Buying

Is the Real Estate Market Finally Getting Back to Normal?

The housing market has been anything but normal for the last eleven years. In a normal real estate market, home prices appreciate 3.7% annually. Below, however, are the price swings since 2007 according to the latest Home Price Expectation Survey: After the bubble burst in June 2007, values depreciated 6.1% annually until February 2012. From March 2012 to today, the market has been recovering with values appreciating 6.2% annually. These wild swings in values were caused by abnormal ratios between the available supply of inventory and buyer demand in the market. In a normal market, there would be a 6-month supply of housing inventory. When the market hit its peak in 2007, homeowners and builders were trying to take advantage of a market that was fueled by an “irrational exuberance.” Inventory levels grew to 7+ months. With that many homes available for sale, there weren’t enough buyers to satisfy the number of homeowners/builders trying to sell, so prices began to fall. Then, foreclosures came to market. We eventually hit 11 months inventory which caused prices to crash until early 2012. By that time, inventory levels had fallen to 6.2 months and the market began its recovery. Over the last five years, inventory levels have remained well below the 6-month supply needed for prices to continue to level off. As a result, home prices have increased over that time at percentages well above the appreciation levels seen in a more normal market.  That was the past. What about the future? We…

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Is Buying a Home Really More Stressful Than Planning a Wedding? [INFOGRAPHIC]

Some Highlights: According to a new survey from Open Listings, 62% of Americans ages 25-54 believe that buying a home is more stressful than planning a wedding. Many young couples are saving for a wedding and a home at the same time. The average US wedding now costs 66% of a median home down payment, according to The Knot.

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Are Homebuyers Starting to Hit the ‘Pause’ Button?

For the last several years, buyer demand has far exceeded the housing supply available for sale. This low supply and high demand have led to home prices appreciating by an average of 6.2% annually since 2012. With this being said, three of the four major reports used to measure buyer activity have revealed that purchasing demand may be softening. Here are the four indices, how they measure demand (methodology), what their latest reports said, and a quick synopsis of the report. The Foot Traffic Report by the National Association of Realtors Methodology: Every month SentriLock, LLC provides NAR Research with data on the number of properties shown by a REALTOR®. Lockboxes made by SentriLock, LLC are used in roughly a third of home showings across the nation. Foot traffic has a strong correlation with future contracts and home sales, so it can be viewed as a peek ahead at sales trends two to three months into the future. Latest Report: “Foot Traffic climbed 3.2 points to 55.8 mid-summer in July. Additionally, the diffusion index is higher than last year by 13.5 points. Despite a healthy economy and labor market, supply and new construction remains unable to keep up with buyer demand.” Synopsis: Buyer demand remains strong. The Showing Index by ShowingTime Methodology: The ShowingTime Showing Index® tracks the average number of buyer showings on active residential properties on a monthly basis, a highly reliable leading indicator of current and future demand trends. Latest Report: “Showing activity throughout the country increased…

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4 Reasons Why Fall Is A Great Time to Buy A Home!

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 Insights report reveals that home prices have appreciated by 6.2% over the last 12 months. The same report predicts that prices will continue to increase at a rate of 5.1% 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 mortgage have already increased by half of a percentage point, to around 4.5% in 2018. 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 that rates will increase by half a percentage point to around 5.1% 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 There are some renters who have not yet purchased homes 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 which you can then tap into later…

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Home Prices Up 6.49% Across the Country! [INFOGRAPHIC]

Some Highlights: The Federal Housing Finance Agency (FHFA) recently released their latest quarterly Home Price Index report. In the report, home prices are compared both regionally and by state. Based on the latest numbers, if you plan on relocating to another state, waiting to move may end up costing you more!

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What Does the Future Hold for Home Prices?

Home prices are at the top of everyone’s minds. Can they maintain their current pace of appreciation? Will rising mortgage rates negatively impact home values? Will the next economic slowdown cause prices to crash? Let’s try to answer these questions based on what has happened in the past as well as what we know about the current real estate market. The Impact of Rising Interest Rates We explained earlier this year that rising mortgage rates have not negatively impacted home prices in the past and probably wouldn’t this time either. Freddie Mac’s comments were very direct: “In the current housing market, the driving force behind the increase in prices is a low supply of both new and existing homes combined with historically low rates. As mortgage rates increase, the demand for home purchases will likely remain strong relative to the constrained supply and continue to put upward pressure on home prices.” They were correct. So far this year, home values have continued to appreciate above normal historic percentages and it appears the gradual increase in rates has had little impact on prices. The Impact of an Economic Slowdown Many people fear that when the economy turns, we may see the same depreciation in home values as we did a decade ago. However, we recently reported that the same group of economists, real estate experts, and investment & market strategists who predicted the next recession will occur in the next 18-24 months have also projected that house prices will continue to…

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Homeownership is a Dominant Gene

There are many things that factor into the decision to buy a home. New research from the Urban Institute suggests that one of those things may be inherited from your parents. Children are More Likely to Own a Home if Their Parents Did According to an analysis of millennial homeowners, the homeownership rate of those whose parents rent their homes is 14.4%, while the rate amongst millennials whose parents are homeowners is 31.7%! “A young adult’s odds of homeownership are highly correlated with their parent’s homeownership. Without controlling for such factors as age, income, education, marital status, and race or ethnicity, there is a 17 percentage-point gap between the homeownership rate for young adults whose parents are renters and young adults whose parents are homeowners.” The study also revealed that as a parent’s net worth increases, so does the likelihood that their child will own a home. These two findings are not surprising as we know from the Survey of Consumer Finances that a homeowner’s net worth is 44x greater than that of a renter. So, a parent who is a homeowner will have more wealth which will, in turn, increase the chances that their children will own their own homes in the future. Below is a breakdown of the relationship between a parent’s wealth and a millennial’s likelihood to own a home. The Good News: The high homeownership rate amongst baby boomers (likely the parents of many millennials) is a great sign that millennials will want to own homes.…

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5 Reasons You Should Sell This Fall!

Here are five reasons why listing your home for sale this fall makes sense. 1. Demand Is Strong The latest Buyer Traffic Report 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! In fact, more often than not, multiple buyers end up competing with each other to buy the same homes. Take advantage of the buyer activity currently in the market. 2. There Is Less Competition Now  Housing inventory is still under the 6-month supply needed for a normal housing market. This means that, in the majority of the country, there are not enough homes for sale to satisfy the number of buyers in the market. This is good news for homeowners who have gained equity as their home values have increased. However, additional inventory could be coming to the market soon! Historically, a homeowner stayed in his or her home for an average of six years, but that number has hovered between nine and ten years since 2011. Many homeowners have a pent-up desire to move as they were unable to sell over the last few years because of a negative equity situation. As home values continue to appreciate, more and more homeowners will be given the freedom to move. The choices buyers have will continue to increase. Don’t wait until this other inventory comes to market before you decide to sell. 3. The Process Will Be Quicker Today’s competitive environment has forced…

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A+ Reasons to Hire a Real Estate Pro [INFOGRAPHIC]

Some Highlights: Hiring a real estate professional to help you buy your dream home or sell your current house is one of the most ‘educated’ decisions you can make! A real estate professional has the experience needed to help you through the entire process. Make sure that you hire someone who knows current market conditions and can simply and effectively explain them to you and your family!

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Why are Existing Home Sales Down?

The latest Existing Home Sales Report issued by the National Association of Realtors (NAR) revealed that home sales have decreased for four consecutive months and are at their slowest pace in over two years. This has some industry leaders puzzled considering the fact that the economy is strengthening, unemployment is down, and wages are beginning to rise. This begs the question: “Where are the buyers?” Actually, agents in the field of most communities are still seeing strong desire from prospective purchasers. They have a list of potential buyers ready to go if the right houses come on the market and they claim it is not a shortage of demand, but is instead a shortage of inventory that is causing the market to soften. Why is there a shortage of inventory? You only need to look at the graph below to understand: New construction sales over the last ten years are far below historic numbers from 1995-2002. A recent industry report looked at building permits and concluded: “If construction over the past decade matched historic norms, accounting for population change, the country would have had 2.3 million more single-family home permits.” That decade of not building enough homes is the primary reason for the concerns about today’s market. Wait, weren’t we talking about ‘existing’ home sales? Some may argue that NAR’s sales report deals with existing home sales and not new construction, and they would be correct. However, reports have shown that one of the main reasons why existing homeowners are…

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