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Do You Know the Real Cost of Renting vs. Buying?

 Some Highlights:  1) Historically, the choice between renting or buying a home has been a close decision.  2) Looking at the percentage of income needed to rent a median-priced home today (30%), vs. the percentage needed to buy a median-priced home (15%), the choice becomes obvious.  3) Every market is different. Before you renew your lease again, find out if you could use your housing costs to own a home of your own!

Some Highlights:

1) Historically, the choice between renting or buying a home has been a close decision.

2) Looking at the percentage of income needed to rent a median-priced home today (30%), vs. the percentage needed to buy a median-priced home (15%), the choice becomes obvious.

3) Every market is different. Before you renew your lease again, find out if you could use your housing costs to own a home of your own!

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5 Reasons to Love Using A RE Pro

  Highlights:   Hiring a real estate professional to guide you through the process of buying a home or selling your house can be one of the best decisions you make!  They are there for you to help with paperwork, explaining the process, negotiations, and helping you with pricing (both when making an offer or setting the right price for your home).  One of the top reasons to hire a real estate professional is their understanding of your local market and how the conditions in your neighborhood will impact your experience.  If you would like to get connected with a great real estate agent, please fill out the form below. We work with many great agents all over California and would be happy to introduce you to one.

Highlights:

Hiring a real estate professional to guide you through the process of buying a home or selling your house can be one of the best decisions you make!

They are there for you to help with paperwork, explaining the process, negotiations, and helping you with pricing (both when making an offer or setting the right price for your home).

One of the top reasons to hire a real estate professional is their understanding of your local market and how the conditions in your neighborhood will impact your experience.

If you would like to get connected with a great real estate agent, please fill out the form below. We work with many great agents all over California and would be happy to introduce you to one.

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Buyer Demand Is Outpacing the Supply of Homes for Sale

 The price of any item is determined by the supply of that item, as well as the market demand.  The National Association of REALTORS (NAR)  surveys  “over 50,000 real estate practitioners about their expectations for home sales, prices and market conditions”  for their monthly   REALTORS Confidence Index  .  Their latest edition sheds some light on the relationship between Seller Traffic (supply) and Buyer Traffic (demand).   Buyer Demand   The map below was created after asking the question:  “How would you rate buyer traffic in your area?”

The price of any item is determined by the supply of that item, as well as the market demand. The National Association of REALTORS (NAR) surveys “over 50,000 real estate practitioners about their expectations for home sales, prices and market conditions” for their monthly REALTORS Confidence Index.

Their latest edition sheds some light on the relationship between Seller Traffic (supply) and Buyer Traffic (demand).

Buyer Demand

The map below was created after asking the question: “How would you rate buyer traffic in your area?”

 The darker the blue, the stronger the demand for homes in that area. Only six states had a weak demand level.   Seller Supply   The Index also asked:  “How would you rate seller traffic in your area?”   As you can see from the map below, the majority of the country has weak Seller Traffic, meaning there are far fewer homes on the market than what is needed to satisfy the buyers who are out looking for their dream homes

The darker the blue, the stronger the demand for homes in that area. Only six states had a weak demand level.

Seller Supply

The Index also asked: “How would you rate seller traffic in your area?”

As you can see from the map below, the majority of the country has weak Seller Traffic, meaning there are far fewer homes on the market than what is needed to satisfy the buyers who are out looking for their dream homes

Bottom Line

Looking at the maps above, it is not hard to see why prices are appreciating in many areas of the country. Until the supply of homes for sale starts to meet the buyer demand, prices will continue to increase. If you are debating listing your home for sale, let’s get together to help you capitalize on the demand in the market now!

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Buyers Are Searching For Your House

 The most recent   Pending Homes Sales Index   from the  National Association of Realtors  revealed a slight bump in contracts with an increase of 1.6% in December. This news comes as existing home sales are also forecasted to be on pace for 5.54 million in 2017, a 1.7% increase over 2016, which was the best year for sales in a decade.  The  Pending Home Sales Index  is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed.  According to  NAR’s Chief Economist , Lawrence Yun,   “ Pending sales bounded last month as enough buyers fended off rising mortgage rates and alarmingly low inventory levels to sign a contract. ”    So, what’s the problem?   Buyers are searching for existing homes, but supply is not keeping up with their demand!  Yun went on to explain,   “ The main storyline in the early months of 2017 will be if supply can meaningfully increase to keep price growth at a moderate enough level for households to absorb higher borrowing cost.  Sales will struggle to build on last year’s strong pace if inventory conditions don’t improve. ” (emphasis added)     Bottom Line   Buyers are out in force right now! If you are considering selling your home this year, the early months of 2017 will be your best option. Let’s get together to discuss how you can capitalize on current market conditions.

The most recent Pending Homes Sales Index from the National Association of Realtors revealed a slight bump in contracts with an increase of 1.6% in December. This news comes as existing home sales are also forecasted to be on pace for 5.54 million in 2017, a 1.7% increase over 2016, which was the best year for sales in a decade.

The Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed.

According to NAR’s Chief Economist, Lawrence Yun,

Pending sales bounded last month as enough buyers fended off rising mortgage rates and alarmingly low inventory levels to sign a contract.

So, what’s the problem?

Buyers are searching for existing homes, but supply is not keeping up with their demand!

Yun went on to explain,

The main storyline in the early months of 2017 will be if supply can meaningfully increase to keep price growth at a moderate enough level for households to absorb higher borrowing cost. Sales will struggle to build on last year’s strong pace if inventory conditions don’t improve.” (emphasis added)

Bottom Line

Buyers are out in force right now! If you are considering selling your home this year, the early months of 2017 will be your best option. Let’s get together to discuss how you can capitalize on current market conditions.

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January 9th Weekly Update

January 9, 2017 Market Update:  

QUOTE OF THE WEEK... "Write it on your heart that every day is the best day in the year." --Ralph Waldo Emerson, American essayist, lecturer and poet

INFO THAT HITS US WHERE WE LIVE
... This year we should have 357 best days ahead of us, if most of the housing market forecasts come true. One online real estate firm expects a fast sales pace, thanks to millennials surging into the market, helping to push existing home sales up by 2.8% in 2017. The National Association of Realtors (NAR) currently estimates existing home sales will rise by 2.0%, their lower estimate based on increasing home prices. Yet a financial services company, whose house price index looks at inflation, wage growth and other factors, says prices are still more affordable now than during the housing boom.

Speaking of home prices, a real estate tech and data firm reported prices in November up 7.1% versus a year ago. The property economist for a research consultancy put this to continued low inventories and the rise in housing demand after the election. Of course, the situation varies by market. That data firm forecasts the year will show a 5% increase in prices overall. But some areas may hit double-digit gains, while others decline. Last week, Case-Shiller reported home prices were finally above their all-time highs. Now a listing site notes that the value of housing stock nationally hit an all-time high in 2016, though some markets are still below their peak prices.

BUSINESS TIP OF THE WEEK... The beginning of the year is a great time to re-commit yourself to your business. It takes a 100% commitment to give you the drive you need to keep meeting the challenges and enjoying the ride.

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Inadequate Inventory Driving Prices Up

The latest Existing Home Sales Report from the National Association of Realtors (NAR) revealed a direct correlation between a lack of inventory and rising prices.

We are all familiar with the concept of supply and demand. As the demand for an item increases the supply of that same item goes down, driving prices up.

Year-over-year inventory levels have dropped each of the last 18 months, as inventory now stands at a 4.0-month supply, well below the 6.0-month supply needed for a ‘normal’ market.

The median price of homes sold in November (the latest data available) was $234,900, up 6.8% from last year and marking the 57th consecutive month with year-over-year gains.

NAR’s Chief Economist, Lawrence Yun had this to say:

"Existing housing supply at the beginning of the year was inadequate and is now even worse heading into 2017. Rental units are also seeing this shortage. As a result, both home prices and rents continue to far outstrip incomes in much of the country."

But there is good news about rising prices. More and more homeowners are recovering from a negative equity situation and learning that they are able to sell their homes and either move up to their dream home or downsize to a property that will better suit their needs. Look for these homes to come to market soon.

Bottom Line

Buyer demand continues to outpace the supply of homes for sale. Listing your home in the winter attracts serious buyers who are looking to close the transaction quickly.

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January 3, 2017 Market Update

QUOTE OF THE WEEK... "And now we welcome the new year. Full of things that have never been." --Rainer Maria Rilke, German poet

INFO THAT HITS US WHERE WE LIVE
... In the housing market we hope this year will be chock full of new transactions. But some question whether this will happen. The National Association of Realtors (NAR) Pending Home Sales index dipped in November, 2.5% below its October reading. This measure of contracts signed on existing homes points to actual sales a few months out. The NAR said higher borrowing costs "somewhat cloud" the housing market outlook for 2017. Yet their chief economist noted that the effect of higher rates will be "partly neutralized" by stronger growth in wages and this year's expected two million net new job additions.

Meanwhile, the Case-Shiller National Home Price Index (HPI) came in with an annual gain of 5.6% in October. This finally put prices past the all-time highs set more than ten years ago--long recovery, hey? However, since the National HPI bottomed out in February 2012, it climbed to a peak yearly rate just shy of 11% before falling to its present 5% range of annual gains. Case-Shiller's managing director noted "the current high consumer confidence numbers and low unemployment rate...do not suggest an immediate reversal in home price trends." But some observers point out that more buyers and sellers might get off the fence given the new market conditions.

BUSINESS TIP OF THE WEEK... Take every opportunity to build trust with clients and prospects. Make phone calls and deliver information when you say you will and show up for meetings on time. Trust is the basis of business success.

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Will Increasing Mortgage Rates Impact Home Prices?

There are some who are calling for a decrease in home prices should mortgage interest rates begin to rise rapidly. Intuitively, this makes sense as the cost of a home is determined by the price of the home, plus the cost of financing that home. If mortgage interest rates increase, fewer people will be able to buy, and logic says prices will fall if demand decreases.

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However, history shows us that this has not been the case the last four times mortgage interest rates dramatically increased.

Here is a graph showing what actually happened:

Last week, in an article titled “Higher Rates Don’t Mean Lower House Prices After All, the Wall Street Journal revealed that a recent study by John Burns Real Estate Consulting Inc. found that:

“[P]rices weren’t especially sensitive to rising rates, particularly in the presence of other positive economic factors, such as strong job growth, rising wages and improving consumer confidence.”

Last week’s jobs report was strong and the Conference Board just reported that the Consumer Confidence Index was back to pre-recession levels.

Bottom Line

We will have to wait and see what happens as we move forward, but a decrease in home prices should rates go up is anything but guaranteed.

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FHFA Announces new, higher loan limts

Today the FHFA announced the new conforming loan limits for loans purchased by Fannie Mae and Freddie Mac on or after January 1, 2017.  The base limit will increase to $424,100 and the high balance ceiling will increase to $636,150.  The base limit in Hawaii will be $636,150.

A list of the 2017 conforming loan limits for all counties can be found here.  A map showing the maximum loan limits across the country can be found here.

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Homes across the country are selling fast!

1) The National Association of REALTORS® surveyed their members for the release of their Confidence Index.

2) The REALTORS® Confidence Index is a key indicator of housing market strength based on a monthly survey sent to over 50,000 real estate practitioners. Practitioners are asked about their expectations for home sales, prices and market conditions.

3) Homes sold in 60 days or less in 42 out of 50 states, and Washington D.C.

4) Homes sold in 30 days or less in 17 states.

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Winter Is Coming… 5 Reasons to Sell Now!

People across the country are beginning to think about what their life will look like next year. It happens every fall; we ponder whether we should relocate to a different part of the country to find better year-round weather, or perhaps move across the state for better job opportunities. Homeowners in this situation must consider whether they should sell their house now or wait.

If you are one of these potential sellers, here are five important reasons to sell now instead of in the dead of winter.

1. Demand Is Strong

The latest Realtors’ Confidence Index from the National Association of Realtors (NAR) shows that buyer demand remains very strong throughout the vast majority of the country. These buyers are ready, willing and able to purchase… and are in the market right now!

Take advantage of the buyer activity currently in the market.

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2. There Is Less Competition Now

According to NAR’s latest Existing Home Sales Report, the supply of homes for sale is still under the 6-month supply that is needed for a normal housing market (which is 4.5-months).

This means, in most areas, there are not enough homes for sale to satisfy the number of buyers in that market. This is good news for home prices. However, additional inventory is about to come to market.

There is a pent-up desire for many homeowners to move, as they were unable to sell over the last few years because of a negative equity situation. Homeowners are now seeing a return to positive equity as real estate values have increased over the last two years. Many of these homes will be coming to the market soon.

Also, as builders regain confidence in the market, new construction of single-family homes is projected to continue to increase, reaching historic levels in 2017. Last month’s new home sales numbers show that many buyers who have not been able to find their dream homes within the existing inventory have turned to new construction to fulfill their needs.

The choices buyers have will continue to increase. Don’t wait until all this other inventory of homes comes to market before you sell.

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3. The Process Will Be Quicker

Fannie Mae announced that they anticipate an acceleration in home sales that will surpass 2007's pace. As the market heats up, banks will be inundated with loan inquiries causing closing timelines to lengthen. Selling now will make the process quicker & simpler. 

4. There Will Never Be a Better Time to Move Up

If you are moving up to a larger, more expensive home, consider doing it now. Prices are projected to appreciate by 5.2% over the next year, according to CoreLogic. If you are moving to a higher-priced home, it will wind up costing you more in raw dollars (both in down payment and mortgage payment) if you wait.

According to Freddie Mac’s latest report, you can also lock-in your 30-year housing expense with an interest rate around 3.57% right now. Interest rates are projected to increase moderately over the next 12 months. Even a small increase in rate will have a big impact on your housing cost.

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

Look at the reason you decided to sell in the first place and determine whether it is worth waiting. Is money more important than being with family? Is money more important than your health? Is money more important than having the freedom to go on with your life the way you think you should?

Only you know the answers to the questions above. You have the power to take control of the situation by putting your home on the market. Perhaps the time has come for you and your family to move on and start living the life you desire.  

That is what is truly important.

Get Pre-Qualified

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Strong Buyer Demand Continues to Outpace Inventory of Homes for Sale

The price of any item is determined by the supply of that item, as well as the market demand. The National Association of REALTORS (NAR) surveys “over 50,000 real estate practitioners about their expectations for home sales, prices and market conditions” for their monthly REALTORS Confidence Index.

Their latest edition sheds some light on the relationship between Seller Traffic (supply) and Buyer Traffic (demand).

Buyer Demand

The map below was created after asking the question: “How would your rate buyer traffic in your area?”

The darker the blue, the stronger the demand for homes in that area. Only four states came in with a weak or moderate demand level.

Seller Supply

The Index also asked: “How would your rate seller traffic in your area?”

As you can see from the map below, the majority of the country has weak Seller Traffic, meaning there are far fewer homes on the market than what is needed to satisfy the buyers who are out looking for their dream homes.

Bottom Line

Looking at the maps above, it is not hard to see why prices are appreciating in many areas of the country. Until the supply of homes for sale starts to meet the buyer demand, prices will continue to increase. If you are debating listing your home for sale, let’s get together and discuss the demand in our area.

 

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Foreclosure Rate Drops to Pre-Crisis Levels

Some Highlights:

  • Only 2.9% of homes are in serious delinquency, down 17.1% from July 2015.
  • This is the 57th consecutive month with a year-over-year decline.
  • The national foreclosure rate has returned to August 2007 levels, at only 0.9%.

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5 Stats That Prove the Real Estate Market Is Getting Stronger

Whenever there is talk about an improving housing market, some begin to show concern that we may be headed toward another housing bubble that will be followed by a crash similar to the one we saw last decade.

Here are five data points that show the housing market will continue to recover, and that a new housing crisis is not about to take shape.

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1) Mortgage availability is increasing, but is nowhere near the levels we saw in 2004-2006.

A buyer’s chances of being approved for a mortgage have increased over the last three years; That’s good news for the market. This is not a precursor to another challenge, as many experts maintain that it is still too difficult for many buyers to attain house financing.

As Jonathan Smoke, the Chief Economist of realtor.com, recently explained:

“The havoc during the last cycle was the result…of speculation fueled by loose credit. That’s the exact opposite of what we have today.”

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2) The Housing Affordability Index, which measures whether or not a typical family earns enough income to qualify for a mortgage loan on a typical home, based on the most recent price and income data. The current index shows that it is more affordable to buy a home today than at any other time between 1990 and 2008. With median incomes finally beginning to rise, houses should continue to remain affordable and housing demand should remain strong.

3) Home prices are well within historic norms. Prices have increased substantially over the last several years; However, those increases followed the housing crash of 2008 and national prices are still not back to 2006 levels. If there were no bubble (and subsequent bust), today’s prices would actually be lower than if they were measured by historic appreciation levels from 1987-1999.

4) Demand for housing, as measured by new household formations, is growing.The Urban Land Institute projects that 5.95 million new households will be formed over the next three years. Even if the homeownership rate drops to 60%, that would be over 3.5 million new homeowners entering the market.

5) New home starts are finally beginning to increase. This helps eliminate the number one challenge in the industry – lack of inventory. And it does so in two ways:

  1. Some first time buyers will, in fact, purchase a newly constructed home.

  2. Many current homeowners will move-up (or move-down) to a new construction and then put their current home on the market.

This means that there will be an increase in both new construction and existing home inventories.

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2 Myths About Mortgages That May Be Holding Back Buyers

Fannie Mae’s “What do consumers know about the Mortgage Qualification Criteria?” Studyrevealed 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.

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.

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.

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Whether You Rent or Buy, You’re Paying a Mortgage

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.

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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.”

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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.

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Real Life vs. Reality TV: 5 Myths Explained

Have you ever been flipping through the channels, only to find yourself glued to the couch in an HGTV ‘show hole’*? We’ve all been there… watching entire seasons of “Love it or List it,” “Fixer Upper,” “House Hunters,” “Flip or Flop,” “Property Brothers,” and so many more, just in one sitting.

When you’re in the middle of your real estate themed show marathon, you might start to think that everything you see on TV must be how it works in real life, but you may need a reality check.

Reality TV Show Myths vs. Real Life:

Myth #1: Buyers look at 3 homes and make a decision to purchase one of them.

Truth: There may be buyers who fall in love and buy the first home they see, but more often than not the process of buying a home means touring more than three homes.

Myth #2: The houses the buyers are touring are still for sale.

Truth: The reality is being staged for TV. Many of the homes being shown are already sold and are off the market.

Myth #3: The buyers haven’t made a purchase decision yet.

Truth: Since there is no way to show the entire buying process in a 30-minute show, TV producers often choose buyers who are further along in the process and have already chosen a home to buy.

Myth #4: If you list your home for sale, it will ALWAYS sell at the Open House.

Truth: Of course this would be great! Open Houses are important to guarantee the most exposure to buyers in your area, but are only a PIECE of the overall marketing of your home. Just realize that many homes are sold during regular showing appointments as well. 

Myth #5: Homeowners make a decision about selling their home after a 5-minute conversation.

Truth: Similar to the buyers portrayed on the shows, many of the sellers have already spent hours deliberating the decision to list their home and move on with their life/goals.

Bottom Line

Having an experienced professional on your side while navigating the real estate market is the best way to guarantee that you can make the home of your dreams a reality!

*Show Hole - A side effect of binge-watching. Symptoms include a sense of emptiness and depression brought on by realizing you just wasted a good portion of your life watching several seasons of a TV show or an entire movie franchise all at once when you could have managed your time better.

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