of them to not even consider selling their houses. Bottom Line If you are curious about how much equity you’d earn if you sold your home, let’s get together to perform an equity review and determine the demand for your home in today’s market! Read More >>

Are Homeowners Renovating to Sell or to Stay?

Posted on November 13, 2018

Over the past few years, two trends have emerged in the housing market: Home renovations have shot up Inventory of homes available for sale on the market has dropped A ‘normal’ housing market is defined by having a 6-month supply of homes for sale. According to the latest Existing Home Sales Report from the National Association of Realtors, we are currently at a 4.4-month supply. This low inventory environment has many current homeowners worried that they would be unable to find a home to buy if they were to list and sell their current houses, which is causing many homeowners to instead renovate their homes in an attempt to fit their needs. According to Home Advisor, homeowners spent an average of $6,649 on home improvements over the last 12 months. If that number seems high, it also includes homeowners who recently bought fixer-uppers. A new study from Zillow asked the question, “Given a choice between spending a fixed amount of money on a down payment for a new home or fixing up their current home, what would you do?” Seventy-six percent of those surveyed said that they would rather renovate their current homes than move. The results are broken down by generation below.   More and more studies are coming out about the intention that many Americans have to ‘age in place’ (or retire in the area in which they live). Among retirees, 91% would prefer to renovate than spend their available funds on a down payment on a new home. If their current house fits their needs as far as space and accessibility are concerned, then a renovation could make sense. But if renovations will end up changing the identity of the home and impacting resale value, then the renovations may end up costing them more in the long run. With home prices increasing steadily for the last 6.5 years, homeowners have naturally gained equity that they may not even be aware of. Listing your house for sale in this low-competition environment could net you more money than your renovations otherwise would. Bottom Line If you are one of the many homeowners who is thinking about remodeling instead of selling, let’s get together to help you make the right decision for you based on the demand for your house in today’s market. Read More >>

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