Renting vs. Buying: What Does it Really Cost?

Does anyone disagree that owning real estate rather than renting makes the most sense? Or... even if you do agree, did you realize that right now the cost to rent a Median Home is DOUBLE the cost of owning?

Per Pulsenomics research:

• The percentage of income needed to afford a median priced home is almost half the percentage of income needed to afford median rent.
• Buying costs are significantly less than renting costs.
• The percentage of income needed to afford a median priced home is less than the historic norm.

 

Historically low interest rates, as well as some available down payment assistance programs are continuing to make home ownership attainable. I'd love to sit down with you and my lender partner to talk about the type of funding you qualify for and to look at the price range that makes the most sense for your finances.

It's Not A Bubble!

 Warren Buffett: There is No Housing Bubble

by The KCM Crew on May 5, 2016 in First Time Homebuyers, For Buyers, Housing Market Update, Move-Up Buyers, Pricing

 

With home prices expected to appreciate by over 5% this year, some are beginning to worry about a new housing bubble forming. Warren Buffet addressed this issue last week in an article by Fortune Magazine. He simply explained:

“I don’t see a nationwide bubble in real estate right now at all.”

Later, when questioned whether real estate and/or mortgaging could present the same challenges for the economy as they did in 2008, Buffet said:

“I don’t think we will have a repeat of that.”

 What factors are driving home prices up?
It is easily explained by the theory of supply and demand. There is a lack of housing inventory for sale while demand for that inventory is very strong. According to a recent survey of agents by the National Association of Realtors (NAR), buyer traffic was seen as either “strong” or “very strong” in 44 of the 50 states (the exceptions being: Alaska, Wyoming, North Dakota, West Virginia, Connecticut and Delaware).

Also, in NAR’s latest Pending Home Sales Report, it was revealed that the index was the highest it has been in a year.

What does the future bring?

As prices rise, more families will have increased equity in their homes which will enable them to put their home on the market. As more listings come to market, price increases should slow to more normal levels.
Anand Nallathambi, President & CEO of CoreLogic, recently addressed the issue:

“Home price gains have clearly been a driving force in building positive equity for homeowners. Longer term, we anticipate a better balance of supply and demand in many markets which will help sustain healthy & affordable home values into the future.”

Additionally Americans See home Ownership as The Best Long Term Investment:

• Real estate outranks stocks/mutual funds, gold, savings accounts/CDs, and bonds as the best long-term investment among Americans.
• Real estate is ranked as the best long-term investment among all age groups.
• Millennials rank both real estate and savings/CDs at 26% when it comes to the best long-term investment.

With continuing low interest rates and limited supply driving up prices now is a great time to buy or sell. I look forward to the opportunity to help you with either!

Green Options that Buyers Want

Green Options That Buyers Want

• 11% of new home buyers stated "energy efficient features" as the reason for their purchase.
• The most popular remodeling projects done for energy efficiency were insulation upgrades, HVAC replacements, and vinyl & wood window installations.
• Research shows that word preference does make a difference when it comes to attracting "green buyers."

Green Upgrades can help to make your home more desirable, but which ones make the most sense and will give the best return on your investment? That can be a complicated question but I'm here to help you navigate this market and I would love the opportunity to meet with you to talk about potential upgrades and how they will, or won't, affect the potential sales price for your home. Call me today to schedule an appointment.

 

Home Sales Up year Over year!

Home Sales Up Year Over Year!

• This is the 48th consecutive month with year-over-year price gains.
• Lawrence Yun, NAR's Chief Economist says that, "The main issue continues to be a supply & affordability problem. Finding the right property at an affordable price is burdening many potential buyers."
• Inventory is still below historic norms at a 4.4 month supply.

 

It's a Great time to Sell because although prices re continue to increase the  low interest rates are driving buyers into the market.  Call me today for a Comparative Market Analysis of your home.

The Mortgage Process, Explained.

Ready to take advantage of the LOW Interest rates and take the plunge into Home Ownership? Well here's what you need to know about the Mortgage Process:

• Many buyers are purchasing a home with a down payment as little as 3%.
• You may already qualify for a loan, even if you don't have perfect credit.
• Take advantage of the knowledge of your local professionals who are there to help you determine how much you can afford.

 

Still have questions?  I'd love to sit down with you and my preferred lenders to talk about what type of financing makes sense for your budget. Call today to schedule an appointment.

As this info graphic shows the Real Estate market is set to change, as Boomers (Currently 32% of the US Population) retire the choices they make will impact Buyers and Sellers. This is something that I will definitely be keeping my eye on. How about you?

Home Prices Continue to Rise!

• 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, waiting to move may end up costing you more!
• Home Prices in California Remain Strong with an Increase of 7.1%!

The Bottom Line: It's A Great Time to Sell, and it may not pay off to wait to buy. I'd be happy to provide you with a Competitive Market Analysis of your home and discuss with you Your Real Estate Goals so that I can help you to achieve Your Dreams!

 

Existing Home Sales Bounce Back

Some Highlights:

• Sales in December were 14.7% higher than those in November, marking the largest month-over-month increase ever recorded.
• Inventory levels are still below historic norms at 3.9-months supply.
• Median home price is up 7.6% from last year, marking the 46th consecutive month with year-over-year price gains.

What Do You Actually Need to Get a Mortgage?

by The KCM Crew on January 21, 2016

Fannie Mae recently released their “What do consumers know about the Mortgage Qualification Criteria?” Study. The study revealed that Americans are misinformed about what is required to qualify for a mortgage when purchasing a home. Here are three takeaways:

• 59% of Americans either don’t know (54%) or are misinformed (5%) about what FICO score is necessary
• 86% of Americans either don’t know (59%) or are misinformed (25%) about what an appropriate Back End Debt-to-Income (DTI) ratios is
• 76% of Americans either don’t know (40%) or are misinformed (36%) about the minimum down payment required

To help correct these misunderstandings, let’s take a look at the latest Ellie Mae Origination Insight Report, which focuses on recently closed (approved) loans.

FICO SCORES

BACK END DTI

DOWN PAYMENTS

Bottom Line

Whether buying your first home or moving up to your dream home, knowing your options will definitely make the mortgage process easier. Your dream home may already be within your reach, call me today and we can run the numbers together.

Obstacles to Home-Ownership... Real or Imagined?

 

Obstacles to Home-Ownership... Real or Imagined?

 

The belief Americans have in homeownership and their desire to partake in this piece of the American Dream is well documented. And yet, there may be obstacles that seem to prevent Americans from attaining that goal. However, studies have shown that many of the obstacles mentioned are perceived, not real.

A recent study by Fannie Mae, What Do Consumers Know About The Mortgage Qualification Criteria?, revealed that many consumers are either unsure or misinformed regarding the minimum requirements necessary to obtain a mortgage. Let’s break down three such challenges.

Down Payment

Perceptions

Many renters have mentioned that the lack of an adequate down payment is preventing them from moving forward with the purchase of a home. According to the Fannie Mae report:

• 40% of all renters don’t know what down payment is required
• 15% think you need at least 20% down
• An additional 4% think you need at least 10% down

The Reality

There are programs offered by Fannie Mae, Freddie Mac and FHA that require as little as 3-3.5% down. VA and USDA loans offer 0% down programs. According to the National Association of Realtors, the typical down payment for a first time buyer is 6%.

Credit Score

Perceptions

Many renters have mentioned that the lack of an adequate credit score is preventing them from moving forward with the purchase of a home. According to the Fannie Mae report:

• 54% of all renters don’t know what credit score is required
• 5% think you need at least a 740 credit score

The Reality

Many mortgages are granted to purchasers with a credit score of less than 700. According to Ellie Mae, the average credit score on a closed FHA purchase is 687 and the average credit score on all loans is 722.

Back End Debt-to-Income Ratio (DTI)

Perceptions

Many renters have mentioned that they carry too much debt which is preventing them from moving forward with the purchase of a home. According to the Fannie Mae report:

• 59% of all renters don’t know what DTI is acceptable
• 25% think you need at under 25%
• 7% think you need under 39%

The Reality

Lenders like to see a back-end ratio that does not exceed 36%. Fannie Mae’s maximum total DTI ratio is 36% of the borrower’s stable monthly income. The maximum can be exceeded up to 45% based on credit score and other requirements.

 

Bottom Line

Don't let a lack of knowledge or misinformation keep your family from buying a home this year. I'd be happy to meet with you to help to evaluate your ability to buy now!

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Home Equity Increasing as Home Prices Rise 

 The Real Estate Market continues to be strong and we are continuing to see homes gain positive equity. Only 8.1% of homes are "upside down" which is a significant increase from recent years. Home prices are predicted to rise at least 5% over the next (on average nation wide). California home values are predicted to increase by about 11% in the coming year. while interest rates are only projected to rise about 1% over the same period. These factor paired together will continue to boost the California Housing Market. All in all it's a healthy outlook for for buyers and sellers. The American Dream is Alive and Well! whether you are a first time buyer or are looking to Sell your current home and find your next dream home, I'm here to help.

• 91.9% of homes in the US have positive equity
• 256,000 homes regained equity in the third quarter of 2015
• 37.5 million homes have significant equity (defined as more than 20%)

Should You Pay a Mortgage Interest Rate over 4%?

 Should You Pay a Mortgage Interest Rate over 4%?

 

Mortgage interest rates, as reported by Freddie Mac, have increased over the last several weeks. Along with Freddie Mac, Fannie Mae, the Mortgage Bankers Association and the National Association of Realtors are all calling for mortgage rates to continue to rise over the next four quarters.

This has caused some purchasers to lament the fact they may no longer be able to get a rate less than 4%. However, we must realize that current rates are still at historic lows.
Here is a chart showing the average mortgage interest rate over the last several decades.

Bottom Line

Though you may have missed getting the lowest mortgage rate ever offered, 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.

 Here Come the Millennials!!  

The Real Estate Market has been eagerly anticipating the entry of Millennials as first time home buyers. It's finally looking like the job market is aligning to support Millennial's ability to take the first steps to home ownership and financial security. This is great news for the continuing strong Seller's Market. 

 

Many have been wondering when the much anticipated move by Millennials’ into homeownership would actually take place. We know the belief in owning a home is there.

According to a recent Merrill Lynch study, eighty one percent of Millennials believe “homeownership is an important part of the American Dream”. This compares favorably to previous generations.

The obstacle seemed to be employment. It appears that is about to change.
The most recent jobs report disappointed many economists. However, the silver lining in that cloud of doubt was Millennials. Jonathan Smoke, realtor.com Chief Economist, reported:

“About 33% of civilian jobs created over the last 12 months have been for the young adults who are most likely to buy their first home. This should help support continued growth in the share of homes purchased by first time buyers, as economic success has been influencing older Millennials to jump into the housing market this year.”

Selma Hepp, chief economist at Trulia, concurred:

“The faster rate of job growth among Millennials will continue to bolster both the rental and for-sale housing markets for an extended period of time.”

It appears that Millennials will be entering the housing market in great numbers in the very near future.

by The KCM Crew on October 22, 2015 in First Time Homebuyers, For Buyers, Millennials

Where Will Home Prices Be In A Year?

Where Will Home Prices Be In A Year?

Some interesting facts:

• 25 states are forecasted to achieve higher levels of appreciation in the next 12 months than already achieved in the last year.
• 25 state and the District of Columbia are forecasted to experience a slow in appreciation.
• All 50 states & D.C. are forecasted to achieve some level of positive price appreciation.

Even though each state is appreciating at different levels, you need to know the Cost of Waiting until next year to buy your dream home!

 Ready to buy? Call me today, I would love to help you realize your Dream!!

New Home Sales Surge By 5.7%!

Some Highlights:

• The median price of a newly constructed home is currently $292,700.
• Sales are up 5.7% month-over-month and 21.6% year-over-year.
• Many buyers are looking to new homes as an option due to the lack of inventory of existing homes for sale.

 

It's great news that New Home sales are up, but when you see that it is because of the lack of inventory in existing homes, you'll realize that the opportunity for Seller's is still high. Because the demand it there which will continue to drive prices and values up. If you're thinking about selling it's still a great time to call me!

Credit Score Requirements LOWER As Interest Rates CREEP UP!

Credit Score Requirements LOWER 

As Interest Rates CREEP UP!

Some Highlights:

• The average 30-year rate for all loans closed in August eclipsed 4.3% for the first time since October 2014.
• The average FICO score for all closed loans in August reached a new yearly low at 724 (the lowest since February 2014!)
• The average down payment of FHA loans closed was just 4%!

How Do Home Sales Impact A Local Economy?

How Do Home Sales Impact A Local Economy? 

• Every time a home is sold, the surrounding economy feels a boost.
• Different industries and businesses benefit at each stage of the process of moving into a home!
• Hawaii leads the way with a $177,000 boost to the local economy.

It stands to reason that the sale of a home would have an impact on it's surrounding economy, but what exactly is that impact? Well, In California, each home sold puts more than $111,000 into the local economy. 

Where does this money come from, or go to? Of course there is the potential income to the Home Seller in the form of profit over what they owe vs. the selling price, and that profit either goes into a Seller's reserves, or is used to purchase a replacement property, generating more income for the area. Additionally the commissions paid to Real Estate Agents creates incomes for these agents, their support staff and brokerages as well as their vendors. 

Another avenue of economic impact are all those services and products related to moving or taking possession of a new property, such as handymen, contractors, painters and building supply stores. 

It's easy to look at a rising Real Estate Market, like we have now, and see only the individual homeowner as benefiting from an increased home value, but in reality the benefit starts there and flows all the way down to the clerks manning local businesses. Even in an economy as large as California's this translates to an estimated $46.1Billion impact to our economy. (Based on $111,000 multiplied by the an actual number of escrows closed in 2014: 415,000). This number will predictably be higher as we close out 2015, because not only have home prices risen, but the number of escrows closed is up about 15% in 2015 when compared to the same time last year. This translates into an estimated $53Billion boost to California's economy.

A+ Reasons to Hire A Real Estate Professional

The Best Reasons To Hire A Real Estate Professional:

• Hiring a Real Estate Professional to buy your dream home, or sell your current house is one of the most 'educated' decisions you can make!
• A Real Estate Professional has the experience needed to help you through the entire process.
• Make sure that you hire someone who knows current market conditions & can simply & effectively explain them to you & your family!

 

These are all important reasons why it's important to hire a Real Estate Professional when Selling or even Buying a Home. Especially given that regulations have changed so dramatically since the Mortgage Crisis in 2007/2008. Prior to these increased regulations a Seller may have been able to, with some determination and perseverance, wade through the paperwork required to sell their home. However the ever restrictive regulations enacted after the Mortgage Crisis have made For sale By Owner more and more difficult. 

As a Professional Real Estate Agent I work within these requirements on a daily basis, that coupled with on-going education and training gives me the experience needed to navigate all of these requirements. My goal is always to make every Real Estate Transaction appear to be smooth and seamless so that the entire process can feel simple and straight froward to my clients. Like a Duck swimming in a pond; on the surface the water is smooth, but underneath the water the ducks legs are moving and working, keeping him resting on the water. In that same way my Team and I work behind the scenes to successfully close each transaction. 

When you're ready to list your home I will provide you with a Complete Market Analysis of your Property and walk you through the process every step of the way. Thank you for allowing me to be "Your Trusted Advisor!"

Home prices Are Up in 93% of Markets

Home Prices Are Up in 93 % of Markets

• The national median home price for Q2 is up 8.2% to $229,400
• The income needed to afford the median home in each region is directly impacted by the amount of the down payment. The larger the down payment the lower the income needed to pay the monthly mortgage payment.
• The West led the way with the highest median home price at $325,200.

 

 

This is great news as we continue to see a Seller's market, with Buyers continuing to be lured into the market by historically low interest rates! Buying or Selling it's a great time to enter the market! 

Foreclosure Inventory is at a Historical 7 Year Low!

Foreclosure Inventory is at a Historical 7 Year Low!

Some Highlights:

• The number of homes in the US in some stage of foreclosure is down 28.9% to 472,000.
• Only 3.5% of homes in the US are currently in serious delinquency.
• Foreclosure Inventory levels hit the lowest level since January 2008 at 1.2% of all homes with a mortgage.