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Tips for Young, First-Time Homeowners on Starting Fresh, Organized, and Downsiz

One of the best gifts you can give yourself as a young, first-time homeowner is a clean, organized start. You certainly don’t want to pack your brand-new home full of junk -- unnecessary items that you’ve amassed over the years. And if you think only older people have to worry about downsizing and hardcore organizing, then think again. Everyone can benefit from a somewhat minimalist mindset -- especially someone starting their adult life. Here are some tips to make that happen.

 

Examine your closet

 

In our closets, lurk the largest collection of items we don’t really need anymore. The biggest culprit is usually our clothes, where we amass a staggering amount of completely unnecessary clutter. Thankfully, it’s very easy to make some inroads. As LifeHacker suggests, if you get rid of clothes that don’t fit, are torn or stained, are simply ugly/out of style, and don’t make you happy, then you’ll be well on your way. Beyond that, think about getting rid of anything you haven’t worn in a year. Make the process as cut and dry as possible; that will help it be successful.

 

Move on to your media

 

How many books, movies, CDs, etc. do you really need? Consider cutting your collections down to the basics and selling/donating the rest (an app like Decluttr makes this pretty easy). In this day and age, with streaming music and video options, it’s not imperative that you hold onto every DVD and album you love.

 

Digitize your paper clutter

 

What if you could get rid of a ton of physical items but not get rid of them at all? Luckily, you can. Digitizing (scanning) your important paper documents is a great way to downsize and declutter. This includes receipts, invoices, tax documents, and even photos. Some tips for doing this include scanning and saving in a universal file type like a PDF, keeping the documents on a physical drive as well as in the cloud in digital storage, and scanning things as soon as you get them. 

 

Make sure most things have more than one purpose

 

Putting aside family heirlooms and some emotionally charged keepsakes, you should try to find at least two reasons for keeping each item in your home. If you can’t think of something as multipurpose, you should put it on the downsizing chopping block first. For example, your TV stand. It serves the purpose of holding up your TV and storing your movies/gaming systems inside its cabinet. But what if those cabinets are empty. Then it only serves one purpose. Mount your TV to the wall instead. See how this works?

 

Get some help

 

It’s understandable to take a “it’s my stuff and I know what’s best for it” kind of mentality. You know how you want your new home organized. How could anyone be better at that than you? Well, some people are, and they are called professional organizers. If you’re feeling really stressed out and overwhelmed by the downsizing and decluttering process, it might be worth the money to hire one. A home organizer typically charges between $257 and $744.

 

Change your address

 

Now that you’ve bought your first home, did you remember to change your address? Follow this change of address checklist to make ensure you’ve alerted all the proper channels of your new address. 

 

Starting a new family at a new home or beginning a new career as a single person are both big moments in life where a lot of excess clutter, baggage, and space can really tie you down. If you’re just now moving into your first home, make sure you do what you can to start off clean and organized.

 

 

Becoming A Landlord: The Pros and Cons of Owning A Rental Property

Becoming a landlord is a big decision, but it’s one that many Americans have made over the years because of the benefits that often come with it. Having an extra source of income for several months out of the year is a huge plus, and if you’re able to maintain the property well, you can sell it down the road when the market is at its peak. Diversifying your investment portfolio is a great way to add financial security to your life as well, especially if you have a family.

 

However, there are many things to consider when you’re thinking of renting out a property. With the benefits also come a few cons, such as laying out money in the beginning to make updates and fill the house with furniture, decor, and necessities for your renters. If your year-round home is in a different city or state than the rental, you’ll also have to pay someone to make sure the general upkeep is taken care of throughout the year and that security is a priority. If you aren’t careful, a rental property can take a lot of your time, money, and energy. With the right moves, you can make it a success. Here are a few things to consider--both the good and the bad.

 

Managing the property

 

Managing a property is a big job, which is why there are companies out there that will take the reins for you when it comes to keeping up with profits, repairs, maintenance, and the cost of making sure your property is in great condition for your renters. Having a professional property manager like Great Jones will take some of the burden off your shoulders so you can focus on other things, and knowing you’re in good hands will give you peace of mind that you’re getting the most value out of your investment.

 

Knowing what renters want

 

One of the most important things about owning a rental property is being aware of what your guests want and need in order to have a good time. This will help to ensure that they keep coming back, and that they recommend your property to friends and family. Do some research online to find out what renters in your area expect when they go on vacation or when they’re on a business trip, and think about how those things might be worked into your budget. For instance, if your property is close to a lot of family-friendly activities--such as theme parks or beaches--you might consider adding more places to sleep by installing pull-out couches or bunk beds.

 

Finding out what you’re responsible for

 

The insurance requirements for rental properties vary by state, so make sure you read up on what you’ll be responsible for and what the cost will be. Renting out a property to several different guests throughout the year is different than renting out as a “landlord”--meaning charging one person or one family to stay in your home for several months at a time--and requires a different policy. You’ll need to protect your property against fire and other damage, so talk to a professional who can help you figure out the best plan for you.

 

Using your rental

 

If you own a rental property that only gets used seasonally, you may be able to use it yourself for up to 14 days out of the year and still get the benefit of tax deductions. Do a little research to find out the details according to where you live.

 

Becoming a landlord and renting out property is a big job. However, it can allow you to reap quite a few rewards if you’re prepared, so if this is a challenge you’re considering taking on, do some research to find out what your responsibilities are and how best to run your property.

Why Access Is One of the Most Important Factors in Getting Your House Sold!

Why Access Is One of the Most Important Factors in Getting Your House Sold!

Why Access Is One of the Most Important Factors in Getting Your House Sold! | MyKCM
 

So, you’ve decided to sell your house. You’ve hired a real estate professional to help you through the entire process, and they have asked you what level of access you want to provide to your potential buyers.

There are four elements to a quality listing. At the top of the list is access, followed by condition, financing, and price. There are many levels of access that you can provide to your agent so that he or she can show your home.

Here are five levels of access that you can give to buyers, along with a brief description:

  1. Lockbox on the Door – this allows buyers the ability to see the home as soon as they are aware of the listing, or at their convenience.
  2. Providing a Key to the Home – although the buyer’s agent may need to stop by an office to pick up the key, there is little delay in being able to show the home.
  3. Open Access with a Phone Call – the seller allows showings with just a phone call’s notice.
  4. By Appointment Only (example: 48-Hour Notice) – Many buyers who are relocating for a new career or promotion start working in that area prior to purchasing their home. They often like to take advantage of free time during business hours (such as their lunch break) to view potential homes. Because of this, they may not be able to plan their availability far in advance or may be unable to wait 48 hours to see the house.
  5. Limited Access (example: the home is only available on Mondays or Tuesdays at 2 pm or for only a couple of hours a day) – This is the most difficult way to be able to show your house to potential buyers.

With more competition coming to the market this spring, access can make or break your ability to get the price you are looking for, or even sell your house at all.

Renters Paying Substantially More While Owning Costs Less

Renters Paying Substantially More While Owning Costs Less

Renters Paying Substantially More While Owning Costs Less | MyKCM
 

In a recent Insights Blog, CoreLogic reported that rent prices have skyrocketed since 2005. Meanwhile, the typical mortgage payment has actually decreased.

“CoreLogic’s national rent index was up 36% in December 2018 compared with December 2005, while the typical mortgage payment was down 4% over that period.”

Renters Paying Substantially More While Owning Costs Less | MyKCM

Why the difference between the costs of renting versus owning?

It makes sense that rents have risen. However, how did mortgage payments decrease? CoreLogic explained:

“It’s mainly because mortgage rates back in December 2005 were significantly higher, averaging 6.3% for a fixed-rate 30-year loan, compared with 4.6% in December 2018.

The national median sale price in December 2005 – $190,000 – was lower than the $220,305 median in December 2018, but because of higher mortgage rates in 2005 the typical monthly mortgage payment was slightly higher back then – $941 – compared with $904 in December 2018.”

Additionally, a recent report by the National Association of Realtors (NAR) showed that purchasing a home requires less of your monthly paycheck.

According to the Economists’ Outlook Blog, NAR’s February 2019 Housing Affordability Index showed that the “percentage of income needed” to pay the typical mortgage has decreased the last three months.

  • November - 17.3%
  • December - 16.9%
  • January - 16.2%
  • February – 15.9%

Bottom Line

What does this all mean to the current housing market? We think First American said it best in a post last week:

“The mortgage rate-driven affordability surge has arrived just in time… Rising affordability has already benefited home buyers and, if the lower rate environment persists, we’re in for a great spring home-buying season.”

 

Why Pet-Friendly Homes Are in High Demand

 

Why Pet-Friendly Homes Are in High Demand | MyKCM
 

One of the many benefits of owning your own home is the freedom to find your ‘furever’ friend. By pointing out the aspects of your home that make it ‘pet-friendly’ in your listing, you’ll attract these buyers, rather than alienating the 68% of American households that have a pet!

If you are one of the many homeowners looking to list your home for sale, how do you stand out to the millions of pet parents searching for their dream home?

Whether a dog person, a cat person, or someone who prefers the company of another pet species, 99% of pet owners say that they consider their animal to be family. When finding a home, 95% of animal owners believe it is important that a housing community allows animals.

study by the National Association of Realtors (NAR) revealed that there are many aspects of the home buying, selling and owning experience that have been greatly impacted by our love for our pets.

This should come as no surprise, as $72 billion was spent on pets in the U.S in 2018. NAR’s President William E. Brown shed some light on the impact of pet owners and their home search.

“It is important to understand the unique needs and wants of animal owners when it comes to homeownership. REALTORS® understand that when someone buys a home, they are buying it with the needs of their whole family in mind; ask pet owners, and they will enthusiastically agree that their animals are part of their family.”

The Power of Pets When Choosing the Right Home

  • 89% of pet owners say they would not give up their pet due to a housing restriction
  • 81% of Americans say their pets play a role in their housing situation
  • 31% of animal owners have refused to put in an offer on a home because it wasn’t a good fit for their animals
  • 19% of Americans say they would consider moving for their pet
  • 12% percent have moved for their pet

New home builders have actually begun installing retractable pet gates that tuck away neatly inside door jams as a highly requested feature in new homes to attract pet-parents.

So, if you are a homeowner looking to sell in today’s pet-friendly environment, point out the features of your home that will attract pet owners:

  • Fully fenced in backyard – (91% of pet owners ranked this as the most important feature of a home to accommodate their pet)
  • Locations of dog parks/walking paths/pet-friendly beaches in the area (71% ranked this as the top feature of any neighborhood they would consider)
  • Proximity to veterinarians/groomers/pet supply stores (31%)

Bottom Line

Americans love their pets and will look for pet-friendly features in the home they wish to buy, so take advantage of this knowledge by pointing out your home’s ability to meet their needs.

Budget-Friendly House Selling Tips for Busy Parents

Image courtesy of Unsplash

 

Budget-Friendly House Selling Tips for Busy Parents

 

Are you considering listing your home for sale but are half-afraid you won’t be able to present the house well? We have good news! Not only can busy parents have their home ready for the market, but with a few smart strategies, you can also have it spotless and clutter-free in time for showings. Here’s how to navigate preparations and avoid going broke in the process. 

 

Depersonalize Decor

 

It’s fun to decorate your home with your kids in mind, but when it comes time to sell your house, Realty 101 explains that depersonalizing is your friend. Throughout your home, including kids’ bedrooms and bathrooms, you need to aim for a decor that won’t remind potential buyers you live there. That means family photos, refrigerator art, toy bins, collections, and so on all need to be removed. Theme decor can feel tricky, but you can replace cartoon shower curtains and race car comforters inexpensively, just shop big retailers like Kohl’s. By checking online for Kohl's coupons, you can stretch your dollars and put out attractive and inexpensive replacements, then store their favorites until you have settled into the new place. 

 

Do a Deep Clean

 

Presenting a thoroughly cleaned house is one of the keys to a successful sale, and when you have kids, it can be a challenge to get it clean and keep it that way. So, plan to polish every nook and cranny, and assemble some smart tools for the job. Organize a cleaning caddy with your favorite selection of cleansers and gadgets, and keep it handy for quick refreshers. A well-chosen duster is a boon, and for crumbs, entryways, and play areas, a handheld vacuum is nearly indispensable. For stocking up on all your cleaning goods, Walmart offers everyday low prices and a broad selection. You can save even more and make it super convenient by shopping online and choosing items which are discounted when you pick them up at the store, which is both economical and efficient. 

 

Pick Out Paint

 

Once you pull down personal items and have a spotless home, it’s the perfect time to paint. When it comes to selecting colors, neutral walls are generally your best bet. Think about cool shades of grey or pale blues. One great way to handle refreshing the kids’ rooms is to give them just a couple of shades to pick from and go from there. Giving them a say in the process can take away the sting of losing special decor, and be sure to remind them they can pick stuff for the new house as well. Home Depot offers a full selection of paint and supplies, and since you won’t be staying, consider low-cost paint. The new homeowners might paint over it anyway, and this way you can present the space in an appealing manner without overspending.

 

Storage Solutions

 

Removing your kids’ excess things is one thing, but what do you do with what’s left behind? With a busy family, there will be some things that simply can’t be stowed until after the move, such as favorite toys, sporting equipment, school supplies, baby gear, and so forth. HGTV points out that one way to tackle the conundrum is to invest in aesthetically pleasing storage containers. Choose something attractive that you can display, such as trunks or baskets. Also, keep something handy you can toss things into on your way out the door, like a small laundry basket or bag. Keep space set aside in the car for the last minute stash and you’ll be set to snag any short-notice showings. For baskets, bins, and other storage containers, Michael’s has a broad variety to mesh with your decor, and you can check their website for current deals

 

Getting your home ready to sell is a big deal. Even if your family is on the go, you can prepare to list your property without too much trouble or expense. When showings come along, you’ll be ready in a flash, and thanks to your preparations, you’ll be moving to your new place in no time!

Looking to Upgrade Your Current Home? Now’s the Time to Move-Up!

Looking to Upgrade Your Current Home? Now’s the Time to Move-Up! | MyKCM
 

In every area of the country, homes that are priced at the top 25% of the price range for that area are considered to be Premium Homes. In today’s real estate market there are deals to be had at the higher end! This is great news for homeowners who want to upgrade from their current house and move-up to a premium home.

Much of the demand for housing over the past couple years has come from first-time buyers looking for their starter home, which means that many of the more expensive homes that have been listed for sale have not seen as much interest.

This mismatch in demand and inventory has created a Buyer’s Market in the luxury and premium home markets according to the ILHM’s latest Luxury Report. For the purpose of the report, a luxury home is defined as one that costs $1 million or more.

“A Buyer’s Market indicates that buyers have greater control over the price point. This market type is demonstrated by a substantial number of homes on the market and few sales, suggesting demand for residential properties is slow for that market and/or price point.”

The authors of the report were quick to point out that the current conditions at the higher end of the market are no cause for concern,

“While luxury homes may take longer to sell than in previous years, the slower pace, increased inventory levels and larger differences between list and sold prices, represent a normalization of the market, not a downturn.”

Luxury can mean different things to different people. It could mean a secluded home with a ton of property for privacy to one person, or a penthouse in the center of it all for someone else. Knowing what characteristics you are looking for in a premium home and what luxury means to you will help your agent find your dream home.

Bottom Line

If you are debating upgrading your current house to a premium or luxury home, now is the time!

4 Reasons to Buy a Home in the Spring

4 Reasons to Buy a Home in the Spring

4 Reasons to Buy a Home in the Spring | MyKCM
 

Spring has sprung, and it’s a great time to buy a home! Here are four reasons to consider buying today instead of waiting.

1. Prices Will Continue to Rise

CoreLogic’s latest U.S. Home Price Insights reports that home prices have appreciated by 4.4% over the last 12 months. The same report predicts that prices will continue to increase at a rate of 4.6% over the next year.

Home values will continue to appreciate for years. Waiting no longer makes sense.

2. Mortgage Interest Rates Are Projected to Increase

Freddie Mac’s Primary Mortgage Market Survey shows that interest rates for a 30-year fixed rate mortgage came in at 4.41% last week. Most experts predict that rates will rise over the next 12 months. The Mortgage Bankers Association, Fannie Mae, Freddie Mac, and the National Association of Realtors are in unison, projecting rates will increase by this time next year.

An increase in rates will impact YOUR monthly mortgage payment. A year from now, your housing expense will increase if a mortgage is necessary to buy your next home.

3. Either Way, You Are Paying a Mortgage

Some renters have not yet 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 yours or your landlord’s.

As an owner, your mortgage payment is a form of ‘forced savings’ that allows you to have equity in your home that you can tap into later in life. As a renter, you guarantee your landlord is the person with that equity.

Are you ready to put your housing cost to work for you?

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

The cost of a home is determined by two major components: the price of the home and the current mortgage rate. It appears that both are on the rise.

But what if they weren’t? Would you wait?

Examine the actual reason you are buying and decide if it is worth waiting. Whether you want to have a great place for your children to grow up, greater safety for your family, or you just want to have control over renovations, now could be the time to buy.

Bottom Line

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.

Do 46 Million Millennials Know They Are Mortgage Ready?

 

Do 46 Million Millennials Know They Are Mortgage Ready? | MyKCM
 

Many have written about the millennial generation and whether or not they, as a whole, believe in homeownership as part of attaining the American Dream.

Millennials have taken longer to obtain traditional milestones than the generations before them, such as getting married, having kids, and buying a home. However, that does not mean that they do not still aspire to achieve those things.

History shows that people tend to buy their first home around age 30. Nearly 5 million millennials will turn 30 in the next two years. This will continue to fuel demand for housing.

This is also one of the many reasons why the millennial homeownership rate has continued to grow over the past few years. 48.4% of Americans between the ages of 30-34 now own a home.

There are over 46 million millennials (33% of the generation) who are considered “Mortgage Ready”meaning they meet the qualifications to be approved for a mortgage today!

  • a FICO Score ≥ 620
  • a Back-End Debt to Income Ratio ≤ 25%
  • no Foreclosures or Bankruptcies in the last 7 years
  • no severe delinquencies in 1 year

Rob Chrane, CEO of Down Payment Resource, commented on the findings of the report,

“We now know there are millions of buyers with the income & credit necessary to qualify to buy a home. The biggest question is:

Do they know it? …Unfortunately, many renters don’t investigate homeownership simply because they don’t believe it’s an option.”

The good news is that more and more millennials are realizing that they can afford a home now. Even so, more can be done to increase awareness of low down payment programs to attract even more of this generation.

New data from realtor.com shows that in December, millennials accounted for 42% of all new home loans originated in the month. This is more than any other generation.

Bottom Line

If you are one of the many millennials who may be “Mortgage Ready” but are unsure what your next steps should be, let's get together to help guide you on your path to homeownership!

7 Things To Avoid After Applying for a Mortgage!

 

7 Things To Avoid After Applying for a Mortgage! | MyKCM
 

Congratulations! You’ve found a home to buy and have applied for a mortgage! You are undoubtedly excited about the opportunity to decorate your new home! But before you make any big purchases, move any money around, or make any big-time life changes, consult your loan officer. They will be able to tell you how your decision will impact your home loan.

Below is a list of 7 Things You Shouldn’t Do After Applying for a Mortgage! Some may seem obvious, but some may not!

1. Don’t change jobs or the way you are paid at your job! Your loan officer must be able to track the source and amount of your annual income. If possible, you’ll want to avoid changing from salary to commission or becoming self-employed during this time as well.

2. Don’t deposit cash into your bank accounts. Lenders need to source your money and cash is not really traceable. Before you deposit any amount of cash into your accounts, discuss the proper way to document your transactions with your loan officer.

3. Don’t make any large purchases like a new car or new furniture for your new home. New debt comes with it, including new monthly obligations. New obligations create new qualifications. People with new debt have higher debt to income ratios… higher ratios make for riskier loans… and sometimes qualified borrowers no longer qualify.

4. Don’t co-sign other loans for anyone. When you co-sign, you are obligated. As we mentioned, with that obligation comes higher ratios as well. Even if you swear you will not be the one making the payments, your lender will have to count the payment against you.

5. Don’t change bank accounts. Remember, lenders need to source and track assets. That task is significantly easier when there is consistency among your accounts. Before you even transfer money between accounts, talk to your loan officer.

6. Don’t apply for new credit. It doesn’t matter whether it’s a new credit card or a new car. When you have your credit report run by organizations in multiple financial channels (mortgage, credit card, auto, etc.), your FICO score will be affected. Lower credit scores can determine your interest rate and maybe even your eligibility for approval.

7. Don’t close any credit accounts. Many clients have erroneously believed that having less available credit makes them less risky and more likely to be approved. Wrong. A major component of your score is your length and depth of credit history (as opposed to just your payment history) and your total usage of credit as a percentage of available credit. Closing accounts has a negative impact on both those determinants of your score.

Bottom Line

Any blip in income, assets, or credit should be reviewed and executed in a way that ensures your home loan can still be approved. The best advice is to fully disclose and discuss your plans with your loan officer before you do anything financial in nature. They are there to guide you through the process.

How You Can Create a Successful Vacation Rental

 

Many of us have special memories associated with vacation rentals, and owning one can be just as rewarding. It has never been easier to promote your property online, but there is more that goes into making it a success. Here is what you can do to make an impact on the market.

 

Why Prep?

 

It may be tempting to advertise as a vacation rental from the get-go, but investing your time and energy can pay dividends. By their nature, vacation homes are lucrative and can attract a broad spectrum of tenants. They can be a worthwhile income depending on the area and could contribute to retirement savings or other personal funds. In fact, expenses such as repairs and property taxes may be eligible as deductibles from the IRS. Having a rental gives you further options, as you can draw an income from it even if you ultimately plan to sell. Indeed, by making shrewd enhancements, you could appreciate your property’s valuation down the line.

 

Upgrade Features

 

As noted, vacation rentals are not exclusively about immediate benefits; there are also returns on investment that can be yielded from upgrades. You do not have to radically overhaul your property; instead, you can make cost-effective enhancements like new faucets and improved lighting. Brightening up rooms can nurture luxuriousness, and this can be a clincher when it comes to staged photographs. Of course, remodeling some rooms is a good idea, as it can offer ROI, such as installing granite surfaces and replacing a tub with a jacuzzi in your bathroom. Making upgrades can sound expensive, but the right enhancements could reward you.

 

Keep it Spotless

 

Maintaining a clean rental is a given for success, but the approach you take is flexible. You may want to delegate cleaning by hiring professionals to ready your home and restock supplies when necessary. Certain companies may engage you in the process by taking photographs and maintaining an inventory that you can go over. However, you may want to clean personally, so it’s important to have the right gear on hand, including a sturdy vacuum. A vacuum is an investment, one that needs extensive research from guides to positive and negative reviews. Whatever path you decide upon, always have spare bedding, towels, and hygiene products on hand to make preparing for new guests less onerous, and leave a lasting impression.

 

Make It Smart

 

Creating a smart home can make life easier and boost rental appeal. After all, you may not live close, but a smart home can simplify bookings and even benefit a guest’s sense of well-being. Your needs will determine what type of home security you invest in, whether that is monitored alarms or apps to track it yourself. A professional service will vary in cost, but you may prefer a subscription over an app. Smart homes offer comfort, so consider what might improve a guest’s experience. Would their stay be enhanced by an automated thermostat or a smart assistant that could smooth their transition to an unfamiliar environment? The right smart choices can make your rental appear fresh while potentially adding further value to your home.

 

Stock Up

 

A furnished property is one thing, but guests — whether families or individuals — will be most assured by the basics. Think along the lines of cupboards full of silverware and dishes, or bathrooms replete with clean towels and toiletries. When you take photographs of your rental, be sure to stage rooms so that these essentials are clearly visible. As well, mention these amenities in your descriptions as viewers will be attentive to omissions of features they could consider important. When you stock up, consider what would make your rental livable and cozy. Your home may have gorgeous surfaces and smart tech, but if it is lacking in a coffee pot or WiFi, that could take business away from you.

 

Transforming a home may sound like a herculean effort, but it doesn't have to be. Yes, you need plenty of preparation, and your property can benefit from upgrades, but there are also very clear financial benefits. This is an opportunity worth embracing.

 

Why an Economic Slowdown Will NOT Crush Real Estate this Time

 

Why an Economic Slowdown Will NOT Crush Real Estate this Time | MyKCM
 

Last week, the National Association for Business Economics released their February 2019 Economic Policy Survey. The survey revealed that a majority of the panel believe an economic slowdown is in the near future:

“While only 10% of panelists expect a recession in 2019, 42% say a recession will happen in 2020, and 25% expect one in 2021.”

Their findings coincide with three previous surveys calling for a slowdown sometime in the next two years:

  1. The Pulsenomics Survey of Market Analysts
  2. The Wall Street Journal Survey of Economists
  3. The Duke University Survey of American CFOs

That raises the question: Will the real estate market be impacted like it was during the last recession?

A recession does not equal a housing crisis. According to the dictionary definition, a recession is:

“A period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters.”

During the last recession, prices fell dramatically because the housing collapse caused the recession. However, if we look at the previous four recessions, we can see that home values weren’t negatively impacted:

  • January 1980 to July 1980: Home values rose 4.5%
  • July 1981 to November 1982: Home values rose 1.9%
  • July 1990 to March 1991: Home values fell less than 1%
  • March 2001 to November 2001: Home values rose 4.8%

Most experts agree with Ralph McLaughlin, CoreLogic’s Deputy Chief Economist, who recently explained:

“There’s no reason to panic right now, even if we may be headed for a recession. We’re seeing a cooling of the housing market, but nothing that indicates a crash.”

The housing market is just “normalizing”. Inventory is starting to increase and home prices are finally stabilizing. This is a good thing for both buyers and sellers as we move forward.

Bottom Line

If there is an economic slowdown in our near future, there is no need for fear to set in. As renowned financial analyst, Morgan Housel, recently tweeted:

“An interesting thing is the widespread assumption that the next recession will be as bad as 2008. Natural to think that way, but, statistically, highly unlikely. Could be over before you realized it began.”

What are the Benefits of Becoming a Homeowner?


 

Every family has a list of important dates. We celebrate birthdays, anniversaries, pet adoptions…and the list goes on. For 64.4 percent of households in the United States, this list includes the day they became a homeowner for the first time!

Why is this date important? Homeownership is not just a roof over your head! It represents shelter, stability, wealth, and pride! For decades, homeownership has been an important part of the American Dream!

However, many question if the next generations see the same benefits of homeownership as their predecessors.

In case we have forgotten, some of those benefits are:

Non-Financial Benefits

  1. Educational Achievement: Homeownership has a positive impact on academic achievement, including reading and math performance in children 3-12 years old.
  2. Civic Participation: “Owning a home means owning a part of the neighborhood.” Homeowners have a stronger connection to their neighborhood and are more committed to volunteer.
  3. Health Benefits: Adjusting for a range of demographic, socioeconomic and housing-related characteristics, homeowners have a substantial health advantage over renters.
  4. Public Assistance: The report shows 47% of homeowners use their home equity credit lines to help pay other debts, diminishing their need for public assistance.
  5. Property Maintenance and Improvement: A well-maintained home not only generates benefits through consumption and safety, but a high-quality structure also raises mental health.
  6. Pride of Ownership: This place is uniquely “yours.” You can customize it according to your likes and personality.

In addition to financial benefits, homeownership also brings significant social benefits. These not only pertain to the family, but extend to the communities, the state, and the country!

Financial Benefits

Buying a home is an investment in your future!

  1. Appreciation: On average, home prices are appreciating annually at a rate of 3.6%. This helps to create a safety net.
  2. Forced Savings: Your mortgage is like a forced savings plan! With each payment, you are reducing the principal of your loan.
  3. Home Equity: Homeownership builds equity every single month. You can later use that equity to start a business, send your children to college, etc.
  4. Net Worth: A homeowners’ net worth is 44x greater than renters! This gives you the financial freedom to invest.
  5. Stability: Rent prices increase 4% annually! A fixed mortgage payment allows you to save for future projects and guard against inflation.
  6. Tax Benefits: The government has created tax benefits to encourage customers to purchase. (Talk to your CPA to see which benefits apply to you).

Bottom Line

Homeownership is and will always be part of the American Dream! There are many financial and non-financial benefits to take advantage of when owning a home. If owning a home is part of your dream, let’s get together to help you with the process!

3 Reasons Why We Are Not Heading Toward Another Housing Crash

3 Reasons Why We Are Not Heading Toward Another Housing Crash

3 Reasons Why We Are Not Heading Toward Another Housing Crash | MyKCM
 

With home prices softening, some are concerned that we may be headed toward the next housing crash. However, it is important to remember that today’s market is quite different than the bubble market of twelve years ago.

Here are three key metrics that will explain why:

  1. Home Prices
  2. Mortgage Standards
  3. Foreclosure Rates

HOME PRICES

A decade ago, home prices depreciated dramatically, losing about 29% of their value over a four-year period (2008-2011). Today, prices are not depreciating. The level of appreciation is just decelerating.

Home values are no longer appreciating annually at a rate of 6-7%. However, they have still increased by more than 4% over the last year. Of the 100 experts reached for the latest Home Price Expectation Survey94 said home values would continue to appreciate through 2019. It will just occur at a lower rate.

MORTGAGE STANDARDS

Many are concerned that lending institutions are again easing standards to a level that helped create the last housing bubble. However, there is proof that today’s standards are nowhere near as lenient as they were leading up to the crash.

The Urban Institute’s Housing Finance Policy Center issues a quarterly index which,

“…measures the percentage of home purchase loans that are likely to default—that is, go unpaid for more than 90 days past their due date. A lower HCAI indicates that lenders are unwilling to tolerate defaults and are imposing tighter lending standards, making it harder to get a loan. A higher HCAI indicates that lenders are willing to tolerate defaults and are taking more risks, making it easier to get a loan.”

Last month, their January Housing Credit Availability Index revealed:

“Significant space remains to safely expand the credit box. If the current default risk was doubled across all channels, risk would still be well within the pre-crisis standard of 12.5 percent from 2001 to 2003 for the whole mortgage market.”

FORECLOSURE INVENTORY

Within the last decade, distressed properties (foreclosures and short sales) made up 35% of all home sales. The Mortgage Bankers’ Association revealed just last week that:

“The percentage of loans in the foreclosure process at the end of the fourth quarter was 0.95 percent…This was the lowest foreclosure inventory rate since the first quarter of 1996.”

Bottom Line

After using these three key housing metrics to compare today’s market to that of the last decade, we can see that the two markets are nothing alike.

Whose Mortgage Do You Want to Pay? Yours or Your Landlord’s?

Whose Mortgage Do You Want to Pay? Yours or Your Landlord’s? | MyKCM

 

There are some people who haven’t purchased homes because they are uncomfortable taking on the obligation of a mortgage. However, everyone should realize that unless you are living with your parents rent-free, you are paying a mortgage – either yours or your landlord’s.

As Entrepreneur Magazine, a premier source for small business, explained in their article, “12 Practical Steps to Getting Rich”:

“While renting on a temporary basis isn’t terrible, you should most certainly own the roof over your head if you’re serious about your finances. It won’t make you rich overnight, but by renting, you’re paying someone else’s mortgage. In effect, you’re making someone else rich.”

With home prices rising, many renters are concerned about their house-buying power. Mike Fratantoni, Chief Economist at MBA, explained:

“The spring homebuying season is almost upon us, and if rates stay lower, inventory continues to grow, and the job market maintains its strength, we do expect to see a solid spring market.”

As an owner, your mortgage payment is a form of ‘forced savings,’ which allows you to build equity in your home that you can tap into later in life. As a renter, you guarantee the landlord is the person building that equity.

As mentioned before, interest rates are still at historic lows, making it one of the best times to secure a mortgage and make a move into your dream home. Freddie Mac’s latest report shows that rates across the country were at 4.46% last week.

Bottom Line

Whether you are looking for a primary residence for the first time or are considering a vacation home on the shore, now may be the time to buy.

The KonMari Method: Helping You Prep Your House For Sale

The KonMari Method: Helping You Prep Your House For Sale

The KonMari Method: Helping You Prep Your House For Sale | MyKCM
 

One of the biggest challenges sellers face when listing their house is decluttering. Cleaning out some of the more personal decorating choices allows buyers to imagine themselves living in the house.

Those planning to sell soon are in luck! Marie Kondo, the inventor of the KonMari Method of Tidying Up, has gained popularity with her new Netflix series. She gives some great tips for sorting through years of accumulated possessions that we all collect in our homes.

“The KonMari Method™ encourages tidying by category – not by location – beginning with clothes, then moving on to books, papers, komono (miscellaneous items), and, finally, sentimental items. Keep only those things that speak to the heart, and discard items that no longer spark joy. Thank them for their service – then let them go.”

When you subjectively look at all of your belongings, you can sort through the ones that mean the most to you. Not only will you increase space for more joy-bringing items in your new home, but you will also have a much easier time packing remaining belongings!

“Remember, tidying up isn't about getting rid of stuff. It is about creating an environment that sparks joy and improves your quality of life.”

When selling your house, first impressions matter! Before you or your agent schedule a photographer to take photos for your listing, make sure to tour your home with fresh eyes. Look for any imperfections that a buyer might notice.

When you sort through your more sentimental items, consider packing them away to ensure that you know where they all are. That way, they are safe during open houses and showing appointments. This will also cut down on the amount of packing you need to do right before you move!

Bottom Line

Whether you are selling your house to move up to a larger one, downsizing, or moving in with family, only bring the items that truly spark joy for you. This will not only help cut down on the items you move, but also ensures that you’re off to a great start in your new home!

Buying a House This Year? This Should Be Your 1st Step!

 

Buying a House This Year? This Should Be Your 1st Step! | MyKCM
 

In many markets across the country, the number of buyers searching for their dream homes outnumbers the number of homes for sale. This has led to a competitive marketplace where buyers often need to stand out. One way to show that 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 not in an incredibly competitive market, understanding your budget will give you the confidence of knowing whether or not 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 through 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 homebuyers overestimate the down payment and credit scores necessary to qualify for a mortgage. If you are ready and willing to buy, you may be pleasantly surprised at your ability to do so today.

6 ways to increase the resale value of your home

PHOTO CREDIT: PEXELS

Experts say the best tactic for selling your home is to appeal to as many buyers as possible. More likely than not, people want to see a fresh, updated environment — so that means no outdated ‘70s kitchen and tiki-inspired bathroom. Not only will making improvements help you sell your home faster, but it will also increase its value which means you’ll have a larger ROI. But don’t waste time, money, and energy in renovations that aren’t worthwhile. There are certain pro and DIY projects that are guaranteed to give you the best bang for your buck.

 

1. Roof Repairs

An old or damaged room is liable to be a point of negotiation between you and a potential buyer, which means you’ll make less money from the sale. Not only are repairs expensive, but an ill roof can lead to further damage in the home — from water, for example. These are not attractive selling points, so at this juncture, it can be smarter to make the necessary repairs in order to increase the value of your home. Don’t try to do this yourself. Aside from the fact that it’s extremely dangerous (studies show that one-third of construction fatalities are falls from roofs), a professional roofing expert knows exactly what type of materials to use, and they already have the proper tools to get the job done.  Just do your research and get at least three quotes. Nationally, most homeowners spend between $217 - $6,574 for roof repairs.

 

2. Refresh With Paint

Refreshing rooms with a fresh coat of paint can do wonders. It’s inexpensive, and you can do it yourself. But don’t stop after the walls. Consider painting kitchen cabinets, the trim around the windows, the front door, and fence, too.

 

3. Remodel The Kitchen

While a kitchen remodel is among one of the most popular projects to increase the value of your home, it can make or break your ROI if you overdo it. For example, don’t spend $65,000 on a renovation when your home is only valued at $300,000 (the average cost of a kitchen remodel is $21,751). Consider changes that appeal to the masses — think stainless steel or energy-efficient appliances versus something professional-grade for a pro cook. Make the space more functional by adding additional storage space.

 

4. Replace Raggedy Carpet

Not only is old, worn carpeting an eyesore, but it’s also a harbor for dust, odors, and dirt — something a potential buyer with allergies will notice right away. Consider doing away with the carpet all together and replacing with wood, bamboo, laminate, tile, linoleum, cork, vinyl, or stone flooring instead.

 

5. Knock Down A Wall

Taking down a non-structural wall to open up the space. Floor space and a sense of flow are appealing to potential buyers — particularly right off the kitchen. If this is not an option, then consider making some other adjustments like removing a kitchen island, widening a couple of doorways, etc.

 

6. Add Curb Appeal

This can be part or all DIY, depending on whether you have a green thumb. Make sure grass is tidy and replace any dead patches. Add some flowers and shrubs around walkways and the perimeter of the home — but don’t go crazy. Over-complicated landscaping is a turnoff so keep everything low-maintenance. Perennial plants like baptisia, echinacea, and salvia are great because they basically take care of themselves. They come back every year with little or absolutely no effort at all. 

 

Before making any renovations, talk to a realtor about which projects make sense for the current state of the market and the neighborhood in which you live. The same applies for the staging/decorating process. With this in mind, you can be certain that you’re strategically appealing to the masses.

 

 

7 Reasons to Own A Home

 

WHAT TO KNOW

7 Reasons to Own A Home

  1. Tax benefits.
    The U.S. Tax Code lets you deduct the interest you pay on your mortgage, your property taxes, and some of the costs involved in buying a home.
  2. Appreciation.
    Historically, real estate has had a long-term, stable growth in value. In fact, median single-family existing-home sale prices have increased on average 5.2 percent each year from 1972 through 2014, according to the National Association of REALTORS®.  The recent housing crisis has caused some to question the long-term value of real estate, but even in the most recent 10 years, which included quite a few very bad years for housing, values are still up 7.0 percent on a cumulative basis. In addition, the number of U.S. households is expected to rise 10 to15 percent over the next decade, creating continued high demand for housing.
  3. Equity.
    Money paid for rent is money that you’ll never see again, but mortgage payments let you build equity ownership interest in your home.
  4. Savings.
    Building equity in your home is a ready-made savings plan. And when you sell, you can generally take up to $250,000 ($500,000 for a married couple) as gain without owing any federal income tax.
  5. Predictability.
    Unlike rent, your fixed-rate mortgage payments don’t rise over the years so your housing costs may actually decline as you own the home longer. However, keep in mind that property taxes and insurance costs will likely increase.
  6. Freedom.
    The home is yours. You can decorate any way you want and choose the types of upgrades and new amenities that appeal to your lifestyle.
  7. Stability.
    Remaining in one neighborhood for several years allows you and your family time to build long-lasting relationships within the community. It also offers children the benefit of educational and social continuity.

The best reason you should sell your house this Fall…

The minute Seasons change, everyone in real estate starts justifying why “Now!” is the best time to sell your home.

And when it comes to Fall, the main reason real estate agents give is because there are usually less houses on the market to compete with. Or, the buyers in the market are more “serious”.

To me, the best reason for selling in the Fall (or any other time of year for that matter) is because you need to. If you don’t need to sell…wait. Not until Spring. Wait until you need to.

Wanting to sell your house isn’t a bad reason. However, selling a house is a pretty big decision, and too many homeowners put their homes on the market prematurely.

The problem with that?

Since they don’t “need” to sell, they often overprice their homes which leads to their listing becoming “stale”. That leads to giving buyers the impression that something must be wrong with the house…and often selling for less than the house could have.

“Need” is not always easy for a homeowner to pinpoint. Many homeowners will even say they don’t need to sell. But in my experience, if someone is even thinking about selling their house, there is usually a need. It’s just hard to put a finger on.

So, if you’ve been thinking about selling, but aren’t quite sure if you need to…

…give me a ring and I’ll help you figure out If you truly do have a need, or if it makes sense for you to wait until Spring…or the Spring after…or the Spring after that.

But if you do need to sell, the Fall is certainly a fine time to sell.

GOT QUESTIONS?

How to Find Your Dream Home, Not a Nightmare Expense

How to Find Your Dream Home, Not a Nightmare Expense 

If you’re in the market for your first home, you need to be prepared. Keep reading as we explore financial hacks that will help you get the most out of your home buying budget.

 

Know the True Cost

 

Before you start filtering homes on the MLS, you need to understand what you can truly afford and how much that house is really going to cost; you can’t simply factor in the amount of the mortgage payments. Homeowner association fees, routine maintenance, and utilities can add up quickly. This home cost calculator from Angie’s List can get you started and may help you discover expenses you had not considered.

 

Choose a Mortgage Outside the Norm

 

You already know that 15- and 30-year mortgages are an option. You may even be aware of adjustable rate mortgages. What many people don’t realize, however, is that there is another option offered by the vast majority of lenders. A 20-year mortgage, according to Credit Sesame, offers a lower interest rate than a 15-year mortgage with a payment not that much different than a 30-year loan. A 20-year loan can save a substantial amount – $40,000 or more depending on the price of the property.

 

Cut Down Maintenance Costs

 

Once you own a home, you are on the hook for anything that goes wrong. Fortunately, there are several ways to potentially reduce liabilities. Start by keeping your major appliances and systems maintained. Contact your local major heating, cooling, plumbing, and electrical service providers. For reference, Hiller, a service provider covering parts of the southeast, offers a preventative maintenance membership that covers the cost of annual inspections. 

 

Subdivide

 

You found the home of your dreams but it comes with more land than you can possibly manage on your own. Depending on where you live, you may be able to recoup a significant chunk of your investment by subdividing the land. There are costs associated with this process, and local fees vary. This is not a financially feasible option if you are on just a few acres, but if you are on 10 or more, slicing up your piece of the American dream is something worth considering.

 

Fix Your Credit

 

Obviously, a higher credit score equates a better interest rate. However, improving your credit means more than simply paying your bills on time. MyFico explains that your payment history is only one aspect of what lenders will view as your credit-worthiness. If you want to raise your score and thus reduce your potential interest rate, pay off the debt you owe and avoid using your credit cards while you are in the homebuying process. You can also dispute information you think is inaccurate or has been erroneously attributed to you.

 

Trade Chores

 

Once you get settled into your new home, make a point to get to know the neighbors. This will give you an opportunity to discuss those aspects of home maintenance you each detest. Consider swapping chores to save on costs. For instance, if you don’t like to mow the yard, you may be able to build your neighbor’s children’s swing set in exchange for a month’s worth of mowings that you would otherwise have to pay for. Realtor.com notes that lawncare can be expensive, and this can save you hundreds of dollars over the mowing season. 

 

Avoid Good School Zones

 

Time explains that homes in highly rated school districts are almost 50 percent more expensive than the national average. If you don’t have children or plan on providing a private education, you might find a house that suits all of your needs without paying an education access premium.

 

Homeownership, although expensive, is often cheaper than renting. When money is a concern, take the time to do your research and look for unique ways to keep money in your wallet.

 

Image via Pixabay

Labor Day and the Real Estate Market

A lot of people feel that once Labor Day comes along, the real estate market changes.

It’s true… to a degree.

For instance, families who have to make decisions based upon where their children go to school are more likely to have tried to move before the school year begins. So, people with kids in school may very well decide not to sell or buy a house until the school year is done.

But otherwise, who’s really directly affected by Labor Day, when it comes to buying or selling a house?

Think about it…

There’s constantly:

  • People moving in and out of the area for job transfers. (Even if they have kids in school.)
  • People who are retiring and moving out of the area, or downsizing.
  • Newlyweds buying their first house.
  • Single people buying their first house.
  • Sadly, there are deaths, divorces, and desperate times that lead to people selling homes.

That list could go on for pages.

The point is, the real estate market may change more in some markets that are heavily dependent on seasonal sales (think resort / vacation areas). But, even in those areas, people buy and sell throughout the year.

But, in almost every area, it isn’t like Labor Day is the equivalent of the clock striking midnight and the market turns into a pumpkin until Spring.

Maybe there are minor adjustments. But the market doesn’t stop, or entirely turn into a buyer’s market or seller’s market overnight, just because it’s past Labor Day.

So, if you’ve been thinking about buying or selling, or are in the middle of it, don’t be concerned about what you might hear elsewhere. Just ask us, and We'll help you figure out whether it affects you and your scenario at all.

National Dog Day

 

August 25th is National Dog Day. Unlike many of these National days, it’s not just a day to celebrate your love of dogs. It has a pretty clear mission…

It was started to bring awareness to dogs who need homes. Dogs who were abandoned. Dogs who were “unwanted”.

I’m sure there are dogs who were “unwanted”, but it’s not always about not wanting a dog. A lot of times, it’s about not being able to keep a dog. In fact, many dog owners are devastated when they find themselves in a position to have to give up their dog for adoption.

While there are many sad, legitimate reasons to have to give up a dog, one of the ones I hate hearing about the most is when someone has to because they can’t find a place to live that allows dogs.

Most often, it’s because they’re renters, and it’s difficult to find a rental that allows pets.
Or, perhaps there are restrictions on the size or breed of dog.

This is avoidable. Not always easy. But avoidable.

There are a couple of solutions:

  • Find a rental that permits dogs (the most obvious solution).
  • Buy a house.

The problem is, many people avoid looking for a solution until they have no other choice than to give up their dog.

So, keep this in mind…

If you, or anyone you know, owns a dog and it looks like it’ll be affecting their housing situation, please reach out to me as soon as possible.

There’s got to be a better solution than giving up the dog, and I’m glad to help find it.

Lack of Listings Slowing Down the Market

As the real estate market continues to move down the road to a complete recovery, we see home values and home sales increasing while distressed sales (foreclosures and short sales) continue to fall to their lowest points in years. There is no doubt that the housing market will continue to strengthen throughout 2018.

However, there is one thing that may cause the industry to tap the brakes: a lack of housing inventory!

Here’s what a few industry experts have to say about the current inventory crisis:

Lawrence Yun, Chief Economist for the National Association of Realtors

“Inventory coming onto the market during this year’s spring buying season…was not even close to being enough to satisfy demand, that is why home prices keep outpacing incomes and listings are going under contract in less than a month – and much faster – in many parts of the country.”

Sam Khater, Chief Economist for Freddie Mac

“While this spring’s sudden rise in mortgage rates [took] up a good chunk of the conversation, it’s the stubbornly low inventory levels in much of the country that are preventing sales from really taking off like they should… Most markets simply need a lot more new and existing supply to cool price growth and give buyers enough choices.”

Alexandra Lee, Housing Data Analyst for Trulia

This seasonal inventory jump wasn’t enough to offset the historical year-over-year downward trend that has continued over 14 consecutive quarters…Despite the second-quarter gain, inventory was down 5.3% from a year ago. Still, this represents an easing of the double-digit drops we’ve been seeing since the second quarter of 2017.”

4 Reasons Why We Are Not Heading Toward Another Housing Bubble

4 Reasons Why We Are Not Heading Toward Another Housing Bubble

 

With home prices continuing to appreciate above historic levels, some are concerned that we may be heading for another housing ‘boom & bust.’ It is important to remember, however, that today’s market is quite different than the bubble market of twelve years ago.

Here are four key metrics that will explain why:

  1. Home Prices
  2. Mortgage Standards
  3. Foreclosure Rates
  4. Housing Affordability

1. HOME PRICES

There is no doubt that home prices have reached 2006 levels in many markets across the country. However, after more than a decade, home prices should be much higher based on inflation alone.

Last week, CoreLogic reported that,

“The inflation-adjusted U.S. median sale price in June 2006 was $247,110 (or $199,899 in 2006 dollars), compared with $213,400 in March 2018.” (This is the latest data available.)

2. MORTGAGE STANDARDS

Many are concerned that lending institutions are again easing standards to a level that helped create the last housing bubble. However, there is proof that today’s standards are nowhere near as lenient as they were leading up to the crash.

The Urban Institute’s Housing Finance Policy Center issues a monthly index which,

“…measures the percentage of home purchase loans that are likely to default—that is, go unpaid for more than 90 days past their due date. A lower HCAI indicates that lenders are unwilling to tolerate defaults and are imposing tighter lending standards, making it harder to get a loan. A higher HCAI indicates that lenders are willing to tolerate defaults and are taking more risks, making it easier to get a loan.”

Their July Housing Credit Availability Index revealed:

“Significant space remains to safely expand the credit box. If the current default risk was doubled across all channels, risk would still be well within the pre-crisis standard of 12.5 percent from 2001 to 2003 for the whole mortgage market.”

3. FORECLOSURE RATES

A major cause of the housing crash last decade was the number of foreclosures that hit the market. They not only increased the supply of homes for sale but were also being sold at 20-50% discounts. Foreclosures helped drive down all home values.

Today, foreclosure numbers are lower than they were before the housing boom. Here are the number of consumers with new foreclosures according to the Federal Reserve’s most recent Household Debt and Credit Report:

  • 2003: 203,320 (earliest reported numbers)
  • 2009: 566,180 (at the valley of the crash)
  • Today: 76,480

Foreclosures today are less than 40% of what they were in 2003.

4. HOUSING AFFORDABILITY

Contrary to many headlines, home affordability is better now than it was prior to the last housing boom. In the same article referenced in #1, CoreLogic revealed that in the vast majority of markets, “the inflation-adjusted, principal-and-interest mortgage payments that homebuyers have committed to this year remain much lower than their pre-crisis peaks.”

They went on to explain:

“The main reason the typical mortgage payment remains well below record levels in most of the country is that the average mortgage rate back in June 2006, when the U.S. typical mortgage payment peaked, was about 6.7 percent, compared with an average mortgage rate of about 4.4 percent in March 2018.”

The “price” of a home may be higher, but the “cost” is still below historic norms.

Bottom Line

After using these four key housing metrics to compare today to last decade, we can see that the current market is not anything like that bubble market.

SOURCE

JULIE CVERCKO
386-668-8668
840 Deltona Blvd. St. F-1
Deltona, Florida 32725
Julie@primerealestateinc.com

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