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April 11th, 2017 9:13 AM

Careful...Don't Get Caught in the Rental Trap!

Careful…Don’t Get Caught in the Rental Trap! | Keeping Current Matters There are many benefits to homeownership. One of the top benefits is being able to protect yourself from rising rents by locking in your housing cost for the life of your mortgage.

Don’t Become Trapped

Jonathan Smoke, Chief Economist at realtor.com, reported on what he calls a “Rental Affordability Crisis.” He warns that,
“Low rental vacancies and a lack of new rental construction are pushing up rents, and we expect that they’ll outpace home price appreciation in the year ahead.”
In the Joint Center for Housing Studies at Harvard University's 2016 State of the Nation’s Housing Report, they revealed that The number of cost-burdened households rose to 21.3 million. Even more troubling, the number with severe burdens (paying more than 50% of income for housing) jumped to a record 11.4 million. These households struggle to save for a rainy day and pay other bills, such as food and healthcare.

It’s Cheaper to Buy Than Rent

In Smoke’s article, he went on to say,
“Housing is central to the health and well-being of our country and our local communities. In addition, this (rental affordability) crisis threatens the future value of owned housing, as the burdensome level of rents will trap more aspiring owners into a vicious financial cycle in which they cannot save and build a solid credit record to eventually buy a home.” “While more than 85% of markets have burdensome rents today, it’s perplexing that in more than 75% of the counties across the country, it is actually cheaper to buy than rent a home. So why aren’t those unhappy renters choosing to buy?”

Know Your Options

Perhaps you have already saved enough to buy your first home. HousingWire reported that analysts at Nomura believe:
"It’s not that Millennials and other potential homebuyers aren’t qualified in terms of their credit scores or in how much they have saved for their down payment. It’s that they think they’re not qualified or they think that they don’t have a big enough down payment.” (emphasis added)
Many first-time homebuyers who believe that they need a large down payment may be holding themselves back from their dream home. As we have reported before, in many areas of the country, a first-time home buyer can save for a 3% down payment in less than two years. You may have already saved enough!

Bottom Line

Don’t get caught in the trap so many renters are currently in. If you are ready and willing to buy a home, find out if you are able. Have a professional help you determine if you are eligible for a mortgage.

Posted by Cheryl Talbot ABR,GRI,e-PRO,SFR on April 11th, 2017 9:13 AMLeave a Comment

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Incomes Need to Rise at This Pace to Stay on Track With Rents

Incomes Need to Rise at This Pace to Stay on Track With Rents

Rent raised? You’ll need a raise.

According to a new analysis by Zillow, the average renter would need his or her income to grow by $168 to keep up with an expected 1 percent rise in rents over the next year. Many renters, however, would need more—in some cases, much more—to keep costs manageable.

Renters in Seattle, Los Angeles, Boston, Sacramento, and Orlando would be in need of the biggest pay bumps, according to the analysis. In Seattle, renters would need an additional $1,248, while in Orlando, renters would need an additional $672.

Renters in San Antonio, Detroit, Las Vegas, Austin and Columbus would be in need of the smallest—$84 in San Antonio and $264 in Columbus.

“For a long time now, renters have faced an affordability crisis when it comes to housing, and renters in some hot markets will still need significant raises just to keep up with rising rents,” says Dr. Svenja Gudell, chief economist at Zillow. “Incomes have a ways to go to bring rental affordability closer to historical levels, but recent gains are being met with slowing rent appreciation—a welcome sign for renters.”

Appreciation is grinding to a halt in many major metropolitan areas—conditions which, combined with growing incomes, make them ideal for renters. These include New York, Chicago, Houston and Miami, according to the analysis.


Posted by Cheryl Talbot ABR,GRI,e-PRO,SFR on April 10th, 2017 12:38 PMLeave a Comment

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Consumer Confidence in Economy & Housing is Soaring
Consumer Confidence in Economy & Housing is Soaring | Keeping Current Matters
The success of the housing market is strongly tied to the consumer’s confidence in the overall economy. For that reason, we believe 2017 will be a great year for real estate. Here is just a touch of the news coverage on the subject.

HousingWire:

“Consumers’ faith in the housing market is stronger than it’s ever been before, according to a newly released survey from Fannie Mae.”

Bloomberg:

“Americans’ confidence continued to mount last week as the Bloomberg Consumer Comfort Index reached the highest point in a decade on more-upbeat assessments about the economy and buying climate.”

Yahoo Finance:

“Confidence continues to rise among America’s consumers…the latest consumer sentiment numbers from the University of Michigan showed that in March confidence rose again.”

MarketWatch:

“U.S. consumers are the most confident in the U.S. economy in 15 years, buoyed by the strongest job market since before the Great Recession. The survey of consumer confidence rose…according to the Conference Board, the private company that publishes the index. That’s the highest level since July 2001.”

Posted by Cheryl Talbot ABR,GRI,e-PRO,SFR on April 7th, 2017 11:04 AMLeave a Comment

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What Are the Experts Saying about Mortgage Rates?
What Are the Experts Saying about Mortgage Rates? | Keeping Current Matters
Mortgage interest rates have risen over the last few months and projections are that they will continue their upswing throughout 2017. What impact will this have on the housing market? Here is what the experts are saying: Laurie Goodman, Co-director of the Urban Institute’s Housing Finance Policy Center:
“In 1984, 1994, 2000, and 2013, every time we have rate increases, we have increases in nominal home prices. We expect this to be more pronounced, as there is a big demand-and-supply gap at the present time.”
Scott Anderson, Chief Economist for Bank of the West:
“The tightening labor market, rising wage growth, high levels of consumer confidence and a millennial generation with a pent-up demand for housing should allow the housing market to weather the storm of gradually rising interest rates.”
Ivy Zelman in her latest “Z” Report:
“Although we strongly believe that the housing supply-demand imbalance for single-family homes will continue to drive above-average home price appreciation, just as falling mortgage rates aided pricing power on the margin in recent months, we expect the opposite effect to become evident in the coming months. As such, we project year-end home price inflation of 4.8% for 2017 and 4.1% for 2018.”
Bob Walters, President & COO of retail mortgage lender Quicken Loans:
“A modest increase in mortgage rates won’t have much of an effect on home purchases. A buyer may need to slightly re-evaluate which homes they can afford, but it’s not likely to make an impact on qualifying, in most cases.”
First American Chief Economist Mark Fleming:
"Our survey data shows that mortgage rates would have to be significantly higher to have any meaningful impact. The house buying power that borrowers have, even with rates below five percent, still remains historically strong."

Posted by Cheryl Talbot ABR,GRI,e-PRO,SFR on March 27th, 2017 9:59 PMLeave a Comment

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March 23rd, 2017 2:34 PM
4 Great Reasons to Buy This Spring!
4 Great Reasons to Buy This Spring! | Keeping Current Matters
Here are four great reasons to consider buying a home today instead of waiting.

1. Prices Will Continue to Rise

CoreLogic’s latest Home Price Index reports that home prices have appreciated by 6.9% over the last 12 months. The same report predicts that prices will continue to increase at a rate of 4.8% over the next year. The bottom in home prices has come and gone. Home values will continue to appreciate for years. Waiting no longer makes sense.

2. Mortgage Interest Rates Are Projected to Increase

Freddie Mac’s Primary Mortgage Market Survey shows that interest rates for a 30-year mortgage have remained around 4% over the last couple months. The Mortgage Bankers Association, Fannie Mae, Freddie Mac & the National Association of Realtors are in unison, projecting that rates will increase by at least a half a percentage point 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

There are some renters who 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 build 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? Look at 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, you want your family to be safer or you just want to have control over renovations, maybe now is the time to buy.

If the right thing for you and your family is to purchase a home this year, buying sooner rather than later could lead to substantial savings.


Posted by Cheryl Talbot ABR,GRI,e-PRO,SFR on March 23rd, 2017 2:34 PMLeave a Comment

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Magical sunrise over sleepy, foggy neighborhood

As rising rents sweep the country, the channel between the cost of owning and the cost of renting continues to slim. According to the latest Florida Atlantic University national index, today’s active rental prices make for a great time to purchase a home.

“We are not where we were in 2012, when nearly any purchase was a sound financial decision,” said Ken Johnson, Ph.D., real estate economist and index authors, in a recent press release. “However, overall, we are now in a situation where aggressive marketing from sellers combined with due diligence and sound negotiation from buyers is creating a housing market that’s more in line with what we’ve seen historically.”

The index, called the Beracha, Hardin & Johnson Buy vs. Rent (BH&J) Index, shows that 15 of the 23 cities studied are set in buy territory, while another five are only marginally in rent territory. This news only further fortifies the positive outcome of the latest S&P/Case-Shiller Home Price Index, which showed home prices rising at the highest annual increase since June 2014, roughly 5.8 percent year-over-year. Out of the 23 cities studied in the BH&J index, the only urban places to show discouraging market conditions are Dallas, Denver and Houston.

“The scores for Dallas, Denver and Houston have worried us for some time now,” said Eli Beracha, Ph.D., co-author of the index and assistant professor in the T&S Hollo School of Real Estate at FIU. “The last time we saw scores of this magnitude, housing market crashes soon followed.”

The overall verdict seems to be, if you can afford to buy in, the time to do so is now.

To reach their finding, the FAU index incorporated property appreciation from housing markets around the country. This data is joined by rental, maintenance and alternative investment data streams. Together, these factors can indicate when (and why) housing markets might change direction.

For more information, visit http://business.fau.edu/buyvsrent


Posted by Cheryl Talbot ABR,GRI,e-PRO,SFR on March 14th, 2017 11:44 AMLeave a Comment

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March 9th, 2017 8:27 AM

Gen X Homeowners Make Comeback after Coming Up in the Crash

Gen X Homeowners Make Comeback after Coming Up in the Crash

Homeowners in Generation X are making a comeback after coming up in the housing crash, according to the National Association of REALTORS® (NAR) recently released Home Buyer and Seller Generational Trends study for 2017. More Gen X homeowners—who were most dogged by the downturn—are set to sell this year, having regained enough equity lost in the recession.

“Gen X sellers’ median tenure in their previous home was 10 years, which puts many of them selling a property they bought right around the time home values were on the precipice of declining,” says Lawrence Yun, chief economist at NAR. “Fortunately, the much stronger job market and 41 percent cumulative rise in home prices since 2011 have helped a growing number build enough equity to finally sell and trade up to a larger home. More Gen X sellers are expected this year, and are definitely needed to ease the inventory shortages in much of the country.”

Gen X has taken a backseat to millennials in recent years, who have been the primary source of opportunity in housing, Yun says. More activity on the part of Gen X homebuyers and sellers this year opens up new prospects in the market.

According to the survey, the share of Gen X homebuyers grew to 28 percent—the largest percentage since 2014—but is behind the share of millennial homebuyers, 34 percent, and the share of baby boomer homebuyers, 30 percent. The trend toward multigenerational living is going strong, driven by baby boomers housing adult children who either have not moved out or moved back in after moving out.

“The job market is very healthy for young adults with a college education, but repaying student debt and dealing with ever-increasing rents on an entry-level salary are forcing many to either shack up with several roommates or move back home,” says Yun. “This growing trend of delayed household formation is one of the main contributors to the nation’s low homeownership rate.”

Student loan debt is also an issue for Gen Xers and younger boomers, though Gen Xers have the biggest burden, with a student debt load of $30,000—more than millennials’ $25,000 and boomers’ $10,000, according to the survey. Student debt plays a major role in the ability to save for a down payment on a home; in fact, 55 percent of millennial homebuyers, 29 percent of Gen X homebuyers and 9 percent of boomer homebuyers report student debt has stifled their savings.

“Repaying student debt also appears to be slowing some current homeowners who went to graduate school and now can no longer afford to sell and trade up because of their loans,” Yun says. “Nearly a third of homeowners in a NAR survey released last year said student debt is preventing them from selling a home to buy a new one.”

Gen Xers aside, there are shifts occurring in the millennial generation. One significant movement, according to survey, is the presence of children: 49 percent of millennial homebuyers have at least one child, prompting more home-buying activity in the suburbs.

“Millennial buyers, at 85 percent, were the most likely generation to view their home purchase as a good financial investment,” says Yun. “These strong feelings bode well for even greater demand in the future as more millennials settle down and begin raising families. A significant boost in new and existing inventory will go a long way to ensuring the opportunity is there for more of them to reach the market.”

What hasn’t changed, according to the survey, is the need for a real estate professional. Ninety percent of those surveyed worked with a real estate professional to buy or sell a home—92 percent of millennial homebuyers and 90 percent of millennial sellers, and 88 percent of Gen X homebuyers and 89 percent of Gen X sellers.


Posted by Cheryl Talbot ABR,GRI,e-PRO,SFR on March 9th, 2017 8:27 AMLeave a Comment

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Over Half of All Buyers Are Surprised by Closing Costs
Over Half of All Buyers Are Surprised by Closing Costs | Keeping Current Matters
According to a recent survey conducted by ClosingCorp, over half of all homebuyers are surprised by the closing costs required to obtain their mortgage. After surveying 1,000 first-time and repeat homebuyers, the results revealed that 17% of homebuyers were surprised that closing costs were required at all, while another 35% were stunned by how much higher the fees were than expected.
“Homebuyers reported being most surprised by mortgage insurance, followed by bank fees and points, taxes, title insurance and appraisal fees.”
Bankrate.com recently gathered closing cost data from lenders in every state and Washington, D.C. to be able to share the average costs in each state. The map below was created using the closing costs on a $200,000 mortgage with a 20% down payment. Over Half of All Buyers Are Surprised by Closing Costs | Keeping Current Matters Keep in mind that if you are in the market for a home above this price range. your costs could be significantly more. According to Freddie Mac,
“Closing costs are typically between 2 and 5% of your purchase price.”

Bottom Line

Speak with your lender and agent early and often to determine how much you’ll be responsible for at closing. Finding out that you’ll need to come up with thousands of dollars right before closing is not a surprise anyone is ever looking forward to.

Posted by Cheryl Talbot ABR,GRI,e-PRO,SFR on March 2nd, 2017 10:10 AMLeave a Comment

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How Long Do Most Families Stay in Their Home?
How Long Do Most Families Stay in Their Home? | Keeping Current Matters
The National Association of Realtors (NAR) keeps historical data on many aspects of homeownership. One of the data points that has changed dramatically is the median tenure of a family in a home. As the graph below shows, for over twenty years (1985-2008), the median tenure averaged exactly six years. However, since 2008, that average is almost nine years – an increase of almost 50%. How Long Do Most Families Stay in Their Home? | Keeping Current Matters

Why the dramatic increase?

The reasons for this change are plentiful! The fall in home prices during the housing crisis left many homeowners in a negative equity situation (where their home was worth less than the mortgage on the property). Also, the uncertainty of the economy made some homeowners much more fiscally conservative about making a move. With home prices rising dramatically over the last several years, 93.7% of homes with a mortgage are now in a positive equity situation with 79.1% of them having at least 20% equity, according to CoreLogic. With the economy coming back and wages starting to increase, many homeowners are in a much better financial situation than they were just a few short years ago. One other reason for the increase was brought to light during a recent presentation by Lawrence Yun, the Chief Economist of NAR, at the Realtor’s Summit in San Diego, CA. Yun pointed to the fact that historically, young homeowners who were either looking for more space to accommodate their growing family or looking for a better school district were more likely to move more often (every 5 years). The homeownership rate among young families, however, has still not caught up to previous generations resulting in the jump we have seen in median tenure!

What does this mean for housing?

Many believe that a large portion of homeowners are not in a house that is best for their current family circumstances. They could be baby boomers living in an empty, four-bedroom colonial, or a millennial couple planning to start a family that currently lives in a one-bedroom condo. These homeowners are ready to make a move. Since the lack of housing inventory is a major challenge in the current housing market, this could be great news.

Posted by Cheryl Talbot ABR,GRI,e-PRO,SFR on February 28th, 2017 3:35 PMLeave a Comment

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3 Questions to Ask If You Want to Buy Your Dream Home

3 Questions to Ask If You Want to Buy Your Dream Home | Keeping Current Matters If you are debating purchasing a home right now, you are probably getting a lot of advice. Though your friends and family will have your best interest at heart, they may not be fully aware of your needs and what is currently happening in the real estate market. Ask yourself the following 3 questions to help determine if now is a good time for you to buy in today’s market.

1. Why am I buying a home in the first place?

This is truly the most important question to answer. Forget the finances for a minute. Why did you even begin to consider purchasing a home? For most, the reason has nothing to do with money. For example, a survey by Braun showed that over 75% of parents say “their child’s education is an important part of the search for a new home.” This survey supports a study by the Joint Center for Housing Studies at Harvard University which revealed that the top four reasons Americans buy a home have nothing to do with money. They are:
  • A good place to raise children and for them to get a good education
  • A place where you and your family feel safe
  • More space for you and your family
  • Control of that space
What does owning a home mean to you? What non-financial benefits will you and your family gain from owning a home? The answer to that question should be the biggest reason you decide to purchase or not.

2. Where are home values headed?

According to the latest Existing Home Sales Report from the National Association of Realtors (NAR), the median price of homes sold in December (the latest data available) was $232,200, up 4.0% from last year. This increase also marks the 58th consecutive month with year-over-year gains. If we look at the numbers year over year, CoreLogic forecasted a rise by 4.7% from December 2016 to December 2017. On a home that costs $250,000 today, that same home will cost you an additional $11,750 if you wait until next year.

What does that mean to you?

Simply put, with prices increasing each month, it might cost you more if you wait until next year to buy. Your down payment will also need to be higher in order to account for the higher price of the home you wish to buy.

3. Where are mortgage interest rates headed?

A buyer must be concerned about more than just prices. The ‘long-term cost’ of a home can be dramatically impacted by even a small increase in mortgage rates. The Mortgage Bankers Association (MBA), the National Association of Realtors, and Fannie Mae have all projected that mortgage interest rates will increase over the next twelve months, as you can see in the chart below: 3 Questions to Ask If You Want to Buy Your Dream Home | Keeping Current Matters

Bottom Line

Only you and your family will know for certain if now is the right time to purchase a home. Answering these questions will help you make that decision.

Posted by Cheryl Talbot ABR,GRI,e-PRO,SFR on February 15th, 2017 9:51 PMLeave a Comment

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