Is a Major Home Renovation Worth It in the Long Run?

Last week, we shared “7 Factors To Consider When Choosing A Home To Retire In.” For some homeowners, these seven factors can be taken into account with a home renovation, but is it worth it to remodel or change floor plans? Let’s look at this example. Let’s say you have a 4-bedroom colonial style home in a great school district. The neighborhood is amazing, and you are very comfortable there, but your kids are all grown up and the original benefits of the home no longer apply. You’ve always wanted a huge master suite and are considering merging 3 of the smaller bedrooms on the second floor to achieve this dream. In the short term, you are over the moon excited about your newly renovated oasis. In the long term, when you go to sell your home down the road, you’ve now taken a 4-bedroom home in a great school district and turned it into a 2-bedroom home. Your pool of potential buyers has shrunk significantly and so has the value of your home (unless you are able to find someone who has the exact needs you have today!). Why not consider listing your 4-bedroom home now and moving into a gorgeous 2-bedroom with a master suite? Your house can become a home for the next family looking for that perfect neighborhood with a great school district to raise their kids in! You may even be able to achieve your dream in the same area you love, without having to…

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Are You Aware of How Much Equity You Have in Your Home? You May Be Surprised!

CoreLogic’s latest Equity Report revealed that 675,000 US homeowners regained positive equity in their homes in 2017. This is great news for the country, as 95.1% of all mortgaged properties are now in a positive equity situation. “U.S homeowners with mortgages (roughly 63% of all the properties) have seen their equity increase by a total of $908.4 billion since the fourth quarter 2016, an increase of 12.2%, year over year.” Price Appreciation = Good News for Homeowners Frank Nothaft, CoreLogic’s Chief Economist, explains: “Home-price growth has been the primary driver of home-equity wealth creation. The CoreLogic Home Price Index grew 6.2 percent during 2017. The largest calendar-year increase since 2013. Likewise, the average growth in home equity was more than $15,000 during 2017, the most in four years.” He also believes this is a great sign for the market in 2018, saying: “Because wealth gains spur additional consumer purchases, the rise in home-equity wealth during 2017 should add more than $50 billion to U.S. consumption spending over the next two to three years.”   This is great news for homeowners! But, do they realize that their equity position has changed? A study by Fannie Mae suggests that many homeowners are not aware that they have regained equity in their homes as their investment has increased in value. For example, their study showed that 23% of Americans still believe their home is in a negative equity position when, in actuality, CoreLogic’s report shows that only 4.9% of homes are in that position (down from 6.3% in Q4 2016). The study also revealed…

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Moving up Is MORE Affordable Now Than Almost Any Other Time in 40 Years

If you are considering selling your current home, to either move up to a larger home or into a home in an area that better suits your current family needs, great news was just revealed. Last week, Trulia posted a blog, Not Your Father’s Housing Market, which examined home affordability over the last 40+ years (1975-2016). Their research revealed that: “Nationally, homes are just about the most affordable they’ve been in the last 40 years… the median household could afford a home 1.5 times more expensive than the median home price. In 1980, the median household could only afford about 3/4 of the median home price. Despite relatively stagnant incomes, affordability has grown due to the sharp drop in mortgage rates over the last 30 years – from a high of over 16% in the 1980s to under 4% by 2016. Of the nation’s 100 largest metros, only Miami became unaffordable between 1990 and 2016. Meanwhile, 22 metros have flipped from being unaffordable to becoming affordable in that same time frame.” Here is a graph showing the Affordability Index compared to the 40-year average: The graph shows that housing affordability is better now than at any other time in the last forty years, except during the housing crash last decade. (Remember that during the crash you could purchase distressed properties – foreclosures and short sales – at 20-50% discounts.) There is no doubt that with home prices and mortgage rates on the rise, the affordability index will continue to fall.…

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7 Factors to Consider When Choosing A Home to Retire In

As more and more baby boomers enter retirement age, the question of whether or not to sell their homes and move will become a hot topic. In today’s housing market climate, with low available inventory in the starter and trade-up home categories, it makes sense to evaluate your home’s ability to adapt to your needs in retirement. According to the National Association of Exclusive Buyers Agents (NAEBA), there are 7 factors that you should consider when choosing your retirement home. 1. Affordability “It may be easy enough to purchase your home today but think long-term about your monthly costs. Account for property taxes, insurance, HOA fees, utilities – all the things that will be due whether or not you have a mortgage on the property.” Would moving to a complex with homeowner association fees actually be cheaper than having to hire all the contractors you would need to maintain your home, lawn, etc.? Would your taxes go down significantly if you relocated? What is your monthly income going to be like in retirement? 2. Equity “If you have equity in your current home, you may be able to apply it to the purchase of your next home. Maintaining a healthy amount of home equity gives you a source of emergency funds to tap, via a home equity loan or reverse mortgage.” The equity you have in your current home may be enough to purchase your retirement home with little to no mortgage. Homeowners in the US gained an average of over…

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The Difference an Hour Will Make This Spring [INFOGRAPHIC]

Some Highlights: Don’t forget to set your clocks forward this Sunday, March 11th at 2:00 AM EST in observance of Daylight Saving Time. Unless of course, you are a resident of Arizona or Hawaii! Every hour in the United States: 614 homes are sold, 81 homes regain equity (meaning they are no longer underwater on their mortgage), and the median home price rises $1.51!

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A New Housing Bubble Forming…Not Before 2024!

A recent report by CoreLogic revealed that U.S. home values appreciated by more than 37% over the last five years. Some are concerned that this is evidence we may be on the verge of another housing “boom & bust” like the one we experienced from 2006-2008. Recently, several housing experts weighed in on the subject to alleviate these fears. Sean Becketti, Freddie Mac Chief Economist  “The evidence indicates there currently is no house price bubble in the U.S., despite the rapid increase of house prices over the last five years.” Edward Golding, a Senior Fellow at the Urban Institute’s Housing Finance Policy Center  “There is not likely to be a national bubble in the way that we saw the first decade of the century.” Christopher Thornberg, Partner at Beacon Economics  “There is no direct or indirect sign of any kind of bubble.” Bill McBride, Calculated Risk  “I wouldn’t call house prices a bubble.” David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices  “Housing is not repeating the bubble period of 2000-2006.” A recent article by Teo Nicolais, a real estate entrepreneur who teaches courses on real estate principles, markets, and finance at Harvard Extension School concluded that the next housing bubble may not occur until 2024. The article, How to Use Real Estate Trends to Predict the Next Housing Bubble, looks at previous peaks in real estate values going all the way back to 1818. Nicolais uses the research of several economists. The article details the…

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Home Prices: The Difference 5 Years Makes

The economists at CoreLogic recently released a special report entitled, Evaluating the Housing Market Since the Great Recession. The goal of the report was to look at economic recovery since the Great Recession of December 2007 through June 2009. One of the key indicators used in the report to determine the health of the housing market was home price appreciation. CoreLogic focused on appreciation from December 2012 to December 2017 to show how prices over the last five years have fared. Frank Nothaft, Chief Economist at CoreLogic, commented on the importance of breaking out the data by state, “Homeowners in the United States experienced a run-up in prices from the early 2000s to 2006, and then saw the trend reverse with steady declines through 2011. After finally reaching bottom in 2011, home prices began a slow rise back to where we are now. Greater demand and lower supply – as well as booming job markets – have given some of the hardest-hit housing markets a boost in home prices. Yet, many are still not back to pre-crash levels.” The map below was created to show the 5-year appreciation from December 2012 – December 2017 by state. Nationally, the cumulative appreciation over the five-year period was 37.4%, with a high of 66% in Nevada, and a modest increase of 5% in Connecticut. Where were prices expected to go? Every quarter, Pulsenomics surveys a nationwide panel of over 100 economists, real estate experts, and investment and market strategists and asks them to…

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Competition is Coming, Are You Thinking of Selling Your Home?

The number of building permits issued for single-family homes is the best indicator of how many newly built homes will rise over the next few months. According to the latest U.S. Census Bureau and U.S. Department of Housing & Urban Development Residential Sales Report, the number of these permits were up 7.4% over last year. How will this impact buyers? More inventory means more options. Lawrence Yun, NAR’s Chief Economist, explained this is good news for the housing market – especially for those looking to buy: “This rise in single-family housing construction will help tame home price growth, and the increase in multifamily units should continue to help slow rent growth.” How will this impact sellers? More inventory means more competition. Today, because of the tremendous lack of inventory, a seller can expect: A great price on their home as buyers outbid each other for it A quick sale as buyers have so little to choose from Fewer hassles as buyers don’t want to “rock the boat” on the deal With an increase in competition, the seller may not enjoy these same benefits. As Chief Economist Nela Richardson, added: “Because existing home inventory has been so low for so long, new construction is taking a larger share of the market…Builders meet the buyers and see the demand firsthand.” Bottom Line If you are considering selling your house, you’ll want to beat this new competition to market to ensure you get the most attention for your listing and the best price.

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Housing Market Expected To “Spring Forward” This Year

Just like our clocks this weekend in the majority of the country, the housing market will soon “spring forward!” Similar to tension in a spring, the lack of inventory available for sale in the market right now is what is holding back the market. Many potential sellers believe that waiting until Spring is in their best interest, and traditionally they would have been right. Buyer demand has seasonality to it, which usually falls off in the winter months, especially in areas of the country impacted by arctic temperatures and conditions. That hasn’t happened this year. Demand for housing has remained strong as mortgage rates have remained near historic lows. Even with the recent increase in rates, buyers are still able to lock in an affordable monthly payment. Many more buyers are jumping off the fence and into the market to secure a lower rate. The National Association of Realtors (NAR) recently reported that the top 10 dates sellers listed their homes in 2017 all fell in April, May, or June. Those who act quickly and list now could benefit greatly from additional exposure to buyers prior to a flood of more competition coming to market in the next few months. Bottom Line If you are planning on selling your home in 2018, let’s get together to evaluate the opportunities in our market.

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4 Reasons to Sell This Spring [INFOGRAPHIC]

Some Highlights: Buyer demand continues to outpace the supply of homes for sale which means that buyers are often competing with one another for the few listings that are available! Housing inventory is still under the 6-month supply needed to sustain a normal housing market. Perhaps the time has come for you and your family to move on and start living the life you desire.

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