Tag Archives: Realtor

The Tale of Two Markets [INFOGRAPHIC]

The Tale of Two Markets [INFOGRAPHIC] | Simplifying The Market

The Tale of Two Markets [INFOGRAPHIC] | Simplifying The Market

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.

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

2008 vs. Now: Are Owners Using Their Homes as ATMs Again? | Simplifying The Market

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:

2008 vs. Now: Are Owners Using Their Homes as ATMs Again? | Simplifying The Market

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.

Where Are Interest Rates Headed in 2019?

Where Are Interest Rates Headed in 2019? | Simplifying The Market

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.

Where Are Interest Rates Headed in 2019? | Simplifying The Market

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.

Where Are Interest Rates Headed in 2019? | Simplifying The Market

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.

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

Homeowners Aged 65+ Have 48x More Net Worth Than Renters | Simplifying The Market

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 Aged 65+ Have 48x More Net Worth Than Renters | Simplifying The Market

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.

Homeowners Aged 65+ Have 48x More Net Worth Than Renters | Simplifying The Market

Bottom Line

As a homeowner you put your monthly mortgage payment to work for you, building your net worth with every payment.

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

Home Prices Up 6.34% Across the Country! [INFOGRAPHIC] | Simplifying The Market

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!

Further Proof It’s NOT 2008 All Over Again

Further Proof It’s NOT 2008 All Over Again | Simplifying The Market

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 report from 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.

Further Proof It’s NOT 2008 All Over Again | Simplifying The Market

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.

24% of Renters Believe Winter is the Best Time to Buy a Home

24% of Renters Believe Winter is the Best Time to Buy a Home | Simplifying The Market

In real estate, the spring is often seen as the ideal time to buy or sell a house. The term “Spring Buyer’s Season” exists for a reason, as renters and those looking to move on from their current home thaw out from the winter and hit the market ready to buy.

According to Bank of America’s annual Home Buyer Insights Report, 41% of renters surveyed agree that spring is the best time to buy a home. The surprising result, however, is that when ranking the seasons, winter comes in second at 24%.

24% of Renters Believe Winter is the Best Time to Buy a Home | Simplifying The Market

In many areas of the country, the spring and summer are the most competitive seasons for buyers. Families with children often want to move over the summer to make sure that their kids are ready for school in the fall. This often leads those families who haven’t found homes to buy to push pause on their search in the fall and winter months.

This creates a great environment for buyers to find a home with less competition. According to moving.com, scheduling a move during the winter months also comes with the best price.

If you define ‘best’ by cost then, generally speaking, you are more likely to save on a move during the late September to April window. Demand for movers usually slows down during this time frame and rates are low.

There are also many benefits to listing your house for sale during the winter months as well!

As we recently mentioned, buyers who are out in the winter are serious about wanting to find a home, and there is traditionally less competition on the market which gives you greater exposure to those buyers.

Bottom Line

As always, the best time to buy or move all depends on each individual buyer or seller’s goals and needs. If you are one of the many who would like to make a move this winter, let’s get together to create a plan to make it happen!

The #1 Reason to Not Wait Until Spring to Sell Your House

The #1 Reason to Not Wait Until Spring to Sell Your House | Simplifying The Market

Many sellers believe that spring is the best time to place their homes on the market because buyer demand traditionally increases at that time of year, but what they don’t realize is that if every homeowner believes the same thing, then that is when they will have the most competition!

The #1 Reason to List Your Home in the Winter Months is Less Competition!

Housing supply traditionally shrinks at this time of year, so the choices buyers have will be limited. The chart below was created using the months’ supply of listings from the National Association of Realtors.

The #1 Reason to Not Wait Until Spring to Sell Your House | Simplifying The Market

As you can see, the ‘sweet spot’ to list your home for the most exposure naturally occurs in the late fall and winter months (November – February). 

Temperatures aren’t the only thing that heats up in the spring – so do listings!

The #1 Reason to Not Wait Until Spring to Sell Your House | Simplifying The Market

In 2017, listings increased by nearly half a million houses from December to June. Don’t wait for these listings to come to market before you decide to list your house.

Added Bonus: Only Serious Buyers Are Out in the Winter

At this time of year, only those purchasers who are serious about buying a home will be in the marketplace. You and your family will not be bothered and inconvenienced by mere ‘lookers.’ The lookers are at the mall or online doing their holiday shopping.

Bottom Line

If you have been debating whether or not to sell your home and are curious about market conditions in your area, let’s get together to help you decide the best time to list your house for sale.

Buyers: Don’t Be Surprised by Closing Costs!

Buyers: Don’t Be Surprised by Closing Costs! | Simplifying The Market

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 much you’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.

Will Your Side Hustle Buy You a House This Year?

Will Your Side Hustle Buy You a House This Year? | Simplifying The Market

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.