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Whether You Rent or Buy, You're Paying a Mortgage
Whether You Rent or Buy, You're Paying a Mortgage | Keeping Current Matters
There are some people that have not purchased a home because they are uncomfortable taking on the obligation of a mortgage. Everyone should realize that, unless you are living with your parents rent free, you are paying a mortgage - either yours or your landlord's. As The Joint Center for Housing Studies at Harvard University explains:
"Households must consume housing whether they own or rent. Not even accounting for more favorable tax treatment of owning, homeowners pay debt service to pay down their own principal while households that rent pay down the principal of a landlord plus a rate of return. That's yet another reason owning often does--as Americans intuit--end up making more financial sense than renting."
Christina Boyle, a Senior Vice President, Head of Single-Family Sales & Relationship Management at Freddie Mac, explains another benefit of securing a mortgage vs. paying rent:
"With a 30-year fixed rate mortgage, you'll have the certainty & stability of knowing what your mortgage payment will be for the next 30 years - unlike rents which will continue to rise over the next three decades."
As an owner, your mortgage payment is a form of 'forced savings' which allows you to have equity in your home that you can tap into later in life. As a renter, you guarantee the landlord is the person with that equity. 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 3.43% 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.

Posted by Cheryl Talbot ABR,GRI,e-PRO,SFR on August 24th, 2016 9:38 AMLeave a Comment

2 Myths About Mortgages That May Be Holding Back Buyers
2 Myths About Mortgages That May Be Holding Back Buyers | Keeping Current Matters
Fannie Mae's "What do consumers know about the Mortgage Qualification Criteria?" Study revealed that Americans are misinformed about what is required to qualify for a mortgage when purchasing a home.

Myth #1: "I Need a 20% Down Payment"

Fannie Mae's survey revealed that consumers overestimate the down payment funds needed to qualify for a home loan. According to the report, 76% of Americans either don't know (40%) or are misinformed (36%) about the minimum down payment required. Many believe that they need at least 20% down to buy their dream home. New programs actually let buyers put down as little as 3%. Below are the results of a Digital Risk survey of Millennials who recently purchased a home. 2 Myths About Mortgages That May Be Holding Back Buyers | Keeping Current Matters As you can see, 64.2% were able to purchase their home by putting down less than 20%, with 43.8% putting down less than 10%!

Myth #2: "I need a 780 FICO Score or Higher to Buy"

The survey revealed that 59% of Americans either don't know (54%) or are misinformed (5%) about what FICO score is necessary to qualify. Many Americans believe a 'good' credit score is 780 or higher. To help debunk this myth, let's take a look at the latest Ellie Mae Origination Insight Report, which focuses on recently closed (approved) loans. As you can see below, 54.1% of approved mortgages had a credit score of 600-749. 2 Myths About Mortgages That May Be Holding Back Buyers | Keeping Current Matters

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.

Posted by Cheryl Talbot ABR,GRI,e-PRO,SFR on August 23rd, 2016 9:33 AMLeave a Comment

5 Things Renters Should Know About Owning

For renters who aspire to be home owners, transitioning from an apartment to a house requires a shift in their thinking that they may not be prepared to make. The financial changes that come with owning, the need to consider planting longer-term roots in a neighborhood, and new neighborhood rules are things renters may not be thinking about enough.

Read more: Where Buying Beats Out Renting the Most

As their real estate agent, it’s important for you to be there for your clients when they’re embarking on a life-changing event such as buying a home.

Moving can already be one of the most stressful times in a person’s life, but it may be doubly so for a new home owner. In order to be their most reliable resource, using your knowledge and experience to provide them with guidance, share these helpful nuggets of information with your clients so their transition from renter to owner can be as smooth as possible.

They need to understand how their financial investment is changing. Renters may see an increase in their monthly rent every lease term, but they don’t see exactly where it goes — toward property taxes and insurance, even “luxuries” such as trash pickup. As home owners, they don’t have a landlord who handles all those details, so they need to be ready to juggle the financial responsibilities of home ownership. Have an open conversation with your clients about these changes and the importance of budgeting to make sure they make smart financial decisions during this process.

They need to be happy with their location for the long-term. As a renter, you can bounce around from home to home every year if you want. But when you own a home, you have to stay put — unless you plan on renting it out, which most home owners don’t. Impress upon your client that location is going to play a much more significant role in their future, so they should think about evaluating school districts, access to amenities, and commute time now as they search for their next home.

They may need to abide by new rules. Renters don’t think about possible homeowner association rules they may be governed by, such as trash pickup rules or any curfews or rules pertaining to animals. Make sure to get all the information on neighborhood rules and associations to help your client understand what their new obligations will be.

They’ll need to get into the mindset of an owner. Life as your client knows it is about to change. Once your client purchases a new home, they will no longer have a landlord to tend to their many needs, including lawn care and plumbing. The best way you can help them as their real estate agent is to provide them with contact information for local industry experts. They will eventually need certified specialists ranging from HVAC companies to carpenters to electricians. Let them know they don’t have to do everything themselves.

They should know their neighbors can affect their value. Renters don’t care who their neighbors are as long as they’re quiet (enough). But your client is now going to want to know whether their new neighbors are renters or home owners. This knowledge can help your clients gauge current and future home value in the neighborhood. If the neighborhood consists mostly of rental properties, it is likely a home owner will lose money on their house in the future. Renters do not always feel responsible for maintaining their properties the way home owners do. Property value comes down to curb appeal. Less-appealing neighborhoods often have more-appealing prices, which is not always good for buyers and home owners


Posted by Cheryl Talbot ABR,GRI,e-PRO,SFR on August 22nd, 2016 2:37 PMLeave a Comment

Real Estate Values Today Compared to Pre-2008 Peak
Real Estate Values Today Compared to Pre-2008 Peak | Keeping Current Matters
This housing market has many people talking about home values; where they are and where they are headed. It's also interesting to look back and see how home prices compare to values prior to the housing crisis. Every quarter, Freddie Mac releases their House Price Index. The index usually provides monthly home values for:
  • the nation as a whole
  • each of the 50 states
  • 367 metropolitan statistical areas
This quarter, the report also included a look at today's home values as compared to Pre-2008 values. Here is a graphic that breaks down the numbers on a state-by-state basis: Real Estate Values Today Compared to Pre-2008 Peak | Keeping Current Matters

Posted by Cheryl Talbot ABR,GRI,e-PRO,SFR on August 15th, 2016 12:55 PMLeave a Comment

Buying Remains 36% Cheaper than Renting!

Buying Remains 36% Cheaper than Renting! | Keeping Current Matters In the latest Rent vs. Buy Report fromTrulia, they explained that homeownership remains cheaper than renting with a traditional 30-year fixed rate mortgage in the 100 largest metro areas in the United States. The updated numbers actually show that the range is an average of 5% less expensive in Orange County (CA) all the way up to 46% in Houston (TX), and 36% Nationwide! A recent study by GoBankingRates looked at the cost of renting vs. owing a home at the state level and concluded that in 36 states it is actually 'a little' or 'a lot' cheaper to own, represented by the two shades of blue in the map below. Buying Remains 36% Cheaper than Renting! | Keeping Current Matters One of the main reasons that owning a home has remained significantly cheaper than renting is the fact that interest rates have remained at or near historic lows. Freddie Macreports that rates fell again last week to 3.43%.

Nationally, rates would have to rise to 10.6% for renting to be cheaper than buying - and rates haven't been that high since 1989.

Bottom Line

Buying a home makes sense socially and financially. If you are one of the many renters who would like to evaluate your ability to buy this year, meet with a local real estate professional who can help you find your dream home.

Posted by Cheryl Talbot ABR,GRI,e-PRO,SFR on August 13th, 2016 12:18 PMLeave a Comment

August 11th, 2016 11:30 AM

What Does Home Mean to You?



What Does Home Mean to You? | Keeping Current Matters

No matter what shape or size your living space is, the concept and feeling of home can mean different things to different people. Whether it’s a certain scent or a favorite chair, the emotional reasons why we choose to buy our own home are, more often than not, the more powerful or compelling ones.

Every year, The Joint Center for Housing Studies at Harvard University conducts a survey to find driving factors behind why Americans decide to buy a home.

The top 4 reasons to own a home cited by participants of the survey were not financial. 

1. It means having a good place to raise children & provide them with a good education

From the best neighborhoods to the best school districts, even those without children at the time of purchase may have this in the back of their mind as a major reason for choosing the location of the home that they purchase.

2. You have a physical structure where you & your family feel safe

It is no surprise that having a place to call home with the means for comfort and security is the number two reason.

3. It allows you to have more space for your family

Whether your family is expanding, or an older family member is moving in, having a home that fits your needs is a close third on the list. 

4. It gives you control over what you do with your living space, like renovations and updates

Looking to actually try one of those complicated wall treatments that you saw on Pinterest? Tired of paying an additional pet deposit for your apartment building, or do you want to finally adopt that puppy or kitten you’ve seen online 100 times? Who’s to say that you can’t in your own home?

The 5th reason on the list, is the #1 financial reason to buy a home as seen by respondents:

5. Owning a home is a good way to build up wealth that can be passed along to my family

Either way you are paying a mortgage. Why not lock in your housing expense now with an investment that will build equity that you can borrow against in the future?

Bottom Line

Whether you are a first time homebuyer or a move-up buyer who wants to start a new chapter in your life, now is a great time to reflect on the intangible factors that make a house a home.


Posted by Cheryl Talbot ABR,GRI,e-PRO,SFR on August 11th, 2016 11:30 AMLeave a Comment

Home sales are rising, so why isn't inventory going up?

First-time homebuyers play a key role

August 2, 2016

Two facts stand out in today’s housing market: rising home sales and flat/falling inventory. 

Existing home sales are up 5% year over year in the first half of 2016, and in June reached a seasonally adjusted annual rate of 5.57 million units?the highest level since early 2007.  But housing inventory, as measured by the number of existing homes for sale, was down by 130,000 units year over year in June. 

This is a continuation of what has been happening since 2012. Between 2012 and 2015, home sales have increased by almost 600,000 units, from 4.67 million units to 5.25 million units, while housing inventory has been flat or down.   

Figure 1. Existing home sales and housing inventory (Click to enlarge)

Genworth

Source: National Association of Realtors

Why is missing inventory a puzzle?

Housing is a two-sided market. Most homebuyers are already homeowners and they typically sell their existing home before buying another one. 

That is why the flat-to-down housing inventory is so puzzling in the presence of rising home sales. If people are buying more homes, why aren’t there more homes for sale? 

I believe this phenomenon tells us something about what is happening to homebuyers who are more pivotal to housing demand. 

First-time homebuyers, people buying second homes, and investors stand out because they do not have to sell before buying. When these buyers enter the market, they add to sales without also bringing inventory to the market. So rising home sales and flat-to-down inventory trends are consistent with more first-time homebuyers entering the housing market. 

The missing inventory quantified

One way to understand the missing inventory is by comparing actual inventory level with the level of inventory holding constant the months of supply. 

For example, actual housing inventory in 2015 was around 180,000 units less than the level of inventory if months of supply had stayed at the 2014 level. If more first-time homebuyers in the housing market explains the missing inventory phenomenon, it would have to have a similar size.

Figure 2. 2015 housing inventory – actual vs. implied (Click to enlarge)

Genworth

Source: National Association of Realtors, Genworth Financial

The link with the first-time homebuyers market

The best source of information on first-time homebuyers is the mortgage insurance industry and the FHA. Both serve a large number of first-time homebuyers by lowering the down-payment hurdle. 

I estimate that the industry helped around 1 million new first-time homebuyers in 2015. More importantly, our data shows that the number of first-time homebuyers increased by around 200,000 from the previous year. 

This is evidence that the growing presence of first-time homebuyers was a major factor in reducing housing inventory while pushing up home sales last year.  Anecdotally, I hear many stories about the lower end of the housing market being tighter. That is also consistent with more first-time homebuyers entering the market.

Data for the first half of the year suggests that we will see continued pressure from first-time homebuyers entering the housing market. Based on my estimate, the number of first-time homebuyers served by the mortgage insurance industry and the FHA combined are up by another 100,000 in the first half of 2016.

What does this mean for the housing market? 

I expect rising first-time homebuyers to be a major trend in the housing market over the next few years, generating higher home sales while keeping housing inventory down or flat. The result is a tilt in favor of home sellers and a continuation of rising home prices.  


Posted by Cheryl Talbot ABR,GRI,e-PRO,SFR on August 5th, 2016 8:44 AMLeave a Comment

House Hasn't Sold Yet? Take Another Look at Your Price!

House Hasn't Sold Yet? Take Another Look at Your Price! | Keeping Current Matters The residential housing market has been hot. Home sales have bounced back solidly and are now at their second highest pace since February 2007. Demand has remained strong throughout the summer as many real estate professionals are reporting bidding wars with listings actually selling above listing price. What about your house?

If your house hasn't sold, it is probably because of the price.

If your home is on the market and you are not receiving any offers, look at your price. Pricing your home just 10% above market value dramatically cuts the number of prospective buyers that will even see your house. See chart below. House Hasn't Sold Yet? Take Another Look at Your Price! | Keeping Current Matters

Bottom Line

The housing market is hot. If you are not seeing results you want, sit down with your agent and revisit the pricing conversati

Posted in:General
Posted by Cheryl Talbot ABR,GRI,e-PRO,SFR on July 28th, 2016 1:24 PMLeave a Comment

The Top Reason to List Your House For Sale Now!
The Top Reason to List Your House For Sale Now! | Keeping Current Matters If you are debating listing your house for sale this year, here is the #1 reason not to wait!

Buyer Demand Continues to Outpace the Supply of Homes For Sale

The National Association of REALTORS' (NAR) Chief Economist, Lawrence Yun recently commented on the inventory shortage:
"With demand holding firm and homes selling even faster than a year ago, the notable increase in closings in recent months took a dent out of what was available for sale. Realtors are acknowledging, with increasing frequency lately, that buyers continue to be frustrated by the tense competition and lack of affordable homes for sale in their market."
The latest Existing Home Sales Report shows that there is currently a 4.6-month supply of homes for sale. This remains lower than the 6-month supply necessary for a normal market and 5.8% lower than June 2015. The chart below details the year-over-year inventory shortages experienced over the last 12 months: The Top Reason to List Your House For Sale Now! | Keeping Current Matters Anything less than a six-month supply is considered a "Seller's Market".

Bottom Line

Meet with a local real estate professional who can show you the supply conditions in your neighborhood and assist you in gaining access to the buyers who are ready, willing and able to buy now!

Posted by Cheryl Talbot ABR,GRI,e-PRO,SFR on July 26th, 2016 4:51 PMLeave a Comment

July 23rd, 2016 12:25 PM

Rents Skyrocket at Highest Rate in almost a Decade

Rent Set to Exceed $535 Billion Paid Last Year | Keeping Current Matters
The Consumer Price Index (CPI) was released by the Labor Department last week. An analysis by Market Watch revealed the cost of rent was 3.8% higher than a year ago for the second straight month in June. That's the strongest yearly price gain since 2007. This coincides with a report released earlier this month in which AxioMetrics announced that rents are continuing to increase in 2016. The report revealed:
  • There was a 3.7% increase in effective rents in the second quarter of 2016 as compared to the same period last year.
  • That the effective rent growth this quarter compared to last quarter was 2.3%.
  • Annual effective rent growth was positive in 49 of the top 50 markets, based on number of units. Only Houston was negative, at -1.4%, as the fallout from energy-industry job losses and excess construction continues.

Here is a graph to illustrate the rate of increase over the last several years:

Rent Set to Exceed $535 Billion Paid Last Year | Keeping Current Matters

Bottom Line

With rents continuing to rise and mortgage interest rates still at historic lows, meet with a local real estate professional who can help determine if you could turn your monthly rental cost into a home of your own. 

Posted by Cheryl Talbot ABR,GRI,e-PRO,SFR on July 23rd, 2016 12:25 PMLeave a Comment

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