833 Willow Creek Drive
2757 Square Foot Home with 4 bedrooms.
Click link below for more details:
Serving Home Buyers, Sellers and Investors in Raleigh / Durham North Carolina
833 Willow Creek Drive
2757 Square Foot Home with 4 bedrooms.
Click link below for more details:
There are many questions about where home prices will be next year as well as where they may be headed over the next several years to come. We have gathered the most reliable sources to help answer these questions:
The Home Price Expectation Survey – A survey of over 100 market analysts, real estate experts, and economists conducted by Pulsenomics each quarter.
Zelman & Associates – The firm leverages unparalleled housing market expertise, extensive surveys of industry executives, and rigorous financial analysis to deliver proprietary research and advice to leading global institutional investors and senior-level company executives.
Mortgage Bankers Association (MBA) – As the leading advocate for the real estate finance industry, the MBA enables members to successfully deliver fair, sustainable, and responsible real estate financing within ever-changing business environments.
Freddie Mac – An organization whose mission is to provide liquidity, stability, and affordability to the U.S. housing market in all economic conditions extending to all communities from coast to coast.
The National Association of Realtors (NAR) – The largest association of real estate professionals in the world.
Fannie Mae – A leading source of financing for mortgage lenders, providing access to affordable mortgage financing in all markets always.
Every source sees home prices continuing to appreciate – just at lower percentages as we move through the next several years.
There are many conflicting headlines when it comes to describing today’s real estate market. Some are making comparisons to the market we experienced 10 years ago and are starting to believe that we may be doomed to repeat ourselves. Others are just plain wrong when it comes to what it takes to qualify for a mortgage.
Today, I want to try and clear the air by shedding some light on what’s causing some of these headlines, as well as what’s truly going on.
Home prices have appreciated year-over-year for the last 76 straight months. Many areas of the country are at or near their peak prices achieved before the last housing bubble burst. This has many worried that we are headed towards another housing bubble.
Reality: The biggest challenge facing today’s real estate market is a lack of homes for sale! Demand is strong, as many renters have come off the fence and are searching for their dream homes.
Historically, a normal market requires a 6-month supply of inventory in order for prices to rise with the rate of inflation. According to the National Association of Realtors (NAR) there is currently a 4.3-month supply of inventory.
The US housing market hasn’t had 6-months inventory since August 2012! The concept of supply and demand is what is driving home prices up!
Economists and analysts know that the country has experienced economic growth for almost a decade. When this happens, they also know that a recession can’t be too far off. But what is a recession?
Merriam-Webster defines a recession as “a period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two consecutive quarters.”
Reality: Recession DOES NOT equal housing crisis. Many people associate these two terms with one another because the last time we had a recession it was caused by a housing crisis. According to the Federal Reserve, over the last 40 years, there have been six recessions. In each of the previous five recessions, home values appreciated.
Rising home prices have many concerned that the average family will no longer be able to afford the most precious piece of the American Dream – their own home.
There are many different affordability indexes supported by different organizations that all measure different data. For this reason, there is a lot of confusion about what “affordable” actually means.
The monthly cost of a home is determined by the home’s price and the interest rate on the mortgage used to purchase it. According to Freddie Mac, interest rates have risen from 3.95% in January to 4.59% just last week.
Reality: As we mentioned earlier, home prices have appreciated year-over-year for the last 76 months, largely driven by high demand and low supply.
According to a recent study by Zillow, the percentage of median income necessary to buy a home in today’s market (17.1%) is well below the mark reached in 1985 – 2000 (21%), as well as the mark reached in 2006 (25.4)! Interest rates would have to increase to 6% before buying a home would be less affordable than historical norms.
The starter-home market has appreciated at higher levels (9.4% year-over-year) than any other market. One reason for this is the fact that many of the first-time buyers who have flocked to the starter-home market are being met with high competition. For some hopeful buyers, it may take more than a good offer to stand out from the crowd!
There is a lot of confusion in today’s real estate market. If your future plans include buying or selling, please let me know. I will be by your side as your trusted advisor and market expert, helping guide you to the best decision for you and your family. Simply send me an email or call me at (919) 369-4926.
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For many Americans, buying their first home is their first taste of achieving part of the American Dream. There is a sense of pride that comes along with owning your own home and building your family’s wealth through your monthly mortgage payment.
It may seem hard to imagine that the first home you purchased (which made your dreams come true) might not be the home that will allow you to achieve the rest of your dreams. The good news is that it’s ok to admit that your home no longer fits your needs!
According to CoreLogic’s latest Home Price Index, prices in the starter home market have appreciated faster than any other category over the last year, at 9.4%. At the same time, inventory in this category has dropped 14.2%.
These two stats are directly related to one another. As inventory has decreased and demand has increased, prices have been driven up.
This is great news if you own a starter home and are looking to move up to a larger home. The equity in your home has risen as prices have gone up. Even better is the fact that there is a large pool of buyers out there searching for your starter home to help them achieve their American Dream!
A move in the opposite direction is equally important in today's real estate environment. Homeowners that now find themselves in a home that is larger than they need, see themselves spending more of their time and money maintaining a home rather than investing that money in areas that will enhance their quality of life.
If your current home no longer fits your needs, give me a call today and let's develop a plan to help you move into a home that is the right fit for your current lifestyle!
Since the beginning of the year, mortgage interest rates have risen over a half of a percentage point (from 3.95% to 4.52%), according to Freddie Mac. Even a small rise in interest rates can greatly impact a buyer’s monthly mortgage payment.
First American recently released the results of their quarterly Real Estate Sentiment Index (RESI), in which they surveyed title and real estate agents across the country about the impact of rising rates on first-time homebuyers.
Real estate professionals around the country have not noticed a slowdown in demand for housing among young buyers; nearly 93% of all first-time homebuyers last quarter were between the ages of 21-35, with the largest share of buyers (51%) coming from those ages 26-30.
First American’s Chief Economist Mark Fleming had this to say,
“On a national level, mortgage rates would need to hit 5.6%, 1 percentage point above the current rate, before first-time homebuyers withdraw from the market.”
According to the last Existing Home Sales Report from the National Association of Realtors, sales are now down 3.0% year-over-year and have fallen for the last three months. If rising interest rates aren’t to blame, then what is?
Fleming addressed the cause, saying that:
“The housing market is facing its greatest supply shortage in 60 years of record keeping, according to the Federal Reserve Bank of Kansas City. The ongoing housing supply shortage will make it difficult for first-time buyers to find a home to buy, even when they are financially ready.”
First-time homebuyers know the importance of owning their own homes and a spike in interest rates is not going to keep them from buying this year! Their biggest challenge is finding a home to buy!
Some experts are calling for a slowdown in the economy later this year and most economists have predicted that the next recession could only be eighteen months away. The question is, what affect will a recession have on the housing market?
Here are the opinions of several experts on the subject:
“While economic activity appears to have accelerated so far in 2018, some prominent economic forecasters have become more cautious about growth prospects for 2019 and 2020…
All told, while solid long-term demographic underpinnings support our positive fundamental outlook for housing, in the event micro-economic headwinds surface, we would expect housing transaction volumes and home prices to weather the storm.”
“While much remains unknown about the precise path of the U.S. economy in the years ahead, another housing market crisis is unlikely to be a central protagonist in the next nationwide downturn.”
“If a recession is to occur, it is unlikely to be caused by housing-related activity, and therefore the housing sector should be one of the leading sources to come out of the recession.”
“Real estate may be one of your best investments during the next bear market for stocks. And by real estate, I mean your home or other residential properties.”
“Fortunately – and hopefully – the history of recessions and current issues that could harm the economy don’t lead many to believe the housing market crash will repeat itself in an upcoming decline.”
One of the most common questions I get from my clients is. “Where is the real estate market headed”?
What we do know is that demand for housing is high right now, in both the residential rental and buyer markets. After all, no matter what else happens with other sectors of the economy, people still need a place to live. Investors from around the world recognize this fact and these investors play an important role in the real estate market. Until we see a balance between supply and demand, I believe we will continue to see an appreciating market. Once this balance is achieved, we may see a leveling off of pricing.
I value your thoughts on this subject. Please send me an email with any other points of view that you care to share and I may include them in an upcoming post.
There are many unsubstantiated theories as to why home values are continuing to increase. From those who are worried that lending standards are again becoming too lenient(data shows this is untrue), to those who are concerned that prices are again approaching boom peaks because of “irrational exuberance” (this is also untrue as prices are not at peak levels when they are adjusted for inflation), there seems to be no shortage of opinion.
However, the increase in prices is easily explained by the theory of supply & demand. Whenever there is a limited supply of an item that is in high demand, prices increase.
It is that simple. In real estate, it takes a six-month supply of existing salable inventory to maintain pricing stability. In most housing markets, anything less than six months will cause home values to appreciate and anything more than seven months will cause prices to depreciate (see chart below).
According to the Existing Home Sales Report from the National Association of Realtors (NAR), the monthly inventory of homes for sale has been below six months for the last five years (see chart below).
If buyer demand continues to outpace the current supply of existing homes for sale, prices will continue to appreciate. Nothing nefarious is taking place. It is simply the theory of supply & demand working as it should.
It’s tempting to disregard the steep price tag and hire a professional contractor for home improvement repairs rather than doing them yourself. Home repairs can seem complex and intimidating to the uninitiated, and fear that your own attempts at fixing that leaky faucet or drafty window will cause further damage may further discourage you from going DIY.
However, having a home maintenance plan can make a huge difference in your bank account. And, fortunately, performing proper home maintenance does not require a lot of specialized know-how or training, nor does it require a lot of time or money.
Water leaking from your toilet tank will not only cost you money when it comes to your utility bill, but it can also cause water damage to your bathroom floor and premature wear of your toilet’s internal workings. To find out whether your toilet tank is leaking, add some red food coloring to the water in the tank. Come back in about an hour and see if the water in the bowl is pink. If it is, you have a leak.
If you find that your toilet is leaking from the tank to the bowl, the flapper needs to be replaced. To change your toilet’s flapper, first shut off the water supply to your toilet. To do this, simply turn the water valve located directly behind the toilet. Remove the tank lid and flush the toilet in order to empty the tank. Use a towel or sponge to mop out any excess water left in the tank. Remove the flush chain from the lever, and then slide the old flapper up off the overflow tube. Slide the new flapper in place over the overflow tube, reconnect the chain, and turn the water supply back on.
The main cause of leaky faucets is worn out washers. The washers inside of the faucet handles are rubber and tend to wear out quickly. Replace them by turning off the main water supply, unscrewing the leaky handle that controls the flow of water to the spout, removing the old washer, and dropping in the new one.
It is important to regularly inspect your washing machine water supply hoses for leaks. One of the top reasons for insurance claims is for water damage caused by leaky washing machine supply lines. Inspect washing machine water supply lines at least annually and replace them every three years if they are plastic. If you notice that the metal ends of your water supply lines are discolored or rusty, replace them immediately.
Faulty washing machine drain hoses are as important as water supply lines when it comes to keeping water off of your floor and in your drain where it belongs. As with supply lines, regularly inspect the ends of your washing machine drain lines for discoloration or rust, and replace them immediately if you find evidence of leaking.
Additionally, check the snugness of the drain lines by using a crescent wrench or a pair of pliers. You should not be able to tighten the line any further if the line is properly tightened. Plastic lines should be replaced every three years.
When it comes to your dryer, it is important to make sure that you regularly clean your lint screen in order to prevent fires. Not only will a clean lint screen prevent fires, but it will also increase the life of the heating element. Physically remove the lint from the screen between each load of laundry. Also, be sure to remove fabric softener residue by washing the screen with warm water and dish detergent once per week.
There is nothing more frustrating than turning on the hot water in your shower and instead receiving cold water. Water heaters, like other appliances, need maintenance to increase longevity and reduce the possibility of damage.
Water has sediment suspended in it, and as the water sits in your water heater, these particles will often settle to the bottom of the tank, causing damage to the floor of your water heater. At least once per year, drain the water from your water heater and clean the inside surface of its floor.
To drain your water heater, first turn off the water supply and power to the water heater. For electric water heaters, turning off the power means that you simply flip the circuit breaker to the “off” position. For gas water heaters, turn the thermostat setting to the pilot position.
Next, connect a water hose to the drain fitting at the bottom of the tank and put the other end in a place, such as your driveway, where the draining hot water won’t cause any damage. A typical garden hose is a direct fit to the drain fitting. Turn on all the hot water faucets in your home and then open the drain valve on the water heater. Turn the water supply back on with the drain valve still open to remove any built up sediment in the bottom of the tank. Then close the drain valve, refill the tank, and turn the power back on.
In order to keep water flowing freely through your pipes, keep the following things in mind:
Air conditioners are among the most overlooked appliances when it comes to performing regular home maintenance. However, they can be one of the most costly appliances to repair.
Regularly inspect the condensation hose to make sure that water can flow freely from the line. If there is standing water where your condensation line drains, create a drainage path using a small garden trowel and line the path with gravel to keep mold and algae from forming, which can be a serious health hazard when the spores are drawn into the appliance and blown into your home.
Additionally, keep the screen around your air conditioner free from debris to keep air flowing easily. This will prevent your air conditioner from using more power than necessary to keep your house cool and keep the internal parts from wearing out too quickly.
Some climate control systems have in-duct humidifiers that help keep air moist and healthy during the winter when artificial heat systems are in use. But when these systems aren’t working properly, they become a breeding ground for mold and bacteria, which can cause serious air quality issues.
At the end of each winter season, it is important to drain the unit and close the water valve to keep water from stagnating in the system. Also, cleaning the reservoir with a mixture of water and white vinegar helps to keep mineral deposits to a minimum.
Change the air filter in your central heat and air unit often, especially during peak usage months. Thirty days is the absolute longest you should ever leave an air filter in place; two weeks is maximum for high-usage months.
Using cheap fiberglass filters is actually preferred as opposed to more expensive HEPA filters for two reasons: First, replacing the more expensive filters often isn’t cost-effective. Second, the fiberglass filters actually allow for more air to flow into your climate-controlled unit, reducing the amount of energy needed to effectively heat or cool your home.
You can easily give your house a facelift by repainting the interior. However, repainting the entire interior of your house can be costly and difficult to accomplish. You can save both time and money by strategically touching up your paint job every so often. The first thing you need is a spot-on color match. The only way to get this is to save paint from your current paint job for future touch-ups. If you have leftover paint, simply roll the paint over the dirty spots on your walls. When the paint dries, it will dry perfectly, leaving you with a wall that looks as though you just painted it.
If you don’t have any leftover paint, you can still touch up your walls, though your efforts will be more labor intensive than spot painting. Take a sample of your color to your local hardware outlet and have your paint tinted to match. When you are ready to touch up your walls, paint the dirty wall from corner to corner, being careful to keep the new paint off any surface you aren’t looking to touch up. If there is a shade difference, you won’t notice it, even if the wall you are painting butts up against another wall.
If you are trying to cover up nicotine-stained walls, you will need to apply a stain blocker to the walls before applying paint. Nicotine will prevent your paint from adhering properly to the wall surface and will cause bubbles. Additionally, if stale smoke or other odor is an issue, add a few drops of vanilla to your paint. This will help combat odors that have seeped into your drywall.
The main component of your refrigerator that should get your attention is the door seals. Keeping your door seals tight will reduce the amount of energy it takes to keep your food cool or frozen, but will also keep your refrigerator working efficiently, preventing premature wear on internal parts.
To test the door seals, close the door on a dollar bill and attempt to pull it out with the door closed. If you cannot easily pull the dollar bill out from the door, your seals are in good shape. However, if the bill slides out without much resistance, it’s time to replace the seals. You can purchase new seals from any home repair outlet store.
Also, if you have a refrigerator that has coils along the back, periodically vacuum these coils to remove dirt and dust build up. These coils contain the coolant the refrigerator uses to keep the internal temperature cold. If they become dirty, they won’t work efficiently and your refrigerator may stop cooling altogether.
As a general tip, keeping your refrigerator full uses less energy than trying to cool when it’s empty. Therefore, keep as many items in your refrigerator as possible to help reduce energy costs.
Drafty windows are a major culprit of high energy bills in the summer and winter months. Periodically check the condition of the caulk line that holds your windows in place. If the caulk appears to be dry, cracked, or otherwise weathered, remove the old caulk with a box cutter or other sharp knife and run a new bead of caulk along the seam.
For added utility bill savings, you can further insulate your window by applying an insulating window film over the glass. These methods cost much less than the price of replacing your windows and implementing green energy technologies in your home.
While gutters may go practically unnoticed when you look at your house, they are the main line of defense between your foundation and siding and the elements. Gutters are designed to capture water and debris runoff from your roof and divert it away from your foundation, and one of the main causes of water accumulation in basements is a lack of gutter maintenance and proper water diversion.
Clean your gutters at least once per year by physically removing debris from the channels and rinsing them thoroughly by using a garden hose. Avoid installing gutter guards – not only do these not adequately prevent debris from entering your gutters, they also make it extremely difficult (if not impossible) to properly clean your gutter system.
Also, be sure to regularly check that your gutters are properly affixed to your fascia boards, and replace any sections that appear to be damaged or leaking.
Periodically check your roof for damage. Damaged, discolored, or gravel-less shingles should be quickly replaced to prevent the need to replace your roof, water-damaged trusses, or drywall when you finally discover a leak. During the inspection of your roof, pay special attention to shingles that surround skylights, vents, and chimneys, as these areas are the most leak-prone.
Keeping your home properly maintained will not only save you money by increasing the longevity of your appliances and existing structures, but it will also help you become more energy-efficient and save money on your utility bills. These tips merely scratch the surface of the things you can do around your home to keep everything running in tiptop shape.
In today’s housing market, where supply is very low and demand is very high, home values are increasing rapidly. Many experts are projecting that home values could appreciate by another 4% or more over the next twelve months. One major challenge in such a market is the bank appraisal.
When prices are surging, it is difficult for appraisers to find adequate, comparable sales (similar houses in the neighborhood that recently closed) to defend the selling price when performing the appraisal for the bank.
Every month in their Home Price Perception Index (HPPI), Quicken Loans measures the disparity between what a homeowner who is seeking to refinance their home believes their house is worth and what an appraiser’s evaluation of that same home is.
In the latest release, the disparity was the narrowest it has been in over two years, as the gap between appraisers and homeowners was only -0.5%. This is important for homeowners to note as even a .5% difference in appraisal can mean thousands of dollars that a buyer or seller would have to come up with at closing (depending on the price of the home)
The chart below illustrates the changes in home price estimates over the last two years.
Bill Banfield, Executive VP of Capital Markets at Quicken Loans urges homeowners to find out how their local markets have been impacted by supply and demand:
“Appraisers and real estate professionals evaluate their local housing markets daily. Homeowners, on the other hand, may only think about their housing market when they see ‘for sale’ signs hit front yards in the spring or when they think about accessing their equity.”
“With several years of growth, owners may have more equity than they realize. Many consumers use the tax season at the beginning of the year to reevaluate their entire financial life. It also provides a good opportunity for them to consider how best to take advantage of their equity while mortgage interest rates and borrowing costs are still near record lows.”
Every house on the market must be sold twice; once to a prospective buyer and then to the bank (through the bank’s appraisal). With escalating prices, the second sale might be even more difficult than the first. If you are planning on entering the housing market this year, let’s get together to discuss this and any other obstacles that may arise.
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The housing crisis is finally in the rearview mirror as the real estate market moves down the road to a complete recovery. Home values are up, home sales are up, and distressed sales (foreclosures and short sales) have fallen to their lowest points in years. It seems that the market will continue to strengthen in 2018.
However, there is one thing that may cause the industry to tap the brakes: a lack of housing inventory. While buyer demand looks like it will remain strong throughout the winter, supply is not keeping up.
National Association of Realtors
“Total housing inventory at the end of November dropped 7.2 percent to 1.67 million existing homes available for sale, and is now 9.7 percent lower than a year ago (1.85 million) and has fallen year-over-year for 30 consecutive months. Unsold inventory is at a 3.4-month supply at the current sales pace, which is down from 4.0 months a year ago.”
Joseph Kirchner, Senior Economist for Realtor.com
“The increases in single-family permits and starts show that builders are planning and starting new construction projects, that’s a good thing because it will help to relieve the shortage of homes on the market.”
Sam Khater, Deputy Chief Economist at CoreLogic
“Inventory is tighter than it appears. It’s much lower for entry-level buyers.”
If you are thinking of selling, now may be the time. Demand for your house will be strong at a time when there is very little competition. That could lead to a quick sale for a really good price.
What truly causes a housing bubble and the inevitable crash? For the best explanation, let’s go to a person who correctly called the last housing bubble – a year before it happened.
“A bubble requires both overvaluation based on fundamentals and speculation. It is natural to focus on an asset’s fundamental value, but the real key for detecting a bubble is speculation…Speculation tends to chase appreciating assets, and then speculation begets more speculation, until finally, for some reason that will become obvious to all in hindsight, the ‘bubble’ bursts.
I have taken to calling the housing market a ‘bubble’.”
– Bill McBride of Calculated Risk calling the bubble back in April 2005
There are two measurements that are used to determine the speculation in a housing market:
As compared to 2005, investor purchases are down dramatically (from 23% to 13%) and so is flipping (from 8.2% to 5.7%). McBride explains:
“There is currently some flipping activity, but this is more the normal type of flipping (buy, improve and then sell). Back in 2005, people were just buying homes and letting them sit vacant – and then selling without significant improvements. Classic speculation.”
DSNews recently ran an article which asked two economists to compare the speculation in today’s market to that in 2005-2007. Here is what they said:
“The speculative ‘flipping mania’ of 2006 is absent from most metro areas.”
“The nature of housing demand is different as well, with more potential homeowners and far fewer speculators in the housing market compared to the 2005-2007 period.”
Sixty days ago, he explained:
“In 2005, people were just buying homes and letting them sit vacant – and then selling without significant improvements. Classic speculation. And even more dangerous during the bubble was the excessive use of leverage (all those poor-quality loans). Currently lending standards are decent, and loan quality is excellent…
I wouldn’t call house prices a bubble – and I don’t expect house prices to decline nationally like during the bust.”
Speculation is a major element of the housing bubble formula. Right now, there are not elevated percentages of investors and house flippers. Therefore, there is not an elevated rate of speculation.
Six months ago, we reported that the mismatch between the type of inventory of homes for sale and the demand of buyers in the US was causing the formation of two markets. If you own a home in Raleigh, Durham or Charlotte this two market condition exist in your city.
In the starter and trade-up home categories, there were significantly more buyers than there were homes for sale, causing a seller’s market. In the premium, or luxury, home categories, the opposite was true as there was a surplus of these homes compared to the buyers that were out searching for their dream homes, which created a buyer’s market.
According to the National Association of Realtors latest Existing Home Sales Report, the inventory of existing homes for sale in today’s market is at a 4.2-month supply. Inventory is now 6.5% lower than this time last year, marking the 27th consecutive month of year-over-year decreases.
Looking at the latest report from Trulia, we can see that not much has changed, and in fact, recent natural disasters across the country have made inventory conditions even more dire.
Trulia’s market mismatch score measures the search interest of buyers against the category of homes that are available on the market. For example: “if 60% of buyers are searching for starter homes but only 40% of listings are starter homes, [the] market mismatch score for starter homes would be 20.”
The results of their latest analysis are detailed in the chart below.
Nationally, buyers are searching for starter and trade-up homes and are coming up short with the listings available, which is leading to a highly competitive seller’s market in these categories.
Premium homebuyers, on the other hand, have the best chance of less competition and more inventory of listings in their price range with a 14.7-point surplus, which is creating more of a buyer’s market.
Real estate is local. If you are thinking about buying OR selling this fall, let’s get together to discuss the exact market conditions in your area.
With residential home prices continuing to appreciate at levels above historic norms, some are questioning if we are heading toward another housing bubble (and subsequent burst) like the one we experienced in 2006-2008.
Recently, five housing experts weighed in on the question.
“We’re definitely not in a bubble.”
“We have a handful of markets that are frothy and probably have hit an affordability wall of sorts but…while prices nominally have surpassed the 2006 peak, we’re not talking about 2006 dollars.”
“There is no direct or indirect sign of any kind of bubble.”
“Steady as she goes. Prices continue to rise. Sales roughly flat.…Overall this market is in an almost boring place.”
“I wouldn't call house prices a bubble.”
“So prices may be a little overvalued, but there is little speculation and I don't expect house prices to decline nationally like during the bust.”
“Housing is not repeating the bubble period of 2000-2006.”
“…price increases vary unlike the earlier period when rising prices were almost universal; the number of homes sold annually is 20% less today than in the earlier period and the months’ supply is declining, not surging.”
“We are not in a bubble and nowhere near the situation preceding the 2008 housing crisis.”
“Despite recent increases, house prices remain affordable by historical standards, suggesting that home prices are tracking a broader economic expansion.”
If your house no longer fits your needs and you are planning on buying a luxury home, now is a great time to do so! We recently shared data from Trulia’s Market Mismatch Study which showed that in today’s premium home market, buyers are in control.
The inventory of homes for sale in the luxury market far exceeds those searching to purchase these properties in many areas of the country. This means that homes are often staying on the market longer which can eventually lead to a price change.
Those who have a starter or trade-up home to sell will find buyers competing, and often entering bidding wars, to be able to call your house their new home.
The sale of your starter or trade-up house will aid in coming up with a larger down payment for your new luxury home. Even a 5% down payment on a million-dollar home is $50,000.
But not all who are buying luxury properties have a home to sell first.
In a Washington Post article, Daryl Judy, an associate broker with Washington Fine Properties, gave some insight into what many millennials are choosing to do:
“Some high-earning millennials save money until they are in their early 30s to buy a place and just skip over that starter-home phase. They’ll stay in an apartment until they can afford to pay for the place they want.”
The best time to sell anything is when demand is high and supply is low. If you are currently in a starter or trade-up house that no longer fits your needs and you are looking to step into a luxury home, now’s the time to list your house for sale and make your dreams come true.
The Aspiring Home Buyers Profile from the National Association of Realtors (NAR) found that the American public is still somewhat confused about what is required to qualify for a home mortgage loan in today’s housing market. The results of the survey show that non-homeowners cite the main reason for not currently owning a home, as not being able to afford one.
This brings us to two major misconceptions that we want to address today.
NAR’s survey revealed that consumers overestimate the down payment funds needed to qualify for a home loan. According to the report, 39% of non-homeowners say they believe they need more than 20% for a down payment on a home purchase. In actuality, there are many loans written with a down payment of 3% or less.
Many renters may actually be able to enter the housing market sooner than they ever imagined with new programs that have emerged allowing less cash out of pocket.
An Ipson survey revealed that 62% of respondents believe they need excellent credit to buy a home, with 43% thinking a “good credit score” is over 780. In actuality, the average FICO® scores of approved conventional and FHA mortgages are much lower.
The average conventional loan closed in August had a credit score of 752, while FHA mortgages closed with a score of 683. The average across all loans closed in August was 724. The chart below shows the distribution of FICO® Scores for all loans approved in August.
If you are a prospective buyer who is ‘ready’ and ‘willing’ to act now, but are not sure if you are ‘able’ to, let’s sit down to help you understand your true options.
A recent article from a reputable news source was titled: Here's why some homeowners still can't sell. In the opening bullets of the article, the author claimed, “Negative equity is one of the main reasons why there are so few homes for sale.” The article then goes on to soften that stance but we want to bring better clarity to the equity situation.
A recent report from CoreLogic (which was quoted in the article) revealed that over 80% of all homes now have “significant equity,” which means the home has over 20% equity. That level of equity allows the homeowner to sell their home if they so desire. (There was no reference to significant equity in the article.)
If eight out of ten homeowners now have significant equity in their homes, it is hard to make the claim that lack of equity is “one of the main reasons why there are so few homes for sale.”
Here is a map showing the percentage of homes in each state which currently have significant equity:
If you are one of many homeowners who is debating selling your home and are wondering how much equity you have accumulated, let’s get together to determine if now is the time to list.
According to Bankrate’s latest Financial Security Index Poll, Americans who have money to set aside for the next 10 years would rather invest in real estate than any other type of investment.
Bankrate asked Americans to answer the following question:
“What is the best way to invest money you wouldn’t need for 10 years or more?”
Real Estate came in as the top choice with 28% of all respondents (3% higher than last year), while cash investments – such as savings accounts and CD’s – came in second with 23% (the same as last year). The chart below shows the full results:
The article points out several reasons for these results:
“After bottoming out at the end of 2011 following the worst housing collapse in generations, home prices have gone gangbusters recently, climbing back above their record pre-crisis levels. Prices jumped 6.6 percent during the 12 months that ended in May, according to CoreLogic.
Toss in persistently low interest rates, tax goodies that come with owning a mortgage, and the psychological payoff from planting your roots, and maybe it’s no wonder real estate remains popular.”
The article also revealed that:
“Bankrate’s Financial Security Index — based on survey questions about how people feel about their debt, savings, net worth, job security and overall financial situation — has hit its third-highest level since the poll’s inception in December 2010.”
I have often written about the financial and non-financial reasons homeownership makes sense. It is nice to see that Americans still believe in homeownership as the best investment.
Kevin McVicker is a real estate broker residing in Durham, North Carolina. He has been licensed since 1994 and serves the Research Triangle region, as well as the Charlotte region. He specializes in residential brokerage for local home buyers and real estate investors.