Spring Buying Season Extends Into Summer

July 31, 2015,  simplify For Buyers, For Sellers, Infographics

     

 

Some Highlights:

• Existing Home Sales are up 9.6% over last year.
• Homes Sold on Average in just 34 days!
• Inventory now stands at a 5.0-month supply.
• Distressed Sales made up only 8% of all sales.

http://goo.gl/eLhzx1

Are Home Values REALLY at Record Levels?

July 30, 2015, simplify For Buyers, For Sellers

 

Last week, the National Association of Realtors (NAR) released their Existing Home Sales Report. The report announced that the median existing-home price in June was $236,400. That value surpasses the peak median sales price set in July 2006 ($230,400). This revelation created many headlines exclaiming that home prices had hit a “new record”:

Wall Street Journal: Existing-Home Prices Hit Record

USA Today: Existing home sales surge, prices hit record

Though the headlines are accurate, we want to take a closer look at the story. We do not want people to believe that this information is evidence that a new “price bubble” is forming in housing.
NAR reports the median home price. That means that 50% of the homes sold above that number and 50% sold below that number. With fewer distressed properties (lower valued) now selling, the median price will rise. The median value does not reflect that each individual property is increasing in value.
Below are the comments from Bill McBride, the author of the esteemed economic blog Calculated Risk. McBride talks about the challenges with using the median price and also explains that in “real” prices (taking into consideration inflation) we are nowhere close to a record.

“In general I'd ignore the median sales price because it is impacted by the mix of homes sold (more useful are the repeat sales indexes like Case-Shiller or CoreLogic). NAR reported the median sales price was $236,400 in June, above the median peak of $230,400 in July 2006. That is 9 years ago, so in real terms, median prices are close to 20% below the previous peak. Not close.”

Earlier this week, the Wall Street Journal covered this issue in detail. In this story, Nick Timiraos explained that this rise in median prices is nothing to be concerned about:

“Does this mean we have another problem on our hands? Not really…There may be other reasons to worry about housing affordability by comparing prices with incomes or prices with rents for a given market. But crude comparisons of nominal home prices with their 2006 and 2007 levels shouldn’t be used to make cavalier claims about a new bubble.”

Bottom Line

Home values are appreciating. However, they are not increasing at a rate that we should have fears of a new housing bubble around the corner.

http://goo.gl/pYsXU9

Homeownership: The Real Story Behind The Headlines

July 29, 2015  simplify For Buyers, For Sellers, Housing Market Updates

 

The big housing news this week is that the homeownership rate has dropped to 63.4% which represents the lowest rate in 48 years. That news definitely is making headlines. Yet, to fully understand what this means we have to look at the story that created these headlines.

There is no doubt the homeownership rate has declined since the housing crisis. Here is a graph showing the homeownership rate over the last twenty years. It skyrocketed during the housing boom and has steadily fallen since the bust:

The story behind the headline…

The dramatic fall in the rate over the past year must be looked at very closely. The rate is determined by the “number of households” who rent versus those who own. Let’s assume you have nine friends that live on their own (thus forming a household); six of them own and three of them rent. That would mean that 66.6% (6 out of 9) of your friends that live on their own are homeowners.
Now, let’s assume you have another friend who has been living with his parents. He would not be considered a separate household because he lives within his parents’ household. Once that friend moves out of his parents’ home and gets a place of his own, he will become part of the household count. Let’s assume, since he is just starting out, that he moves into a rental.
When he does, you now have ten friends that live on their own. If six still own their home and four of your friends now rent, the homeownership rate of your friends drops to 60% (6 out of 10). The number who own didn’t decrease; but the percentage decreased.
With the economy improving and job numbers looking better, more and more young adults are beginning to move out and get a place of their own. However, most will start in a rental situation thus driving the “percentage” of homeownership down. Auction.com explained the most recent drop in homeownership rate this way:

“This occurred as household formations popped, implying millennials are riding an improved labor market out of mom and dad’s house. Roughly a third of millennials live at home according to Census data, an elevated figure. Continued gains in the labor market will coax increased numbers out into their own places, a majority of which will be apartments, as this age cohort lacks the financial wherewithal to buy.”

What does this mean to the future of homeownership?

The great news is that study after study has shown that Millennials aspire to homeownership as they still see it as a major part of the American Dream. As they get more comfortable with their financial situation, many of the Millennials who finally made it out of their parents’ homes this year will become homeowners over the next several years. An increase in homeownership rates will follow.
 

http://goo.gl/FYO5Ge

Buyer Demand Continues To Outpace Housing Supply

July 28, 2015  simplify For Buyers, For Sellers

 

The price of any item is determined by the supply of that item, and the market demand. The National Association of Realtors (NAR) recently released their latest Existing Home Sales Report.

Inventory Levels & Demand

Sales of existing homes rose 3.2% from May, outpacing year-over-year figures for the ninth consecutive month. Total unsold housing inventory is at a 5.0-month supply.
This is down from May’s 5.1-month supply and remains below the 6 months that is needed for a historically normal market.
Consumer confidence is at the highest level in over a decade. Pair that with interest rates still around 4%, new programs available for down payments as low as 3%, and you have an attractive market for buyers.
Buyer demand for housing surged to it’s highest level since June 2013.

Prices Rising

June marked the 40th consecutive month of year-over-year price gains as the median price of existing homes sold rose to $236,400 (up 6.5% from 2014).

So What Does This Mean?

The chart below shows the impact that inventory levels have on home prices.



NAR’s Chief Economist, Lawrence Yun gave some insight into the correlation:

"Limited inventory amidst strong demand continues to push home prices higher, leading to declining affordability for prospective buyers."

NAR’s President, Chris Polychron added:

"The demand for buying has really heated up this summer, leading to multiple bidders and homes selling at or above asking price."

Bottom Line

If you are debating putting your home on the market in 2015, now may be the time. The number of buyers ready and willing to make a purchase is at the highest level in years. Let's get together to discuss your options.
 

http://goo.gl/tLr4a0

5 Reasons You Should Sell Now!

July 27, 2015  simplify For Sellers

 

As the temperature continues to rise, buyers are coming out ready to purchase their dream home. Here are five reasons that you should list your house for sale now.

1. Strong Buyer Demand

Foot traffic refers to the number of people out actually physically looking at homes right now. The latest foot traffic numbers show that there are significantly more prospective purchasers currently looking at homes than at any point in the last two years!
These buyers are ready, willing and able to purchase… and are in the market right now! Take advantage of the buyer activity currently in the market.

2. There Is Less Competition Now

The National Association of Realtors reported last week that housing supply as slipped to a 5.0-month supply. This is still under the 6-month supply that is needed for a normal housing market.
This means, in most areas, there are not enough homes for sale to satisfy the number of buyers in that market. This is good news for home prices.
There is a pent-up desire for many homeowners to move as they were unable to sell over the last few years because of a negative equity situation. Homeowners are now seeing a return to positive equity as real estate values have increased over the last two years. Many of these homes will be coming to the market in the near future.
The choices buyers have will continue to increase. Don’t wait until all this other inventory of homes comes to market before you sell.

3. Home Prices Are Skyrocketing

Daren Blomquist, President of RealtyTrac, recently shared insights into why “2015 is a Great Year to Sell” by saying:

"So far in 2015, [sellers] are realizing the biggest gains in home price appreciation since 2007. In June, sellers sold for above estimated market value on average for the first time in nearly two years."

One major factor driving prices up is the lack of inventory available for the amount of buyers in the market. Often buyers, who find a home that they would like to make an offer on, are met with the reality that they aren’t the only ones interested.

4. There Will Never Be a Better Time to Move-Up

If you are moving up to a larger, more expensive home, consider doing it now.
Prices are projected to appreciate by over 19.4% from now to 2019. If you are moving to a higher priced home, it will wind-up costing you more in raw dollars (both in down payment and mortgage payment) if you wait. You can also lock-in your 30-year housing expense with an interest rate near 4% right now.
Rates are projected to increase by a full percentage point over the next year according to Freddie Mac.

5. It’s Time to Move On with Your Life

Look at the reason you decided to sell in the first place and determine whether it is worth waiting. Is money more important than being with family? Is money more important than your health? Is money more important than having the freedom to go on with your life the way you think you should?
Only you know the answers to the questions above. You have the power to take back control of the situation by putting your home on the market. Perhaps, the time has come for you and your family to move on and start living the life you desire.

That is what is truly important.

http://goo.gl/l8yzmN

Cost Across Time

July 24, 2015  simplify Infographics, Interest Rates

Some Highlights:

• With interest rates still around 4% now is a great time to look back at where rates have been over the last 40 years.
• Rates are projected to go up a full percentage point by this time next year according to Freddie Mac.
• The impact your interest rate makes on your monthly mortgage cost is significant!
• Lock in a low rate now while you can!

http://goo.gl/dHqOBr

Freddie Mac: Equity Matters (a Lot!)

July 23, 2015  simplify First Time Home Buyers, For Buyers

 

According to a Merrill Lynch survey, over 80% of the people in this country believe that homeownership is still “an important part of the American Dream”. There are many financial and non-financial reasons people feel this way.

One of the biggest reasons is because it helps build family wealth. Last week, Freddie Mac posted about the power of home equity. They explained:

“In the simplest terms, equity is the difference between how much your home is worth and how much you owe on your mortgage. You build equity by paying down your mortgage over time and through your home's appreciation. In a nutshell, your money is working for you and contributing toward your financial future.”

They went on to show an example where a person bought a home for $150,000 with a down payment of 10%, resulting in a loan amount of $135,000. The buyer secured a 30-year fixed-rate mortgage at 4.5% with a monthly mortgage payment of $684.03 (not including taxes and insurance). They then illustrated what would happen after seven years of making a mortgage payment, assuming 3% per year home appreciation (the historic national average):



And that number continues to build as you continue to own the home. Merrill Lynch published a report earlier this year that showed the average equity homeowners have acquired at certain ages.

Bottom Line

Home equity is important to building wealth as a family. Referring to the first scenario above, Freddie Mac explained:

“Now, if you continued to rent, and made the same payment of $684.03 per month, you'd have zero equity and no means to build it.
Building equity is a critical part of homeownership and can help you create financial stability.”

http://goo.gl/2VOQMB

Homes being sold at the highest prices, ever.

Homes are officially being sold at the highest prices, ever

Existing-home sales also reach highest pace in 8 years

Ben Lane

July 22, 2015 11:19AM

 

existing home pricesExisting home salesLawrence YunNARNational Association of Realtors

Thanks to rising demand and shrinking supply, the median existing-home price for all housing types reached an all-time high in June.

According to the latest data from the National Association of Realtors, the median existing-homes sales price rose to $236,400, which exceeds the previous peak median sales price set in July 2006 of $230,400.
June’s total also rose 6.5% above June 2014.
In May, the median existing-home price for all housing types was $228,700, which was 7.9% above May 2014.
That marked the 39th consecutive month of year-over-year price gains, making June the 40th straight month of year-over-year price gains.
Despite record prices, existing-home sales also reached their highest pace in more than eight years.
Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, increased 3.2% to a seasonally adjusted annual rate of 5.49 million in June from a downwardly revised 5.32 million in May.
Sales are now at their highest pace since February 2007 (5.79 million), have increased year-over-year for nine consecutive months and are 9.6% above a year ago (5.01 million).
Lawrence Yun, NAR chief economist, said that buoyed by June's solid gain in closings, this year's spring buying season has been the strongest since the crisis began.
"Buyers have come back in force, leading to the strongest past two months in sales since early 2007," Yun said. "This wave of demand is being fueled by a year-plus of steady job growth and an improving economy that's giving more households the financial wherewithal and incentive to buy."
According to NAR’s report, total housing inventory at the end of June rose slightly by 0.9% to 2.30 million existing homes available for sale, which is is 0.4% higher than the same time period a year ago (2.29 million).
Unsold inventory is at a 5.0-month supply at the current sales pace, down from 5.1 months in May.
"Limited inventory amidst strong demand continues to push home prices higher, leading to declining affordability for prospective buyers," said Yun. "Local officials in recent years have rightly authorized permits for new apartment construction, but more needs to be done for condominiums and single-family homes."
According to NAR’s report, the percent share of first-time buyers fell to 30% in June from 32% in May, but remained at or above 30% for the fourth consecutive month.
One year ago, first-time buyers represented 28% of all buyers.
NAR President Chris Polychron said that Realtors are reporting “drastic imbalances” of supply in relation to demand in many metro areas — especially in the West.
"The demand for buying has really heated up this summer, leading to multiple bidders and homes selling at or above asking price," Polychron said. "Furthermore, tight inventory conditions are being exacerbated by the fact that some homeowners are hesitant to sell because they're not optimistic they'll have adequate time to find an affordable property to move into."
All-cash sales dropped to the lowest share since December 2009, reaching just 22% of transactions in June, down from 24% in May and 32% a year ago.
Individual investors, who account for many cash sales, purchased 12% of homes in June (14% in May) — the lowest since August 2014 (also 12%) and down from 16% in June 2014.
Distressed sales, which are foreclosures and short sales, fell to 8% in June (matching an August 2014 low) from 10% in May, and are below the 11% share a year ago.
According to NAR’s data, 6% of June sales were foreclosures and 2% were short sales. Foreclosures sold for an average discount of 15% below market value in June (unchanged from May), while short sales were discounted 18% (16% in May).
NAR’s report also showed that single-family home sales increased 2.8% to a seasonally adjusted annual rate of 4.84 million in June from 4.71 million in May, and are now 9.8% above the 4.41 million pace a year ago.
The median existing single-family home price was $237,700 in June, up 6.6% from June 2014 and also surpassing the peak median sales price set in July 2006 ($230,900).
Existing condominium and co-op sales rose 6.6% to a seasonally adjusted annual rate of 650,000 units in June from 610,000 units in May, up 8.3% from June 2014 (600,000 units) and the highest pace since May 2007 (680,000 units).
The median existing condo price was $226,500 in June, which is 5.5% above a year ago and the highest since August 2007 ($229,200).
"June sales were also likely propelled by the spring's initial phase of rising mortgage rates, which usually prods some prospective buyers to buy now rather than wait until later when borrowing costs could be higher," Yun concluded.
Jonathan Smoke, the chief economist for Realtor.com, said that June’s data shows that 2015 is turning into the best housing market since 2006.
“This is the biggest and healthiest year for existing home sales since 2006 when speculation was rampant,” Smoke said.
“The increase in sales we’re seeing is consistent with the strong and growing demand we’ve been monitoring all year and we anticipate sales will increase as the summer progresses particularly with our expectations of growing millennial participation in the housing market,” Smoke added.
“While the market remains tight and favors sellers, the higher prices should encourage more would-be sellers and more new construction in the months ahead, lending further momentum to the market’s positive trend,” Smoke concluded.
In a note responding to the NAR report, Capital Economics said that the rise in existing-home sales to their highest level since before the financial crisis provides further evidence that the housing recovery has shifted into a higher gear.
“The market has clearly taken the recent upturn in mortgage interest rates in its stride and demand is strengthening markedly,” Capital Economics said.
“That said, relative to the population, existing sales are now above their long-run average, and we suspect they won’t rise too much further from here,” the Capital Economics report continued. “However, the improving labor market, high levels of consumer confidence and a gradual loosening in credit conditions should ensure that sales continue at a high level in the months ahead.”

http://goo.gl/2L20AW

Home Sales Will Remain Hot This Summer

July 22, 2015  simplify For Buyers, For Sellers

 

People always talk about the “spring buying season” when they talk real estate. However, this year it appears as though the summer real estate market will be just as hot.

The most recent Foot Traffic Report released by the National Association of Realtors (NAR) revealed that there are more buyers out looking at homes right now than at any other time in the last two years including the past two springs (in orange below).


The Foot Traffic Report is compiled from data on the number of properties shown by Realtors. NAR further explains:

“Foot traffic has a strong correlation with future contracts and home sales, so it can be viewed as a peek ahead at sales trends two to three months into the future."

We can see that the number of prospective purchasers out looking at homes has been greater each month this year compared to the same month in 2014. And, though foot traffic fell off last June as compared to May, this year it has increased nicely.

Bottom Line

The housing market will remain strong throughout the summer and into the fall, making for one of the best years in real estate over the last decade.

http://goo.gl/iBevNI

Stop Paying Your Landlord’s Mortgage!

July 21, 2015  simplify First Time Home Buyers, For Buyers

 

There are some people that have not 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 your mortgage or your landlord’s.

As The Joint Center for Housing Studies at Harvard University explains:

“Households must consume housing whether they own or rent. Not even accounting for more favorable tax treatment of owning, homeowners pay debt service to pay down their own principal while households that rent pay down the principal of a landlord plus a rate of return.  
That’s yet another reason owning often does—as Americans intuit—end up making more financial sense than renting.”

Christina Boyle, a Senior Vice President, Head of Single-Family Sales & Relationship Management 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 have 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.
The graph below shows the widening gap in net worth between a homeowner and a renter:

Bottom Line

Whether you are looking for a primary residence for the first time or are considering a vacation home on the shore, owning might make more sense than renting since home values and interest rates are projected to climb.
 

http://goo.gl/EwlzCx

5 Reasons to Hire a Real Estate Professional Today!

July 20, 2015  simplify For Buyers, For Sellers   

 

Whether you are buying or selling a home, it can be quite an adventurous journey. You need an experienced Real Estate Professional to lead you to your ultimate goal. In this world of instant gratification and internet searches, many sellers think that they can For Sale by Owner or FSBO.
The 5 Reasons You NEED a Real Estate Professional in your corner haven’t changed, but have rather been strengthened due to the projections of higher mortgage interest rates & home prices as the market continues to recover.
1. What do you do with all this paperwork?
Each state has different regulations regarding the contracts required for a successful sale, and these regulations are constantly changing. A true Real Estate Professional is an expert in their market and can guide you through the stacks of paperwork necessary to make your dream a reality.
2. Ok, so you found your dream house, now what?
According to the Orlando Regional REALTOR Association, there are over 230 possible actions that need to take place during every successful real estate transaction. Don’t you want someone who has been there before, who knows what these actions are to make sure that you acquire your dream.
3. Are you a good negotiator?
So maybe you’re not convinced that you need an agent to sell your home. However, after looking at the list of parties that you need to be prepared to negotiate with, you’ll realize the value in selecting a Real Estate Professional. From the buyer (who wants the best deal possible), to the home inspection companies, to the appraiser, there are at least 11 different people that you will have to be knowledgeable with and answer to, during the process.
4. What is the home you’re buying/selling really worth?
It is important for your home to be priced correctly from the start to attract the right buyers and shorten the time that it’s on the market. You need someone who is not emotionally connected to your home to give you the truth as to your home’s value. According to the National Association of REALTORS, “the typical FSBO home sold for $208,700 compared to $235,000 among agent-assisted home sales.”
Get the most out of your transaction by hiring a professional.
5. Do you know what’s really going on in the market?
There is so much information out there on the news and the internet about home sales, prices, mortgage rates; how do you know what’s going on specifically in your area? Who do you turn to in order to competitively price your home correctly at the beginning of the selling process? How do you know what to offer on your dream home without paying too much, or offending the seller with a low-ball offer?
Dave Ramsey, the financial guru advises:

“When getting help with money, whether it’s insurance, real estate or investments, you should always look for someone with the heart of a teacher, not the heart of a salesman.”

Hiring an agent who has their finger on the pulse of the market will make your buying/selling experience an educated one. You need someone who is going to tell you the truth, not just what they think you want to hear.

Bottom Line:

You wouldn’t replace the engine in your car without a trusted mechanic. Why would you make one of your most important financial decisions of your life without hiring a Real Estate Professional? Let's get together and talk about your goals.

http://goo.gl/HxLwuq

45% of Homes Sold in Less Than A Month!

July 17, 2015 simplify For Buyers, For Sellers, Infographics

     

Some Highlights:

• The National Association of REALTORS® surveyed their members for their Confidence Index
• The REALTORS® Confidence Index is a key indicator of housing market strength based on a monthly survey sent to over 50,000 real estate practitioners. Practitioners are asked about their expectations for home sales, prices and market conditions.
• Homes sold in 60 days or less in 35 out of 50 states and Washington D.C.
• Only 7 states had a median sold date longer than 90 days.

 

http://goo.gl/Vl4tpZ

The Main Reason You Should Not Wait to Buy…

July 16, 2015  simplify First Time Home Buyers, For Buyers, Move-Up Buyers

 

The Joint Center for Housing Studies at Harvard University recently released their 2015 State of the Nation’s Housing report. The report concentrated on the challenges renters in this country are facing because of the diminishing supply of quality rental units and dramatically escalating rents.

However, there was also information buried within the report that revealed that now is definitely the time to buy your first home or move-up to the home of your family’s dreams. With home prices still below peak values and mortgage rates still near historic lows, the monthly mortgage payment on a median priced home is less than at almost any time in the last 25 years.
Here is a graph which helps visualize the data from the report:

Bottom Line

With home prices increasing and mortgage rates projected to increase, now is the time to buy.

http://goo.gl/KmZW2J

Homeownership: A Key to Well-Being in Retirement

July 15, 2015 simplify For Buyers

 

There has been much talk about homeownership and whether it is a true vehicle for building wealth. A new report looks at the impact owning a home has on the financial wellbeing of people closing in on their retirement years (ages 55-64).

In recently released study by the Hamilton Project, Ten Economic Facts about Financial Well-Being in Retirement, it was revealed that:
1. Middle-class households near retirement age have about as much wealth in their homes as they do in their retirement accounts.

“Over the past quarter century the largest single source of wealth for all but the richest households nearing retirement age has been their homes, which accounted for about two-fifths of net worth in the early 1990s and accounts for about one-third today.”

2. Home equity is a very important source of net worth to all but the wealthiest households near retirement age.

“Home equity is an important source of wealth for middle income households, accounting for more than one-third of total net worth for the second, third, and fourth quintiles of the net worth distribution… The fifth quintile has a much larger share in business equity—almost a quarter—than any other quintile. (The figure leaves out the bottom quintile of households because they have negative net worth. It is likely that these households will rely almost exclusively on Social Security in retirement.)”

Here is an asset breakdown for the middle 20% of Americans determined by median net worth ($165, 720):

Obviously, the data again proves that homeownership has a big role in building wealth for American families.

http://goo.gl/Uvm5XE

What If I Wait Until Next Year to Buy?

July 14, 2015  simplify First Time Home Buyers, For Buyers

First-time homebuyers are flocking to the housing market in greater numbers than any time in the last few years. Renters who are ready and willing to buy are now realizing that they are also able to as well. Many first-time buyers are Millennials (born between 1981 – 1997).

If you are one of the many in this generation who sees your friends and family diving head first into the real estate market, and wonder if now is the time for you to do the same, keep reading!

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.
Let’s look at an example of what the experts are predicting for the upcoming year, and what that really would mean for you. Let’s say you’re 30 and your dream house costs $250,000 today. Right now mortgage interest rates are at or about 4%.

Your monthly mortgage payment (principal & interest only) would be $1,193.54.

But you’re busy, you like your apartment, and moving is such a hassle. You decide to wait until next year to buy. CoreLogic predicts that home prices will appreciate by 5.1% in the next 12 months; this means that same house you loved now costs, $262,750.
Freddie Mac predicts that over this same period of time, interest rates will be a full point higher at 5.0%. Your new payment per month is now $1,410.50.

The difference in payment is $216.96 PER MONTH!

That’s basically like taking $8 and tossing it out the window EVERY DAY!
Or you could look at it this way:

• That’s your morning coffee everyday on the way to work (average $2) with $10 left for lunch!
• There goes Friday Sushi Night! ($50 x 4)
• Stressed Out? How about a few deep tissue massages with tip!
• Need a new car? You could get a brand new car for $217 a month.

Let’s look at that number annually! Over the course of your new mortgage at 5.0%, your annual additional cost would be $2,603.52!
Had your eye on a vacation in the Caribbean? How about a 2-week trip through Europe? Or maybe your new house could really use a deck for entertaining. We could come up with 100’s of ways to spend $2,603, and we’re sure you could too!
Over the course of your 30 year loan, now at age 61, hopefully you are ready to retire soon, you would have spent an additional $78,105.60, all because when you were 30 you thought moving in 2015 was such a hassle or loved your apartment too much to leave yet.
Or maybe there wasn’t an agent out there who educated you on the true cost of waiting a year. Maybe they thought you wouldn’t be ready. But if they showed you that you could save $78,000 you’d at least listen to what they had to say.
They say hindsight is 20/20, we’d like to think that 30 years from now when you are 60, looking back, you would say to buy now…

http://goo.gl/S8AMaV

Should I Rent My House Instead of Selling It?

July 13, 2015,  simplify Uncategorized

 

The results of Fannie Mae’s June 2015 National Housing Survey, were just released showing that more and more homeowners are warming up to the idea that now may be a great time to sell their home.

The amount of respondents that stated that now is a good time to sell rose three percentage points to a survey high of 52%; which may translate to a healthier market as more homes are listed in the coming months.
At the same time “the percentage of respondents who expect home rental prices to go up rose to 59% – a new survey high.” Doug Duncan, senior vice president and chief economist at Fannie Mae, gave this insight: “The expectation of higher rents is a natural outgrowth of increasing household formation by newly employed individuals putting upward pressure on rental rates.”
There is a chance that those who believe rental prices will rise may consider renting their house rather than selling it at this time.
However, if you have no desire to actually become an educated investor in this sector, you may be headed for more trouble than you were looking for. Are you ready to be a landlord?
Before renting your home, you should answer the following questions to make sure this is the right course of action for you and your family.

10 Questions to ask BEFORE renting your home

1. How will you respond if your tenant says they can’t afford to pay the rent this month because of more pressing obligations? (This happens most often during holiday season and back-to-school time when families with children have extra expenses).
2. Because of the economy, many homeowners cannot make their mortgage payment. What percentage of tenants do you think cannot afford to pay their rent?
3. Have you interviewed experienced eviction attorneys in case a challenge does arise?
4. Have you talked to your insurance company about a possible increase in premiums as liability is greater in a non-owner occupied home?
5. Will you allow pets? Cats? Dogs? How big a dog?
6. How will you actually collect the rent? By mail? In person?
7. Repairs are part of being a landlord. Who will take tenant calls when necessary repairs come up?
8. Do you have a list of craftspeople readily available to handle these repairs?
9. How often will you do a physical inspection of the property?
10. Will you alert your current neighbors that you are renting the house?

Bottom Line

Renting out residential real estate historically is a great investment. However, it is not without its challenges. Make sure you have decided to rent the house because you want to be an investor, not because you are hoping to get a few extra dollars by postponing a sale.

http://goo.gl/CBYTgv

Boomerang Buyers Coming Back in Force

July 10, 2015,  simplify For Buyers, Infographics

     

Some Highlights:

• What is a Boomerang Buyer? A former homeowner who has gone thru a “short sale”, “foreclosure” or “bankruptcy” in the past few years and has been saving for a down payment in preparation of the expiration of the waiting period, in order to qualify once again for a mortgage.
• According to NAR: Up to 1 Million consumers have already restored their credit and qualify to buy now.
• 2.2 million consumers will return to credit worthy status within the next 5 years.

http://goo.gl/MGJ7Iz

Debunking Some Myths about Mortgage Availability

July 9, 2015  simplify First Time Home Buyers, For Buyers

 

There seems to be a growing chasm between what the public believes to be need and what is actually needed to qualify for a residential home loan.

A recent survey by Ipsos reported that:

• Two-thirds of those surveyed believe they need a very good credit score to buy a home, with 45 percent thinking a “good credit score” is over 780.
• Consumers overestimate the down payment funds needed to qualify for a home loan, with 36 percent thinking a 20 percent down payment is always required.

However, according to American Enterprise Institute's International Center on Housing Risk’s May First-Time Buyer Mortgage Risk Index (FBMRI), reality is far from perception. The report reveals:

• 70% of first-time buyer mortgages had a combined loan-to-value ratio of 95% or higher
• About 20% of first-time buyers taking out mortgages had a FICO score below 660
• 25% had total debt-to-income ratios above 43 percent
• The median first-time buyer with an agency mortgage made a down payment of only 3 percent, or $7200 in dollar terms.
• The median FICO score for first-time buyers with agency mortgages was 705
• For first-time buyers with FHA-insured loans, the median FICO score was only 672

These numbers contradict the frequent claims that first-time buyers face difficulties in obtaining mortgages.

Bottom Line

Stephen Oliner, co-director of AEI’s International Center on Housing Risk explained the reality of the situation.

“One hears all the time that first-time buyers have limited access to mortgage debt.  But this isn’t true. Many first-time buyers with low FICO scores and little money down are buying homes every month.”                               

http://goo.gl/x7P7cG

1st Time Buyers Finally Crashing the Real Estate Party

July 8, 2015,  simplify First Time Home Buyers, For Buyers

 

There has been much conversation regarding the lack of first time home buyers in today’s real estate market. However, three recent reports seem to suggest that they are now entering the market in increasing numbers.

The most recent Existing Home Sales Report from the National Association of Realtors (NAR) reported that:

“The percent share of first-time buyers rose to 32 percent in May, up from 30 percent in April and matching the highest share since September 2012. A year ago, first-time buyers represented 27 percent of all buyers.”

And, in a recent Washington Post article, Ken Harney revealed that:

“According to a June 19 Campbell/Inside Mortgage Finance tracking survey, which polls 2,000 real estate agents nationwide, first-time buyers accounted for nearly 39 percent of home purchases in May; that’s the highest level since August 2010.”

Also, according to American Enterprise Institute's International Center on Housing Risk’s May First-Time Buyer Mortgage Risk Index (FBMRI), the share of first-time buyers stood at an estimated 52.2 percent.
Lawrence Yun, the Chief Economist at NAR explained:

"The return of first-time buyers in May is an encouraging sign and is the result of multiple factors, including strong job gains among young adults, less expensive mortgage insurance and lenders offering low down payment programs."

Bottom Line

It seems that the number of first time buyers is increasing for the first time in a long time. This further lends credence to the fact that the residential housing market is back.

 

http://goo.gl/JmNweq

What is a Housing Bubble? Is One Forming?

July 7, 2015, For Buyers, For Sellers

 

The recent talk of Greece and its financial challenges has some questioning whether the U.S. could also return to the crisis we experienced in 2008. Some are looking at the rise in real estate values and wondering whether we are in the middle of another housing price bubble.

What actually is a price bubble?

Here is the definition according to Jack M. Guttentag, Professor of Finance Emeritus at the Wharton School of the University of Pennsylvania:

“A price bubble is a rise in price based on the expectation that the price will rise. Sooner or later something happens to erode confidence in continued price increases, at which point the bubble bursts and prices drop. What makes it a price bubble is that the cause of the price increase is an expectation that the price will increase, which sooner or later must reverse itself.”

Does Professor Guttentag believe we are in another housing bubble?
In a recent article, he explained:

“My view is that we are a long way from another house price bubble. Home buyers, lenders, investors and regulators now understand that a nationwide decline in house prices is possible -- because we recently lived through one.”

What are home prices doing?

Though home values are continuing to appreciate, the acceleration of the increases has slowed to year-over-year numbers which reflect a healthy housing market. Here is a chart showing year-over-year appreciation since January of last year:

We can see that appreciation rates have dropped from double digit numbers to more normal rates of 5% or lower.

Bottom Line

We think Nick Timiraos of the Wall Street Journal put it best in a recent tweet:

“Predictions of a new national home price bubble look unfounded for now, according to data.”

http://goo.gl/18uDuH

#1 Reason to Sell Your House Now!

July 6, 2015, simplify For Sellers

  

If you are one of the many homeowners out there who are debating putting their house on the market this year, don’t miss out on the great opportunity you have right now!
The latest Existing Home Sales Report from The National Association of Realtors (NAR), reveals that the inventory of homes for sale has dropped to a 5.1-month supply.


Historically, a 6-month supply is necessary for a ‘normal’ market, explained below:

There are more buyers that are ready, willing and able to buy now, than there has been in years! The supply of homes for sale is not keeping up with the demand of these buyers.

Bottom Line

Home prices are appreciating in this seller’s market. Listing now will give you the most exposure to buyers who will be competing against each other to buy your house.

http://goo.gl/RHJXWs

Homeownership Still The American Dream

July 3, 2015  simplify For Buyers, For Sellers              

     

Some Highlights:

• Existing Home Sales are 9.2% higher than just one year ago.
• Home Prices are 7.9% higher than last year this time.
• The $250-500K price range leads the way with the largest improvement from last year at 17.4%.

http://goo.gl/mBMcxp

One More Time…You DO NOT Need 20% Down

 July 2, 2015 simplify Down Payments, First Time Home Buyers, For Buyers

 

A recent survey by Ipsos found that the American public is still somewhat confused about what is actually necessary to qualify for a home mortgage loan in today’s housing market. The study pointed out two major misconceptions that we want to address today.

1. Down Payment

The survey revealed that consumers overestimate the down payment funds needed to qualify for a home loan. According to the report, 36% think a 20% down payment is always required. In actuality, there are many loans written with a down payment of 3% or less and the number has increased through the first quarter of the year as shown by the graph below:

2. FICO Scores

The survey also reported that two-thirds of the respondents believe they need a very good credit score to buy a home, with 45 percent thinking a “good credit score” is over 780. In actuality, the average FICO scores of approved conventional and FHA mortgages are much lower:

Bottom Line

If you are a prospective purchaser who is ‘ready’ and ‘willing’ to buy but not sure if you are also ‘able’, let's get together and discuss your options.

 

http://goo.gl/GohJBr

The Impact of Rising Prices on Home Appraisals

July 1, 2015  simplify For Buyers, For Sellers, Pricing

 

The fact that residential home prices are increasing substantially in most regions of the country is music to the ears of homeowners. However, if you are in the process of selling your home, make sure you realize the major challenge a hot real estate market creates.

Each house must be sold twice; once to a buyer and a second time to an appraiser who represents the bank that will grant the purchaser a mortgage to buy the home (unless it is an “all cash” purchase). In a real market with escalating prices, the second sale may be the more difficult. And a recent survey by Quicken Loans reveals that the gap between what a homeowner believes is the value of their home compared to an appraiser is widening.

This could lead to an increase in the percentage of real estate transactions being challenged by a ‘short’ appraisal (where the appraiser value is less than the contracted price of the home).

Bottom Line

Whether you are a buyer or a seller, you must be prepared for this possibility as it may result in a renegotiation of the price of the home.

http://goo.gl/Hs1gDU