by The KCM Crew on February 24, 2015 in For Sellers, Move-Up Buyers
The National Association of REALTORS (NAR) just released their Existing Home Sales report and some have taken the results and ran with headlines like:
Let’s take a closer look at what the report really shows. There is a seasonality to home sales that happens every year, with a decline in January, (as shown in the graph below.) But in reality 200,000 more homes (3.2%) sold this January over last January.
Current buyer demand, as shown in the graph below, is actually 3x greater than that of January 2014.
NAR’s Chief Economist, Lawrence Yun points to the real issue at hand:
“Realtors® are reporting that low rates are attracting potential buyers, but the lack of new and affordable listings is leading some to delay decisions.”
Even though buyers are out looking for their dream home, they cannot find it! Inventory levels increased slightly since December, but are still below historic norms and unable to keep up with the elevated demand.
If your plan for 2015 includes selling your house, waiting till the Spring may not be in your best interest. Meet with a local real estate professional in your market who can explain the opportunities available now.
by The KCM Crew on February 10, 2015 in For Buyers, For Sellers
Two recently released reports reveal that the American public is starting to feel much better about the U.S. economy. The University of Michigan’s Surveys of Consumers showed that:
“Consumer optimism reached the highest level in the past decade in the January 2015 survey…Consumers judged prospects for the national economy as the best in a decade, with half of all consumers expecting the economic expansion will continue for another five years. The anticipated strength in the overall economy has been accompanied by more favorable income and employment expectations.”
As all consumers are feeling more optimistic, more young adults are moving out of their parents’ basements and into a residence of their own. The recent Census report shows that new household formations skyrocketed in 2014. Below is a chart showing the historical significance of the numbers:
The economy is definitely improving and, more importantly, the American consumer is beginning to feel much more confident. This should lead to a very robust real estate market in 2015.
by The KCM Crew on January 28, 2015 in For Sellers, Move-Up Buyers
You’ve decided to sell your house. You begin to interview potential real estate agents to help you through the process. You need someone you trust enough to:
Be careful if the agent you are interviewing begins the interview by:
An agent’s success and the success of their company can be important considerations when deciding on the right real estate professional to represent you in the sale of the house. However, you first need to know they care about what you need and what you expect from the sale. If the agent is not interested in first establishing your needs, how successful they may seem is much less important.
Look for someone with the ‘heart of a teacher’ who comes in prepared well enough to explain the current real estate market and patient enough to take the time to show how it may impact the sale of your home.
Not someone only interested in trying to sell you on how great they are.
by The KCM Crew on January 29, 2015 in For Sellers, Move-Up Buyers, Pricing
There are some homeowners that have been waiting for months to get a price they hoped for when they originally listed their house for sale. The only thing they might want to consider is... If it hasn't sold yet, maybe it's not priced properly.
That is the average number of homes that sell each and every day in this country according to the National Association of Realtors’ (NAR) latest Existing Home Sales Report. NAR reported that sales are at an annual rate of 5.04 million. Divide that number by 365 (days in a year) and we can see that, on average, over 13,800 homes sell every day.
The report from NAR also revealed that there is currently only a 4.4 months supply of inventory available for sale, (6 months inventory is considered ‘historically normal’).
That means less competition for buyers who are out in the market now, but more houses will hit the market soon with spring right around the corner.
We realize that you want to get the fair market value for your home. However, if it hasn't sold in today's active real estate market, perhaps you should reconsider your current asking price.
by The KCM Crew on January 21, 2015 in First Time Homebuyers, For Buyers
Here are the five reasons, each followed by an excerpt from the study:
“Few households are interested in borrowing money to buy stocks and bonds and few lenders are willing to lend them the money. As a result, homeownership allows households to amplify any appreciation on the value of their homes by a leverage factor. Even a hefty 20 percent down payment results in a leverage factor of five so that every percentage point rise in the value of the home is a 5 percent return on their equity. With many buyers putting 10 percent or less down, their leverage factor is 10 or more.”
“Homeowners pay debt service to pay down their own principal while households that rent pay down the principal of a landlord.”
“Since many people have trouble saving and have to make a housing payment one way or the other, owning a home can overcome people’s tendency to defer savings to another day.”
“Homeowners are able to deduct mortgage interest and property taxes from income...On top of all this, capital gains up to $250,000 are excluded from income for single filers and up to $500,000 for married couples if they sell their homes for a gain.”
“Housing costs and rents have tended over most time periods to go up at or higher than the rate of inflation, making owning an attractive proposition.”
We realize that homeownership makes sense for many Americans for an assortment of social and family reasons. It also makes sense financially.
“As of January 5, 2015, the U.S. Energy Information Administration (EIA) reported that the price of regular gasoline was $2.20/gallon, the lowest since gas prices peaked to about $ 4/gallon in May 2011.”
You may have noticed that filling your gas tank has become substantially less expensive in recent months. A welcome change from the close to $5 a gallon that many Americans were paying this time last year. The average US household is projected to save around $550 in 2015.
NAR explains the correlation like this:
“Lower oil prices mean lower inflation rate, which pushes down mortgage rates.”
Based on Freddie Mac’s weekly mortgage survey as of January 22, 2015, the 30-year fixed rate averaged 3.63% and the 15-year fixed rate averaged 2.93%.
“The decline in oil prices is generally positive to households by way of the gas savings and lower mortgage payments. That savings will boost consumer spending in other areas. But there may be some layoffs in oil-producing states.”
No one really knows how long oil prices will continue to support low mortgage rates. In a New York Times article, the author points to the fact that “adding hundreds of billions of dollars to consumer spending” could start to have a “counter effect” on rates as the economy continues to strengthen.
“If firms start hiring again, and wages increase — that’s when the level of all interest rates in the U.S. would increase.”
The low interest rates we are currently experiencing are not going to stay around forever. The current projections from Freddie Mac, Fannie Mae, NAR and the Mortgage Bankers Association all agree that interest rates will increase to between 4.3-5.4% by the end of 2015.
NAR reports: “At the median home price of $205,300, a 0.75 percentage point drop in mortgage rates will yield savings of about $1,000 annually.” If you are in a position to buy a home make sure that you meet with a local real estate professional with their finger on the pulse of what’s going on in the market. Don’t let a delay in purchasing impact your family’s financial future