4 Reasons to Buy This Fall

4 Reasons to Buy This Fall | Simplifying The Market

It’s that time of year; the seasons are changing and with them come thoughts of the upcoming holidays, family get-togethers, and planning for a new year. Those who are on the fence about whether or not now is the right time to buy don’t have to look much further to find four great reasons to consider buying a home now, instead of waiting.

1. Prices Will Continue to Rise

CoreLogic’s latest Home Price Index reports that home prices have appreciated by 6% over the last 12 months. The same report predicts that prices will continue to increase at a rate of 5.4% over the next year. The Home Price Expectation Survey polls a distinguished panel of over 100 economists, investment strategists, and housing market analysts. Their most recent report projects home values to appreciate by more than 3.5% a year for the next 5 years.

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 Remain at Historic Lows

Freddie Mac’s Primary Mortgage Market Survey shows that interest rates for a 30-year mortgage have remained at or below 3.5% for 13 consecutive weeks. The Mortgage Bankers Association, Freddie Mac & the National Association of Realtors are in unison, projecting that rates will increase by this time next year.

Any increase in rates will impact YOUR monthly mortgage payment. A year from now, the percentage of your income that you spend on housing will increase substantially if you choose to wait.

3. Either Way You Are Paying 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 a paper from 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.”

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 whether 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.

Source: Real Estate News

5 Stats That Prove the Real Estate Market Is Getting Stronger

5 Stats that Prove the Real Estate Market is Getting Stronger | Simplifying The Market

Whenever there is talk about an improving housing market, some begin to show concern that we may be headed toward another housing bubble that will be followed by a crash similar to the one we saw last decade.

Here are five data points that show the housing market will continue to recover, and that a new housing crisis is not about to take shape.

1) Mortgage availability is increasing, but is nowhere near the levels we saw in 2004-2006.

A buyer’s chances of being approved for a mortgage have increased over the last three years; That’s good news for the market. This is not a precursor to another challenge, as many experts maintain that it is still too difficult for many buyers to attain house financing.

As Jonathan Smoke, the Chief Economist of realtor.com, recently explained:

“The havoc during the last cycle was the result…of speculation fueled by loose credit. That’s the exact opposite of what we have today.”

2) The Housing Affordability Index, which measures whether or not a typical family earns enough income to qualify for a mortgage loan on a typical home, based on the most recent price and income data. The current index shows that it is more affordable to buy a home today than at any other time between 1990 and 2008. With median incomes finally beginning to rise, houses should continue to remain affordable and housing demand should remain strong.

3) Home prices are well within historic norms. Prices have increased substantially over the last several years; However, those increases followed the housing crash of 2008 and national prices are still not back to 2006 levels. If there were no bubble (and subsequent bust), today’s prices would actually be lower than if they were measured by historic appreciation levels from 1987-1999.

4) Demand for housing, as measured by new household formations, is growing. The Urban Land Institute projects that 5.95 million new households will be formed over the next three years. Even if the homeownership rate drops to 60%, that would be over 3.5 million new homeowners entering the market.

5) New home starts are finally beginning to increase. This helps eliminate the number one challenge in the industry – lack of inventory. And it does so in two ways:

  1. Some first time buyers will, in fact, purchase a newly constructed home.
  2. Many current homeowners will move-up (or move-down) to a new construction and then put their current home on the market.

This means that there will be an increase in both new construction and existing home inventories.

Source: Real Estate News

Ready to Make an Offer? 4 Tips for Success

Ready to Make an Offer? 4 Tips for Success | Simplifying The Market

So you’ve been searching for that perfect house to call a ‘home’ and you finally found one! The price is right, and in such a competitive market you want to make sure you make a good offer so that you can guarantee your dream of making this house yours comes true!

Freddie Mac covered 4 Tips for Making an Offer” in their latest Executive Perspective. Here are the 4 Tips they covered along with some additional information for your consideration:

1. Understand How Much You Can Afford

“While it’s not nearly as fun as house hunting, fully understanding your finances is critical in making an offer.”

This ‘tip’ or ‘step’ really should take place before you start your home search process.

As we’ve mentioned before, getting pre-approved is one of many steps that will show home sellers that you are serious about buying, and will allow you to make your offer with the confidence of knowing that you have already been approved for a mortgage for that amount. You will also need to know if you are prepared to make any repairs that may need to be made to the house (ex: new roof, new furnace).

2. Act Fast

“Even though there are fewer investors, the inventory of homes for sale is also low and competition for housing continues to heat up in many parts of the country.”

According to the latest Existing Home Sales Report, the inventory of homes for sale is currently at a 4.7-month supply. This is well below the 6-month supply that is needed for a ‘normal’ market. Buyer demand has continued to outpace the supply of homes for sale, causing buyers to compete with each other for their dream home.

Make sure that as soon as you decide that you want to make an offer, you work with your agent to present it as soon as possible.

3. Make a Solid Offer

Freddie Mac offers this advice to help make your offer the strongest it can be:

“Your strongest offer will be comparable with other sales and listings in the neighborhood. A licensed real estate agent active in the neighborhoods you are considering will be instrumental in helping you put in a solid offer based on their experience and other key considerations such as recent sales of similar homes, the condition of the house and what you can afford.” 

Consider ways of making your offer stand out! Many buyers write a personal letter to the seller letting them know how much they would love to be the new homeowners. Your agent will be able to help you figure out if there are any other ways your offer could stand above the rest.

4. Be Prepared to Negotiate

“It’s likely that you’ll get at least one counteroffer from the sellers so be prepared. The two things most likely to be negotiated are the selling price and closing date. Given that, you’ll be glad you did your homework first to understand how much you can afford.  

Your agent will also be key in the negotiation process, giving you guidance on the counteroffer and making sure that the agreed-to contract terms are met.”

If your offer is approved, Freddie Mac urges you to “always get an independent home inspection, so you know the true condition of the home. If the inspection uncovers undisclosed problems or issues, you can typically re-negotiate the terms or cancel the contract.”

Bottom Line

Whether buying your first home or your fifth, having a local real estate professional who is an expert in their market on your side is your best bet to make sure the process goes smoothly. Let’s get together and see if we can make your dreams of homeownership a reality!

Source: Real Estate News

76% Of US Homeowners Now Have at Least 20% Equity in Their Homes!

76% Of US Homeowners Now Have at Least 20% Equity in Their Homes! | Simplifying The Market

CoreLogic’s latest Equity Report revealed that 91.1% of all mortgaged properties are now in a positive equity situation, while 75.9% now have significant equity (defined as more than 20%)! The report also revealed that 548,000 households regained equity in the second quarter of 2016 and are no longer under water.

Price Appreciation = Good News for Homeowners

Frank Nothaft, CoreLogic’s Chief Economist, explains:

“Home-value gains have played a large part in restoring home equity. The CoreLogic Home Price Index (HPI) for the U.S. recorded 5.2 percent growth in the year through June, an important reason that the number of owners with negative equity fell by 850,000 in the second quarter from a year earlier.”

Anand Nallathambi, President & CEO of CoreLogic, believes this is a great sign for the market in the coming year as well, as he had this to say:

“We see home prices rising another 5 percent in the coming year based on the latest projected national CoreLogic Home Price Index. Assuming this growth is uniform across the U.S., that should release an additional 700,000 homeowners from the scourge of negative equity.”

Below is a map illustrating the percentage of households in each state with significant equity: 

76% Of US Homeowners Now Have at Least 20% Equity in Their Homes! | Simplifying The Market

Many homeowners with more than 20% equity in their home would be able to use that equity as a down payment on either a larger home, or even a retirement home.

Bottom Line

If you are one of the many Americans who are unsure of how much equity you have in your home, don’t let that be the reason you fail to move on to your dream home this year!

Source: Real Estate News

Don’t Underestimate the Importance of Using an Agent When Selling Your Home

Don’t Underestimate the Importance of Using an Agent When Selling Your Home | Simplifying The Market

When a homeowner decides to sell their house, they obviously want the best possible price with the least amount of hassles. However, for the vast majority of sellers, the most important result is to actually get the home sold.

In order to accomplish all three goals, a seller should realize the importance of using a real estate professional. We realize that technology has changed the purchaser’s behavior during the home buying process. For the past three years, 92% of all buyers have used the internet in their home search according to the National Association of Realtors’ most recent Profile of Home Buyers & Sellers.

However, the report also revealed that 95% percent of buyers that used the internet when searching for a home purchased their home through either a real estate agent/broker or from a builder or builder’s agent. Only 2% purchased their home directly from a seller whom the buyer didn’t know.

Buyers search for a home online, but then depend on an agent to find the actual home they will buy (53%), to negotiate the terms of the sale & price (48%), or to help understand the process (60%).

The plethora of information now available has resulted in an increase in the percentage of buyers that reach out to real estate professionals to “connect the dots.” This is obvious, as the percentage of overall buyers who used an agent to buy their home has steadily increased from 69% in 2001.

Bottom Line

If you are thinking of selling your home, don’t underestimate the role a real estate professional can play in the process.

Source: Real Estate News

50% of Houses Sold in 36 Days or Less in July [INFOGRAPHIC]

50% of Houses sold in 36 Days or Less in July [INFOGRAPHIC] | Simplifying The Market

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 less than 60 days in 38 out of 50 states and Washington D.C.
  • Homes sold in less than 30 days in 17 states

Source: Real Estate News

The Cost of NOT Owning Your Home

The Cost of NOT Owning Your Home | Simplifying The Market

Owning a home has great financial benefits. Because of this, more and more experts are growing concerned about the ramifications of a falling homeownership rate. Today, let’s look at the financial reasons why owning a home of your own has been a part of the American Dream for as long as America has existed.

The outcomes of a falling homeownership rate can be devastating. As explained by ApartmentList.com:

“Our research indicates that not owning a home has a sizable financial cost, as renters miss out on low mortgage rates and are hit by higher rents.

This phenomenon may exacerbate inequality in our society, as those wealthy enough to invest in real estate benefit from lower interest rates, whereas minorities and younger Americans, hit by rising rents and student debt, risk being locked out of homeownership.”

What proof exists that owning is financially better than renting?

1. A study published by the Joint Center of Housing Studies at Harvard University shows the financial benefits of homeownership. The study mentions five major financial benefits:

  • Housing is typically the one leveraged investment available
  • You’re paying for housing whether you own or rent
  • Owning is usually a form of “forced savings”
  • There are substantial tax benefits to owning
  • Owning is a hedge against inflation

2. Studies have shown that homeowners have a net worth that is 45X greater than that of a renter.

3. Just last month, we explained that a family buying an average priced home this past January could build more than $46,000 in family wealth over the next five years. 

4. Some argue that renting eliminates the cost of taxes and home repairs. Every potential renter must realize that all the expenses the landlord incurs are baked into the rent payment already – along with a profit margin!!

Bottom Line

Owning a home has always been, and will always be better from a financial standpoint than renting.

Source: Real Estate News

Mortgage Standards Easing TOO MUCH? NO!!

Mortgage Standards Easing TOO MUCH? NO!! | Simplifying The Market

There is no doubt that getting a mortgage is easier today than it was right after the housing crash a decade ago. However, the easing of credit availability has led to some questioning of whether or not we are headed for another housing crisis.

Let’s put everything into the proper perspective.

Mortgage Credit Availability Over the Last Three Years

Getting a home mortgage has definitely gotten easier over the last three years as evidenced by the Mortgage Credit Availability Index, issued by the Mortgage Bankers Association, in the following graph (the higher the index, the easier it is to get a mortgage):

Mortgage Standards Easing TOO MUCH? NO!! | Simplifying The Market

However, if we look further back at the index we see quite a different story.

Mortgage Credit Availability Today Compared to 2006

The graph below shows the index going back to 2004, and the first graph we showed you above is represented by the small, orange, triangular section all the way in the lower-right corner.

Mortgage Standards Easing TOO MUCH? NO!! | Simplifying The Market

As this visual easily illustrates, today’s index is nowhere near the levels it shot up to in 2006.

Bottom Line

Mortgage credit is definitely easing. However, we are not coming close to the lax standards that caused the housing crisis of last decade.

Source: Real Estate News

Why Getting Pre-Approved Should Be Your First Step

Why Getting Pre-Approved Should Be Your First Step | Simplifying The Market

In many markets across the country, the amount of buyers searching for their dream homes greatly outnumbers the amount of homes for sale. This has led to a competitive marketplace where buyers often need to stand out. One way to show you are serious about buying your dream home is to get pre-qualified or pre-approved for a mortgage before starting your search.

Even if you are in a market that is not as competitive, knowing your budget will give you the confidence of knowing if your dream home is within your reach.

Freddie Mac lays out the advantages of pre-approval in the My Home section of their website:

“It’s highly recommended that you work with your lender to get pre-approved before you begin house hunting. Pre-approval will tell you how much home you can afford and can help you move faster, and with greater confidence, in competitive markets.”

One of the many advantages of working with a local real estate professional is that many have relationships with lenders who will be able to help you with this process. Once you have selected a lender, you will need to fill out their loan application and provide them with important information regarding “your credit, debt, work history, down payment and residential history.”

Freddie Mac describes the 4 Cs that help determine the amount you will be qualified to borrow:

  1. Capacity: Your current and future ability to make your payments
  2. Capital or cash reserves: The money, savings and investments you have that can be sold quickly for cash
  3. Collateral: The home, or type of home, that you would like to purchase
  4. Credit: Your history of paying bills and other debts on time

Getting pre-approved is one of many steps that will show home sellers that you are serious about buying, and it often helps speed up the process once your offer has been accepted.

Bottom Line

Many potential home buyers overestimate the down payment and credit scores needed to qualify for a mortgage today. If you are ready and willing to buy, you may be pleasantly surprised at your ability to do so as well.

Source: Real Estate News