#MyRealtorDonna's Blog!Recently posted or modified blog posts by tag - Economy https://www.donnalernerhometeam.com/blog/Copyright DonnaLernerHomeTeam.com2022-07-11T09:34:07-07:00tag:donnalernerhometeam.com,2012-09-20:9587The Drop in Mortgage Rates Brings Good News for Homebuyers
<img width="750" height="410" src="https://files.mykcm.com/2022/07/08145816/20220711-KCM-Share.jpg" class="attachment-entry size-entry wp-post-image" alt="The Drop in Mortgage Rates Brings Good News for Homebuyers | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2022/07/08145816/20220711-KCM-Share.jpg 750w, https://files.mykcm.com/2022/07/08145816/20220711-KCM-Share-600x328.jpg 600w, https://files.mykcm.com/2022/07/08145816/20220711-KCM-Share-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" />
Over the past few weeks, the average 30-year fixed mortgage rate from Freddie Mac fell by half a percent. The drop happened over concerns about a potential recession. And since mortgage rates have risen dramatically this year, homebuyers across the country should see this decline as welcome news.
Freddie Mac reports that the average 30-year rate was down to 5.30% from 5.81% two weeks prior (see graph below):
<img loading="lazy" class="aligncenter wp-image-103350" src="https://files.mykcm.com/2022/07/08145808/20220711-MEM-Eng-1.png" alt="The Drop in Mortgage Rates Brings Good News for Homebuyers | MyKCM" width="600" height="450" srcset="https://files.mykcm.com/2022/07/08145808/20220711-MEM-Eng-1.png 1000w, https://files.mykcm.com/2022/07/08145808/20220711-MEM-Eng-1-600x450.png 600w, https://files.mykcm.com/2022/07/08145808/20220711-MEM-Eng-1-768x576.png 768w, https://files.mykcm.com/2022/07/08145808/20220711-MEM-Eng-1-100x75.png 100w" sizes="(max-width: 600px) 100vw, 600px" />
But why is this recent dip such good news for homebuyers? As Nadia Evangelou, Senior Economist and Director of Forecasting at the National Association of Realtors (NAR), explains:
“According to Freddie Mac, the 30-year fixed mortgage rate dropped sharply by 40 basis points to 5.3 percent. . . . As a result, home buying is about 5 percent more affordable than a week ago. This translates to about $100 less every month on a mortgage payment.”
That’s because when rates go up (as they have for the majority of this year), they impact how much you’ll pay in your monthly mortgage payment, which directly affects how much you can comfortably afford. The inverse is also true. A decrease in mortgage rates means an increase in your purchasing power.
The chart below shows how a half-point, or even a quarter-point, change in mortgage rates can impact your monthly payment:
<img loading="lazy" class="aligncenter wp-image-103351" src="https://files.mykcm.com/2022/07/08145812/20220711-MEM-Eng-02.png" alt="The Drop in Mortgage Rates Brings Good News for Homebuyers | MyKCM" width="600" height="450" srcset="https://files.mykcm.com/2022/07/08145812/20220711-MEM-Eng-02.png 1000w, https://files.mykcm.com/2022/07/08145812/20220711-MEM-Eng-02-600x450.png 600w, https://files.mykcm.com/2022/07/08145812/20220711-MEM-Eng-02-768x576.png 768w, https://files.mykcm.com/2022/07/08145812/20220711-MEM-Eng-02-100x75.png 100w" sizes="(max-width: 600px) 100vw, 600px" />
Bottom Line
If your home doesn’t meet your needs, this may be the opportunity you’ve been waiting for. Let’s connect to see how you can benefit from the current drop in mortgage rates.
2022-07-11T06:00:00-07:002022-07-11T09:34:07-07:00Donna Lernertag:donnalernerhometeam.com,2012-09-20:9518Real Estate Consistently Voted Best Investment
<img width="1046" height="2020" src="https://files.mykcm.com/2022/06/30083243/20220701-MEM-1046x2020.png" class="attachment-entry size-entry wp-post-image" alt="Real Estate Consistently Voted Best Investment [INFOGRAPHIC] | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2022/06/30083243/20220701-MEM-1046x2020.png 1046w, https://files.mykcm.com/2022/06/30083243/20220701-MEM-311x600.png 311w, https://files.mykcm.com/2022/06/30083243/20220701-MEM-530x1024.png 530w, https://files.mykcm.com/2022/06/30083243/20220701-MEM-768x1483.png 768w, https://files.mykcm.com/2022/06/30083243/20220701-MEM-796x1536.png 796w, https://files.mykcm.com/2022/06/30083243/20220701-MEM-1061x2048.png 1061w, https://files.mykcm.com/2022/06/30083243/20220701-MEM-100x193.png 100w, https://files.mykcm.com/2022/06/30083243/20220701-MEM.png 1300w" sizes="(max-width: 1046px) 100vw, 1046px" />
Some Highlights
Based on a recent Gallup poll, real estate has been rated the best long-term investment for nine years in a row.
Owning real estate is more than just a place to call home. It’s also an investment in your future. That’s because it’s typically a stable and secure asset that can grow in value over time.
If you’re ready to buy a home and invest in your future, let’s connect.
2022-07-01T06:00:00-07:002022-07-01T08:16:14-07:00Donna Lernertag:donnalernerhometeam.com,2012-09-20:9466 Two Reasons Why Today’s Housing Market Isn’t a Bubble
<img width="750" height="410" src="https://files.mykcm.com/2022/06/24131339/20220627-KCM-Share.jpg" class="attachment-entry size-entry wp-post-image" alt="Two Reasons Why Today’s Housing Market Isn’t a Bubble | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2022/06/24131339/20220627-KCM-Share.jpg 750w, https://files.mykcm.com/2022/06/24131339/20220627-KCM-Share-600x328.jpg 600w, https://files.mykcm.com/2022/06/24131339/20220627-KCM-Share-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" />
You may be reading headlines and hearing talk about a potential housing bubble or a crash, but it’s important to understand that the data and expert opinions tell a different story. A recent survey from Pulsenomics asked over one hundred housing market experts and real estate economists if they believe the housing market is in a bubble. The results indicate most experts don’t think that’s the case (see graph below):
<img loading="lazy" class="aligncenter wp-image-103106" src="https://files.mykcm.com/2022/06/24131343/20220627-MEM-Eng-1.png" alt="Two Reasons Why Today’s Housing Market Isn’t a Bubble | MyKCM" width="600" height="450" srcset="https://files.mykcm.com/2022/06/24131343/20220627-MEM-Eng-1.png 960w, https://files.mykcm.com/2022/06/24131343/20220627-MEM-Eng-1-600x450.png 600w, https://files.mykcm.com/2022/06/24131343/20220627-MEM-Eng-1-768x576.png 768w, https://files.mykcm.com/2022/06/24131343/20220627-MEM-Eng-1-100x75.png 100w" sizes="(max-width: 600px) 100vw, 600px" />As the graph shows, a strong majority (60%) said the real estate market is not currently in a bubble. In the same survey, experts give the following reasons why this isn’t like 2008:
The recent growth in home prices is because of demographics and low inventory
Credit risks are low because underwriting and lending standards are sound
If you’re concerned a crash may be coming, here’s a deep dive into those two key factors that should help ease your concerns.
1. Low Housing Inventory Is Causing Home Prices To Rise
The supply of homes available for sale needed to sustain a normal real estate market is approximately six months. Anything more than that is an overabundance and will causes prices to depreciate. Anything less than that is a shortage and will lead to continued price appreciation.
As the graph below shows, there were too many homes for sale from 2007 to 2010 (many of which were short sales and foreclosures), and that caused prices to tumble. Today, there’s still a shortage of inventory, which is causing ongoing home price appreciation (see graph below):
<img loading="lazy" class="aligncenter wp-image-103103" src="https://files.mykcm.com/2022/06/24131331/20220627-MEM-Eng-2.png" alt="Two Reasons Why Today’s Housing Market Isn’t a Bubble | MyKCM" width="600" height="450" srcset="https://files.mykcm.com/2022/06/24131331/20220627-MEM-Eng-2.png 960w, https://files.mykcm.com/2022/06/24131331/20220627-MEM-Eng-2-600x450.png 600w, https://files.mykcm.com/2022/06/24131331/20220627-MEM-Eng-2-768x576.png 768w, https://files.mykcm.com/2022/06/24131331/20220627-MEM-Eng-2-100x75.png 100w" sizes="(max-width: 600px) 100vw, 600px" />Inventory is nothing like the last time. Prices are rising because there’s a healthy demand for homeownership at the same time there’s a limited supply of homes for sale. Odeta Kushi, Deputy Chief Economist at First American, explains:
“The fundamentals driving house price growth in the U.S. remain intact. . . . The demand for homes continues to exceed the supply of homes for sale, which is keeping house price growth high.”
2. Mortgage Lending Standards Today Are Nothing Like the Last Time
During the housing bubble, it was much easier to get a mortgage than it is today. Here’s a graph showing the mortgage volume issued to purchasers with a credit score less than 620 during the housing boom, and the subsequent volume in the years after:
<img loading="lazy" class="aligncenter wp-image-103104" src="https://files.mykcm.com/2022/06/24131335/20220627-MEM-Eng-3.png" alt="Two Reasons Why Today’s Housing Market Isn’t a Bubble | MyKCM" width="600" height="450" srcset="https://files.mykcm.com/2022/06/24131335/20220627-MEM-Eng-3.png 960w, https://files.mykcm.com/2022/06/24131335/20220627-MEM-Eng-3-600x450.png 600w, https://files.mykcm.com/2022/06/24131335/20220627-MEM-Eng-3-768x576.png 768w, https://files.mykcm.com/2022/06/24131335/20220627-MEM-Eng-3-100x75.png 100w" sizes="(max-width: 600px) 100vw, 600px" />This graph helps show one element of why mortgage standards are nothing like they were the last time. Purchasers who acquired a mortgage over the last decade are much more qualified than they were in the years leading up to the crash. Realtor.com notes:
“. . . Lenders are giving mortgages only to the most qualified borrowers. These buyers are less likely to wind up in foreclosure.”
Bottom Line
A majority of experts agree we’re not in a housing bubble. That’s because home price growth is backed by strong housing market fundamentals and lending standards are much tighter today. If you have questions, let’s connect to discuss why today’s housing market is nothing like 2008.
2022-06-27T06:00:00-07:002022-06-27T08:11:51-07:00Donna Lernertag:donnalernerhometeam.com,2012-09-20:9442Homeownership Is a Great Hedge Against the Impact of Rising Inflation
<img width="750" height="410" src="https://files.mykcm.com/2022/06/22164521/20220623-KCM-Share.jpg" class="attachment-entry size-entry wp-post-image" alt="Homeownership Is a Great Hedge Against the Impact of Rising Inflation | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2022/06/22164521/20220623-KCM-Share.jpg 750w, https://files.mykcm.com/2022/06/22164521/20220623-KCM-Share-600x328.jpg 600w, https://files.mykcm.com/2022/06/22164521/20220623-KCM-Share-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" />
If you’re following along with the news today, you’ve heard about rising inflation. Today, inflation is at a 40-year high. According to the National Association of Home Builders (NAHB):
“Consumer prices accelerated again in May as shelter, energy and food prices continued to surge at the fastest pace in decades. This marked the third straight month for inflation above an 8% rate and was the largest year-over-year gain since December 1981.”
With inflation rising, you’re likely feeling it impact your day-to-day life as prices go up for gas, groceries, and more. These climbing consumer costs can put a pinch on your wallet and make you re-evaluate any big purchases you have planned to ensure they’re still worthwhile.
If you’ve been thinking about purchasing a home this year, you’re probably wondering if you should continue down that path or if it makes more sense to wait. While the answer depends on your situation, here’s how homeownership can help you combat the rising costs that come with inflation.
Homeownership Helps You Stabilize One of Your Biggest Monthly Expenses
Investopedia explains that during a period of high inflation, prices rise across the board. That’s true for things like food, entertainment, and other goods and services, even housing. Both rental prices and home prices are on the rise. So, as a buyer, how can you protect yourself from increasing costs? The answer lies in homeownership.
Buying a home allows you to stabilize what’s typically your biggest monthly expense: your housing cost. When you have a fixed-rate mortgage on your home, you lock in your monthly payment for the duration of your loan, often 15 to 30 years. James Royal, Senior Wealth Management Reporter at Bankrate, says:
“A fixed-rate mortgage allows you to maintain the biggest portion of housing expenses at the same payment. Sure, property taxes will rise and other expenses may creep up, but your monthly housing payment remains the same. That’s certainly not the case if you’re renting.”
So even if other prices increase, your housing payment will be a reliable amount that can help keep your budget in check. If you rent, you don’t have that same benefit, and you won’t be protected from rising housing costs.
Investing in an Asset That Historically Outperforms Inflation
While it’s true rising home prices and higher mortgage rates mean that buying a house today costs more than it did even a few months ago, you still have an opportunity to set yourself up for a long-term win. That’s because, in inflationary times, you want to be invested in an asset that outperforms inflation and typically holds or grows in value.
The graph below shows how the average home price appreciation outperformed the average inflation rate in most decades going all the way back to the seventies – making homeownership a historically strong hedge against inflation (see graph below):
<img loading="lazy" class="aligncenter wp-image-103042" src="https://files.mykcm.com/2022/06/22164524/20220623-MEM-Eng-1.png" alt="Homeownership Is a Great Hedge Against the Impact of Rising Inflation | MyKCM" width="600" height="450" srcset="https://files.mykcm.com/2022/06/22164524/20220623-MEM-Eng-1.png 1000w, https://files.mykcm.com/2022/06/22164524/20220623-MEM-Eng-1-600x450.png 600w, https://files.mykcm.com/2022/06/22164524/20220623-MEM-Eng-1-768x576.png 768w, https://files.mykcm.com/2022/06/22164524/20220623-MEM-Eng-1-100x75.png 100w" sizes="(max-width: 600px) 100vw, 600px" />
So, what does that mean for you? Today, experts forecast home prices will only go up from here thanks to the ongoing imbalance of supply and demand. Once you buy a house, any home price appreciation that does occur will grow your equity and your net worth. And since homes are typically assets that grow in value, you have peace of mind that history shows your investment is a strong one.
That means, if you’re ready and able, it makes sense to buy today before prices rise further.
Bottom Line
If you’ve been thinking about buying a home this year, it makes sense to act soon, even with inflation rising. That way you can stabilize your monthly housing cost and invest in an asset that historically outperforms inflation. If you’re ready to get started, let’s connect so you have expert advice on your specific situation when you’re ready to buy a home.
2022-06-23T06:00:00-07:002022-06-23T06:26:28-07:00Donna Lernertag:donnalernerhometeam.com,2012-09-20:9351More Americans Choose Real Estate as the Best Investment Than Ever Before
<img width="750" height="410" src="https://files.mykcm.com/2022/06/10135410/20220613-KCM-Share.jpg" class="attachment-entry size-entry wp-post-image" alt="More Americans Choose Real Estate as the Best Investment Than Ever Before | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2022/06/10135410/20220613-KCM-Share.jpg 750w, https://files.mykcm.com/2022/06/10135410/20220613-KCM-Share-600x328.jpg 600w, https://files.mykcm.com/2022/06/10135410/20220613-KCM-Share-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" />
Americans’ opinion on the value of real estate as an investment is climbing. That’s according to an annual survey from Gallup. Not only is real estate viewed as the best investment for the ninth year in a row, but more Americans selected it than ever before.
The graph below shows the results of the survey since Gallup began asking the question in 2011. As the trend lines indicate, real estate has been gaining ground as the clear favorite for almost a decade now:
<img loading="lazy" class="aligncenter wp-image-102872" src="https://files.mykcm.com/2022/06/10135406/20220613-MEM-Eng-1.png" alt="More Americans Choose Real Estate as the Best Investment Than Ever Before | MyKCM" width="600" height="450" srcset="https://files.mykcm.com/2022/06/10135406/20220613-MEM-Eng-1.png 1000w, https://files.mykcm.com/2022/06/10135406/20220613-MEM-Eng-1-600x450.png 600w, https://files.mykcm.com/2022/06/10135406/20220613-MEM-Eng-1-768x576.png 768w, https://files.mykcm.com/2022/06/10135406/20220613-MEM-Eng-1-100x75.png 100w" sizes="(max-width: 600px) 100vw, 600px" />
If you’re thinking about purchasing a home, let this poll reassure you. Even when inflation is high like today, Americans recognize owning a home is a powerful financial decision.
How an Investment in Real Estate Can Benefit You During High Inflation
Because inflation reached its highest level in 40 years recently, it’s more important than ever to understand the financial benefits of homeownership. Rising inflation means prices are increasing across the board, and that includes goods, services, housing costs, and more. When you purchase your home, you lock in your monthly housing payments, effectively shielding yourself from increases on one of your biggest budgetary items each month.
If you’re a renter, you don’t have that same benefit, and you aren’t protected from these increases, especially as rents rise. As Danielle Hale, Chief Economist at realtor.com, notes:
“Rising rents, which continue to climb at double-digit pace . . . and the prospect of locking in a monthly housing cost in a market with widespread inflation are motivating today’s first-time homebuyers.”
When Inflation Has Risen in the Past, Home Prices Have Too
Your house is also an asset that typically increases in value over time, even during inflation. That‘s because as prices rise, the value of your home does too. Mark Cussen, Financial Writer for Investopedia, puts it like this:
“There are many advantages to investing in real estate. . . . It often acts as a good inflation hedge since there will always be a demand for homes, regardless of the economic climate, and because as inflation rises, so do property values. . . .”
And since rising home values help increase your equity, and by extension your net worth, homeownership is historically a good hedge against inflation.
Bottom Line
Buying a home is a powerful decision. It’s no wonder why so many people view it as the best long-term investment, even when inflation is high. When you buy, you help shield yourself from increases in your housing costs and you own an asset that typically gains value with time. If you want to better understand how buying a home could be a great investment for you, let’s connect today.
2022-06-13T06:00:00-07:002022-06-13T08:57:33-07:00Donna Lernertag:donnalernerhometeam.com,2012-09-20:9289Why You Need an Expert To Determine the Right Price for Your House
<img width="750" height="410" src="https://files.mykcm.com/2022/06/03144518/20220606-KCM-Share.jpg" class="attachment-entry size-entry wp-post-image" alt="Why You Need an Expert To Determine the Right Price for Your House | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2022/06/03144518/20220606-KCM-Share.jpg 750w, https://files.mykcm.com/2022/06/03144518/20220606-KCM-Share-600x328.jpg 600w, https://files.mykcm.com/2022/06/03144518/20220606-KCM-Share-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" />
If your lifestyle has changed recently and you’re ready to make a move, taking advantage of today’s sellers’ market might be just the answer for your summer plans. With homes continuing to get multiple offers, this could be your moment to get the contract you’re looking for on your house if you’re ready to sell.
And here’s the thing – you need an expert on your side to ensure you make all the right moves when you do, especially when it comes to pricing your house. Even in this competitive market, you can’t stick just any price tag on your home and get the deal you want. A key piece of the puzzle is setting the right asking price so you can help buyers notice your home (and get excited about it) from the very first time they view the listing. That’s where a real estate professional comes in.
Why Pricing Your House Right Is Important
The price you set for your house sends a message to potential buyers. Price it too low and you might raise questions about your home’s condition or lead buyers to assume something is wrong with the property. Not to mention, if you undervalue your house, you could leave money on the table which decreases your future buying power.
On the other hand, price it too high, and you run the risk of deterring buyers. When that happens, you may have to do a price drop to try to re-ignite interest in your house when it sits on the market for a while. But be aware that a price drop can be seen as a red flag for some buyers who will wonder why the price was reduced and what that means about the home.
In other words, think of pricing your home as a target. Your goal is to aim directly for the center – not too high, not too low, but right at market value. Pricing your house fairly based on market conditions increases the chance you’ll have more buyers who are interested in purchasing it. That makes it more likely you’ll see multiple offers, too. And if a bidding war happens, you’ll likely get an even higher final sale price. Plus, when homes are priced right, they tend to sell quickly.
To get a look into the potential downsides of over or underpricing your house and the perks that come with pricing it at market value, see the chart below:
<img loading="lazy" class="aligncenter wp-image-102786" src="https://files.mykcm.com/2022/06/03144515/2020606-MEM-Eng-1.png" alt="Why You Need an Expert To Determine the Right Price for Your House | MyKCM" width="600" height="450" srcset="https://files.mykcm.com/2022/06/03144515/2020606-MEM-Eng-1.png 1000w, https://files.mykcm.com/2022/06/03144515/2020606-MEM-Eng-1-600x450.png 600w, https://files.mykcm.com/2022/06/03144515/2020606-MEM-Eng-1-768x576.png 768w, https://files.mykcm.com/2022/06/03144515/2020606-MEM-Eng-1-100x75.png 100w" sizes="(max-width: 600px) 100vw, 600px" />
Lean on a Professional’s Expertise
There are several factors that go into pricing your house, and balancing them is the key. That’s why it’s important to lean on an expert real estate advisor when you’re ready to move. A local real estate advisor is knowledgeable about:
The value of homes in your neighborhood
The current demand for houses in today’s market
The condition of your house and how it affects the value
A real estate professional will balance these factors to make sure the price of your house makes the best first impression and gives you the greatest return on your investment in the end.
Bottom Line
If you’re thinking about selling, pricing your house appropriately is key. Let’s connect to make sure your house is priced right for the local market, for your home’s condition, and to stand out from the competition.
2022-06-06T06:00:00-07:002022-06-06T07:37:05-07:00Donna Lernertag:donnalernerhometeam.com,2012-09-20:9160Don’t Let Rising Inflation Delay Your Homeownership Plans
<img width="1046" height="2334" src="https://files.mykcm.com/2022/05/18153723/20220520-MEM-1046x2334.png" class="attachment-entry size-entry wp-post-image" alt="Don’t Let Rising Inflation Delay Your Homeownership Plans INFOGRAPHIC] | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2022/05/18153723/20220520-MEM-1046x2334.png 1046w, https://files.mykcm.com/2022/05/18153723/20220520-MEM-269x600.png 269w, https://files.mykcm.com/2022/05/18153723/20220520-MEM-459x1024.png 459w, https://files.mykcm.com/2022/05/18153723/20220520-MEM-768x1714.png 768w, https://files.mykcm.com/2022/05/18153723/20220520-MEM-688x1536.png 688w, https://files.mykcm.com/2022/05/18153723/20220520-MEM-918x2048.png 918w, https://files.mykcm.com/2022/05/18153723/20220520-MEM-100x223.png 100w, https://files.mykcm.com/2022/05/18153723/20220520-MEM.png 1300w" sizes="(max-width: 1046px) 100vw, 1046px" />
Some Highlights
If recent headlines about rising inflation are making you wonder if it’s still a good time to buy, here’s what experts have to say.
Housing is an asset that typically grows in value. Plus, your mortgage helps stabilize your monthly housing costs, and buying protects you from rising rents.
Experts say owning a home is historically a good hedge against inflation. Let’s connect if you’re ready to start the homebuying process today.
2022-05-20T06:00:00-07:002022-05-20T07:09:17-07:00Donna Lernertag:donnalernerhometeam.com,2012-09-20:9071What You Actually Need To Know About the Number of Foreclosures in Today’s Housing Market
<img width="750" height="410" src="https://files.mykcm.com/2022/05/11125456/20220512-KCM-Share.jpg" class="attachment-entry size-entry wp-post-image" alt="What You Actually Need To Know About the Number of Foreclosures in Today’s Housing Market | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2022/05/11125456/20220512-KCM-Share.jpg 750w, https://files.mykcm.com/2022/05/11125456/20220512-KCM-Share-600x328.jpg 600w, https://files.mykcm.com/2022/05/11125456/20220512-KCM-Share-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" />
While you may have seen recent stories about the volume of foreclosures today, context is important. During the pandemic, many homeowners were able to pause their mortgage payments using the forbearance program. The goal was to help homeowners financially during the uncertainty created by the health crisis.
When the forbearance program began, many experts were concerned it would result in a wave of foreclosures coming to the market, as there was after the housing crash in 2008. Here’s a look at why the number of foreclosures we’re seeing today is nothing like the last time.
1. There Are Fewer Homeowners in Trouble
Today’s data shows that most homeowners are exiting their forbearance plan either fully caught up on payments or with a plan from the bank that restructured their loan in a way that allowed them to start making payments again. The graph below depicts those findings from the Mortgage Bankers Association (MBA):
<img loading="lazy" class="aligncenter wp-image-102232" src="https://files.mykcm.com/2022/05/11125459/20220512-MEM-Eng-1.png" alt="What You Actually Need To Know About the Number of Foreclosures in Today’s Housing Market | MyKCM" width="600" height="450" srcset="https://files.mykcm.com/2022/05/11125459/20220512-MEM-Eng-1.png 1000w, https://files.mykcm.com/2022/05/11125459/20220512-MEM-Eng-1-600x450.png 600w, https://files.mykcm.com/2022/05/11125459/20220512-MEM-Eng-1-768x576.png 768w, https://files.mykcm.com/2022/05/11125459/20220512-MEM-Eng-1-100x75.png 100w" sizes="(max-width: 600px) 100vw, 600px" />
The same MBA report mentioned above estimates there are approximately 525,000 homeowners who remain in forbearance today. Thankfully, those people still have the chance to work out a suitable repayment plan with the servicing company that represents their lender.
2. Most Homeowners Have Enough Equity To Sell Their Homes
For those who are exiting the forbearance program without a plan in place, many will have enough equity to sell their homes instead of facing foreclosures. Due to rapidly rising home prices over the last two years, the average homeowner has gained record amounts of equity in their home.
Marina Walsh, CMB, Vice President of Industry Analysis at MBA, says:
“Given the nation’s limited housing inventory and the variety of home retention and foreclosure alternatives on the table across various loan types, . . . Borrowers have more choices today to either stay in their homes or sell without resorting to a foreclosure.”
3. There Have Been Fewer Foreclosures over the Last Two Years
One of the seldom-reported benefits of the forbearance program was it gave homeowners facing difficulties an extra two years to get their finances in order and work out a plan with their lender. That helped prevent the foreclosures that normally would have come to the market had the new forbearance program not been available.
Even as people leave the forbearance program, there are still fewer foreclosures happening today than before the pandemic. That means, while there are more foreclosures now compared to last year (when foreclosures were paused), the number is still well below what the housing market has seen in a more typical year, like 2017-2019 (see graph below):
<img loading="lazy" class="aligncenter wp-image-102233" src="https://files.mykcm.com/2022/05/11125502/20220512-MEM-Eng-2.png" alt="What You Actually Need To Know About the Number of Foreclosures in Today’s Housing Market | MyKCM" width="600" height="450" srcset="https://files.mykcm.com/2022/05/11125502/20220512-MEM-Eng-2.png 1000w, https://files.mykcm.com/2022/05/11125502/20220512-MEM-Eng-2-600x450.png 600w, https://files.mykcm.com/2022/05/11125502/20220512-MEM-Eng-2-768x576.png 768w, https://files.mykcm.com/2022/05/11125502/20220512-MEM-Eng-2-100x75.png 100w" sizes="(max-width: 600px) 100vw, 600px" />
4. The Current Market Can Easily Absorb New Listings
When the foreclosures in 2008 hit the market, they added to the oversupply of houses that were already for sale. It’s exactly the opposite today. The latest Existing Home Sales Report from the National Association of Realtors (NAR) reveals:
“Total housing inventory at the end of March totaled 950,000 units, up 11.8% from February and down 9.5% from one year ago (1.05 million). Unsold inventory sits at a 2.0-month supply at the present sales pace, up from 1.7 months in February and down from 2.1 months in March 2021.”
A balanced market would have approximately a six-month supply of inventory. At 2.0 months, today’s housing market is severely understocked. Even if one million homes enter the market, there still won’t be enough inventory to meet the current demand.
Bottom Line
If you see headlines about the increasing number of foreclosures today, remember context is important. While it’s true the number of foreclosures is higher now than it was last year, foreclosures are still well below pre-pandemic years.
If you have questions, let’s connect to talk through the latest market conditions and what they mean for you.
2022-05-12T06:00:00-07:002022-05-12T07:11:16-07:00Donna Lernertag:donnalernerhometeam.com,2012-09-20:8960 How Homeownership Can Help Shield You from Inflation
<img width="750" height="410" src="https://files.mykcm.com/2022/04/25102951/20220426-KCM-Share.jpg" class="attachment-entry size-entry wp-post-image" alt="How Homeownership Can Help Shield You from Inflation | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2022/04/25102951/20220426-KCM-Share.jpg 750w, https://files.mykcm.com/2022/04/25102951/20220426-KCM-Share-600x328.jpg 600w, https://files.mykcm.com/2022/04/25102951/20220426-KCM-Share-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" />
If you’re following along with the news today, you’ve likely heard about rising inflation. You’re also likely feeling the impact in your day-to-day life as prices go up for gas, groceries, and more. These rising consumer costs can put a pinch on your wallet and make you re-evaluate any big purchases you have planned to ensure they’re still worthwhile.
If you’ve been thinking about purchasing a home this year, you’re probably wondering if you should continue down that path or if it makes more sense to wait. While the answer depends on your situation, here’s how homeownership can help you combat the rising costs that come with inflation.
Homeownership Offers Stability and Security
Investopedia explains that during a period of high inflation, prices rise across the board. That’s true for things like food, entertainment, and other goods and services, even housing. Both rental prices and home prices are on the rise. So, as a buyer, how can you protect yourself from increasing costs? The answer lies in homeownership.
Buying a home allows you to stabilize what’s typically your biggest monthly expense: your housing cost. If you get a fixed-rate mortgage on your home, you lock in your monthly payment for the duration of your loan, often 15 to 30 years. James Royal, Senior Wealth Management Reporter at Bankrate, says:
“A fixed-rate mortgage allows you to maintain the biggest portion of housing expenses at the same payment. Sure, property taxes will rise and other expenses may creep up, but your monthly housing payment remains the same.”
So even if other prices rise, your housing payment will be a reliable amount that can help keep your budget in check. If you rent, you don’t have that same benefit, and you won’t be protected from rising housing costs.
Use Home Price Appreciation to Your Benefit
While it’s true rising mortgage rates and home prices mean buying a house today costs more than it did a year ago, you still have an opportunity to set yourself up for a long-term win. Buying now lets you lock in at today’s rates and prices before both climb higher.
In inflationary times, it’s especially important to invest your money in an asset that traditionally holds or grows in value. The graph below shows how home price appreciation outperformed inflation in most decades going all the way back to the seventies – making homeownership a historically strong hedge against inflation (see graph below):
<img loading="lazy" class="aligncenter wp-image-101920" src="https://files.mykcm.com/2022/04/25102953/20220426-MEM-Eng-1.png" alt="How Homeownership Can Help Shield You from Inflation | MyKCM" width="600" height="450" srcset="https://files.mykcm.com/2022/04/25102953/20220426-MEM-Eng-1.png 1000w, https://files.mykcm.com/2022/04/25102953/20220426-MEM-Eng-1-600x450.png 600w, https://files.mykcm.com/2022/04/25102953/20220426-MEM-Eng-1-768x576.png 768w, https://files.mykcm.com/2022/04/25102953/20220426-MEM-Eng-1-100x75.png 100w" sizes="(max-width: 600px) 100vw, 600px" />
So, what does that mean for you? Today, experts say home prices will only go up from here thanks to the ongoing imbalance in supply and demand. Once you buy a house, any home price appreciation that does occur will be good for your equity and your net worth. And since homes are typically assets that grow in value (even in inflationary times), you have peace of mind that history shows your investment is a strong one.
Bottom Line
If you’re ready to buy a home, it may make sense to move forward with your plans despite rising inflation. If you want expert advice on your specific situation and how to time your purchase, let’s connect.
2022-04-26T06:00:00-07:002022-04-26T12:29:48-07:00Donna Lernertag:donnalernerhometeam.com,2012-09-20:8923Why This Housing Market Is Not a Bubble Ready To Pop
<img width="750" height="410" src="https://files.mykcm.com/2022/04/20152833/20220421-KCM-Share.jpg" class="attachment-entry size-entry wp-post-image" alt="Why This Housing Market Is Not a Bubble Ready To Pop | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2022/04/20152833/20220421-KCM-Share.jpg 750w, https://files.mykcm.com/2022/04/20152833/20220421-KCM-Share-600x328.jpg 600w, https://files.mykcm.com/2022/04/20152833/20220421-KCM-Share-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" />
Homeownership has become a major element in achieving the American Dream. A recent report from the National Association of Realtors (NAR) finds that over 86% of buyers agree homeownership is still the American Dream.
Prior to the 1950s, less than half of the country owned their own home. However, after World War II, many returning veterans used the benefits afforded by the GI Bill to purchase a home. Since then, the percentage of homeowners throughout the country has increased to the current rate of 65.5%. That strong desire for homeownership has kept home values appreciating ever since. The graph below tracks home price appreciation since the end of World War II:
<img loading="lazy" class="aligncenter wp-image-101888" src="https://files.mykcm.com/2022/04/20152835/20220421-MEM-Eng-1.png" alt="Why This Housing Market Is Not a Bubble Ready To Pop | MyKCM" width="600" height="450" srcset="https://files.mykcm.com/2022/04/20152835/20220421-MEM-Eng-1.png 1000w, https://files.mykcm.com/2022/04/20152835/20220421-MEM-Eng-1-600x450.png 600w, https://files.mykcm.com/2022/04/20152835/20220421-MEM-Eng-1-768x576.png 768w, https://files.mykcm.com/2022/04/20152835/20220421-MEM-Eng-1-100x75.png 100w" sizes="(max-width: 600px) 100vw, 600px" />
The graph shows the only time home values dropped significantly was during the housing boom and bust of 2006-2008. If you look at how prices spiked prior to 2006, it looks a bit like the current spike in prices over the past two years. That may lead some people to be concerned we’re about to see a similar fall in home values as we did when the bubble burst. To help alleviate those worries, let’s look at what happened last time and what’s happening today.
What Caused the Housing Crash 15 Years Ago?
Back in 2006, foreclosures flooded the market. That drove down home values dramatically. The two main reasons for the flood of foreclosures were:
1. Many purchasers were not truly qualified for the mortgage they obtained, which led to more homes turning into foreclosures.
2. A number of homeowners cashed in the equity on their homes. When prices dropped, they found themselves in an underwater situation (where the home was worth less than the mortgage on the house). Many of these homeowners walked away from their homes, leading to more foreclosures. This lowered neighboring home values even more.
This cycle continued for years.
Why Today’s Real Estate Market Is Different
Here are two reasons today’s market is nothing like the one we experienced 15 years ago.
1. Today, Demand for Homeownership Is Real (Not Artificially Generated)
Running up to 2006, banks were creating artificial demand by lowering lending standards and making it easy for just about anyone to qualify for a home loan or refinance their current home. Today, purchasers and those refinancing a home face much higher standards from mortgage companies.
Data from the Urban Institute shows the amount of risk banks were willing to take on then as compared to now.
<img loading="lazy" class="aligncenter wp-image-101889" src="https://files.mykcm.com/2022/04/20152838/20220421-MEM-Eng-2.png" alt="Why This Housing Market Is Not a Bubble Ready To Pop | MyKCM" width="600" height="450" srcset="https://files.mykcm.com/2022/04/20152838/20220421-MEM-Eng-2.png 1000w, https://files.mykcm.com/2022/04/20152838/20220421-MEM-Eng-2-600x450.png 600w, https://files.mykcm.com/2022/04/20152838/20220421-MEM-Eng-2-768x576.png 768w, https://files.mykcm.com/2022/04/20152838/20220421-MEM-Eng-2-100x75.png 100w" sizes="(max-width: 600px) 100vw, 600px" />
There’s always risk when a bank loans money. However, leading up to the housing crash 15 years ago, lending institutions took on much greater risks in both the person and the mortgage product offered. That led to mass defaults, foreclosures, and falling prices.
Today, the demand for homeownership is real. It’s generated by a re-evaluation of the importance of home due to a worldwide pandemic. Additionally, lending standards are much stricter in the current lending environment. Purchasers can afford the mortgage they’re taking on, so there’s little concern about possible defaults.
And if you’re worried about the number of people still in forbearance, you should know there’s no risk of that causing an upheaval in the housing market today. There won’t be a flood of foreclosures.
2. People Are Not Using Their Homes as ATMs Like They Did in the Early 2000s
As mentioned above, when prices were rapidly escalating in the early 2000s, many thought it would never end. They started to borrow against the equity in their homes to finance new cars, boats, and vacations. When prices started to fall, many of these homeowners were underwater, leading some to abandon their homes. This increased the number of foreclosures.
Homeowners didn’t forget the lessons of the crash as prices skyrocketed over the last few years. Black Knight reports that tappable equity (the amount of equity available for homeowners to access before hitting a maximum 80% loan-to-value ratio, or LTV) has more than doubled compared to 2006 ($4.6 trillion to $9.9 trillion).
The latest Homeowner Equity Insights report from CoreLogic reveals that the average homeowner gained $55,300 in home equity over the past year alone. Odeta Kushi, Deputy Chief Economist at First American, reports:
“Homeowners in Q4 2021 had an average of $307,000 in equity – a historic high.”
ATTOM Data Services also reveals that 41.9% of all mortgaged homes have at least 50% equity. These homeowners will not face an underwater situation even if prices dip slightly. Today, homeowners are much more cautious.
Bottom Line
The major reason for the housing crash 15 years ago was a tsunami of foreclosures. With much stricter mortgage standards and a historic level of homeowner equity, the fear of massive foreclosures impacting today’s market is not realistic.
2022-04-21T06:00:00-07:002022-04-21T10:05:55-07:00Donna Lernertag:donnalernerhometeam.com,2012-09-20:8910How To Approach Rising Mortgage Rates as a Buyer
<img width="750" height="410" src="https://files.mykcm.com/2022/04/18153455/20220420-KCM-Share.jpg" class="attachment-entry size-entry wp-post-image" alt="How To Approach Rising Mortgage Rates as a Buyer | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2022/04/18153455/20220420-KCM-Share.jpg 750w, https://files.mykcm.com/2022/04/18153455/20220420-KCM-Share-600x328.jpg 600w, https://files.mykcm.com/2022/04/18153455/20220420-KCM-Share-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" />
In the last few weeks, the average 30-year fixed mortgage rate from Freddie Mac inched up to 5%. While that news may have you questioning the timing of your home search, the truth is, timing has never been more important. Even though you may be tempted to put your plans on hold in hopes that rates will fall, waiting will only cost you more. Mortgage rates are forecast to continue rising in the year ahead.
If you’re thinking of buying a home, here are a few things to keep in mind so you can succeed even as mortgage rates rise.
How Rising Mortgage Rates Impact You
Mortgage rates play a significant role in your home search. As rates go up, they impact how much you’ll pay in your monthly mortgage payment, which directly affects how much you can comfortably afford. Here’s an example of how even a quarter-point increase can have a big impact on your monthly payment (see chart below):
<img loading="lazy" class="aligncenter wp-image-101860" src="https://files.mykcm.com/2022/04/18153452/20220420-MEM-Eng-1.png" alt="How To Approach Rising Mortgage Rates as a Buyer | MyKCM" width="600" height="450" srcset="https://files.mykcm.com/2022/04/18153452/20220420-MEM-Eng-1.png 1000w, https://files.mykcm.com/2022/04/18153452/20220420-MEM-Eng-1-600x450.png 600w, https://files.mykcm.com/2022/04/18153452/20220420-MEM-Eng-1-768x576.png 768w, https://files.mykcm.com/2022/04/18153452/20220420-MEM-Eng-1-100x75.png 100w" sizes="(max-width: 600px) 100vw, 600px" />
With mortgage rates on the rise, you’ve likely seen your purchasing power impacted already. Instead of delaying your plans, today’s rates should motivate you to purchase now before rates increase more. Use that motivation to energize your search and plan your next steps accordingly.
The best way to prepare is to work with a trusted real estate advisor now. An agent can connect you with a trusted lender, help you adjust your search based on your budget, and make sure you’re ready to act quickly when it’s time to make an offer.
Bottom Line
Serious buyers should approach rising rates as a motivating factor to buy sooner, not a reason to wait. Waiting will cost you more in the long run. Let’s connect today so you can better understand your budget and be prepared to buy your home even before rates climb higher.
2022-04-20T06:00:00-07:002022-04-20T06:40:58-07:00Donna Lernertag:donnalernerhometeam.com,2012-09-20:8895Why Pre-Approval Is an Important Step for Today’s Homebuyers
<img width="750" height="410" src="https://files.mykcm.com/2022/04/15135640/20220419-KCM-Share.jpg" class="attachment-entry size-entry wp-post-image" alt="Why Pre-Approval Is an Important Step for Today’s Homebuyers | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2022/04/15135640/20220419-KCM-Share.jpg 750w, https://files.mykcm.com/2022/04/15135640/20220419-KCM-Share-600x328.jpg 600w, https://files.mykcm.com/2022/04/15135640/20220419-KCM-Share-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" />
Being intentional and competitive are musts when buying a home this season. That’s why pre-approval is so important today. Pre-approval from a lender is the only way to know your true price range and how much money you can borrow for your loan. Peter Warden, Editor of The Mortgage Reports, explains:
“The lender will check out your personal finances and issue you a letter confirming the amount you’re eligible to borrow. This not only gives you a firm budget for house hunting, but also lets sellers know you’re qualified to make an offer.”
Why does that matter so much today? There are many more buyers looking for homes today than there are homes available for sale, and that’s creating some serious competition. According to the National Association of Realtors (NAR), the average home is getting 4.8 offers per sale. As a result, bidding wars are still common.
Your pre-approval gives you a leg up in these situations. That’s because you know exactly what you’re approved to borrow before you write your offer, and it lets the seller know you’re qualified to buy their home. This helps both you and the seller feel confident in what you’re bringing to the table. And that puts you in a better position to potentially win a bidding war.
As Warden puts it:
“There’s another important reason to get preapproved, too. And that’s because there are way more buyers than homes in today’s market — which means you need to be ultra-prepared if you want to win a bidding war. Most sellers are getting multiple offers right now. And most won’t even entertain an offer without a preapproval letter included.”
Every advantage you can gain as a buyer is crucial in a market that’s constantly changing. Mortgage rates are rising, home prices are going up, and lending institutions are regularly updating their standards. You’re going to need guidance to navigate these waters, so it’s important to have a team of professionals, such as a loan officer and a trusted real estate advisor, on your side. They’ll help make sure you’re ready to put your best foot forward.
Bottom Line
Getting pre-approved for a mortgage helps you better understand what you can afford and signals to sellers you’re serious about purchasing their home. Let’s connect so you have the tools you need to succeed as a homebuyer in today’s market.
2022-04-19T06:00:00-07:002022-04-19T06:25:31-07:00Donna Lernertag:donnalernerhometeam.com,2012-09-20:8705A Key To Building Wealth Is Homeownership
<img width="750" height="410" src="https://files.mykcm.com/2022/03/24150309/20220328-KCM-Share.jpg" class="attachment-entry size-entry wp-post-image" alt="A Key To Building Wealth Is Homeownership | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2022/03/24150309/20220328-KCM-Share.jpg 750w, https://files.mykcm.com/2022/03/24150309/20220328-KCM-Share-600x328.jpg 600w, https://files.mykcm.com/2022/03/24150309/20220328-KCM-Share-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" />
The link between financial security and homeownership is especially important today as inflation rises. But many people may not realize just how much owning a home contributes to your overall net worth. As Leslie Rouda Smith, President of the National Association of Realtors (NAR), says:
“Homeownership is rewarding in so many ways and can serve as a vital component in achieving financial stability.”
Here are just a few reasons why, if you’re looking to increase your financial stability, homeownership is a worthwhile goal.
Owning a Home Is a Building Block for Financial Success
A recent NAR report details several homeownership trends and statistics, including the difference in net worth between homeowners and renters. It finds:
“. . . the net worth of a homeowner was about $300,000 while that of a renter’s was $8,000 in 2021.”
To put that into perspective, the average homeowner’s net worth is roughly 40 times that of a renter (see visual below):
<img loading="lazy" class="aligncenter wp-image-101625" src="https://files.mykcm.com/2022/03/24150344/20220328-MEM-Eng.png" alt="A Key To Building Wealth Is Homeownership | MyKCM" width="600" height="450" srcset="https://files.mykcm.com/2022/03/24150344/20220328-MEM-Eng.png 960w, https://files.mykcm.com/2022/03/24150344/20220328-MEM-Eng-600x450.png 600w, https://files.mykcm.com/2022/03/24150344/20220328-MEM-Eng-768x576.png 768w, https://files.mykcm.com/2022/03/24150344/20220328-MEM-Eng-100x75.png 100w" sizes="(max-width: 600px) 100vw, 600px" />
The results from this report show that owning a home is a key piece to the puzzle when building your overall net worth.
Equity Gains Can Substantially Boost a Homeowner’s Net Worth
The net worth gap between owners and renters exists in large part because homeowners build equity. As a homeowner, your equity grows as your home appreciates in value and you make your mortgage payments each month.
In other words, when you own your home, you have the benefit of your mortgage payment acting as a contribution to a forced savings account. And when you sell, any equity you’ve built up comes back to you. As a renter, you’ll never see a return on the money you pay out in rent every month.
To sum it up, NAR says it simply:
“Homeownership has always been an important way to build wealth.”
Bottom Line
The gap between a homeowner’s net worth and a renter’s shows how truly foundational homeownership is to wealth-building. If you’re ready to start on your journey to homeownership, let’s connect today.
2022-03-28T06:00:00-07:002022-03-28T07:03:09-07:00Donna Lernertag:donnalernerhometeam.com,2012-09-20:8588This Spring Presents Sellers with a Golden Opportunity
<img width="750" height="410" src="https://files.mykcm.com/2022/03/11104015/20220314-KCM-Share.jpg" class="attachment-entry size-entry wp-post-image" alt="This Spring Presents Sellers with a Golden Opportunity | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2022/03/11104015/20220314-KCM-Share.jpg 750w, https://files.mykcm.com/2022/03/11104015/20220314-KCM-Share-600x328.jpg 600w, https://files.mykcm.com/2022/03/11104015/20220314-KCM-Share-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" />
If you’re thinking of selling your house this year, timing is crucial. After all, you’ll want to balance getting the most out of the sale of your current home and making the best investment when you buy your next one.
If that’s the case, you should know – you may be able to get the best of both worlds today. Here are four reasons why this spring may be your golden window of opportunity.
1. The Number of Homes on the Market Is Still Low
Today’s limited supply of houses for sale is putting sellers in the driver’s seat. There are far more buyers in the market today than there are homes available. That means purchasers are eagerly waiting for your house.
Listing your house now makes it the center of attention. And if you work with a real estate professional to price your house correctly, you can expect it to sell quickly and likely get multiple strong offers this season.
2. Your Equity Is Growing in Record Amounts
According to the most recent Homeowner Equity Insight report from CoreLogic, homeowners are sitting on record amounts of equity thanks to recent home price appreciation. The report finds that the average homeowner has gained $55,300 in equity over the past year.
That much equity can open doors for you to make a move. If you’ve been holding off on selling because you’re worried about how rising prices will impact your next home search, rest assured your equity can help fuel your move. It may be just what you need to cover a large portion – if not all – of the down payment on your next home.
3. Mortgage Rates Are Increasing
While it’s true mortgage rates have already been climbing this year, current mortgage rates are still below what they’ve been in recent decades. In the 2000s, the average mortgage rate was 6.27%. In the 1990s, the average rate was 8.12%.
For context, the current average 30-year fixed mortgage rate, according to Freddie Mac, is 3.85%. And while recent global uncertainty caused rates to dip slightly in the near-term, experts project rates will rise in the months ahead. Doug Duncan, Senior Vice President and Chief Economist at Fannie Mae, says:
“For homebuyers, we believe that borrowing costs will likely rise with the increase in mortgage rates….”
When that happens, it’ll cost you more to purchase your next home. That’s why it’s important to act now if you’re ready to sell. Work with a trusted advisor to kickstart the process so you can take key steps to making your next purchase before rates climb further.
4. Home Prices Are Climbing Too
Home prices have been skyrocketing in recent years because of the imbalance of supply and demand. And as long as that imbalance continues, so will the rise in home values.
What does that mean for you? If you’re selling so you can move into the home of your dreams or downsize into something that better suits your current needs, you have an opportunity to get ahead of the curve by leveraging your growing equity and purchasing your next home before prices climb higher.
And, once you make your purchase, you can find peace of mind in knowing ongoing home price appreciation is growing the value of your new investment.
Bottom Line
If you want to win when you sell and when you buy, this spring could be your golden opportunity. Let’s connect so you have the insights you need to take advantage of today’s incredible sellers’ market.
2022-03-14T06:00:00-07:002022-03-14T08:32:43-07:00Donna Lernertag:donnalernerhometeam.com,2012-09-20:8537How Global Uncertainty Is Impacting Mortgage Rates
<img width="750" height="410" src="https://files.mykcm.com/2022/03/07135327/20220308-KCM-Share.jpg" class="attachment-entry size-entry wp-post-image" alt="How Global Uncertainty Is Impacting Mortgage Rates | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2022/03/07135327/20220308-KCM-Share.jpg 750w, https://files.mykcm.com/2022/03/07135327/20220308-KCM-Share-600x328.jpg 600w, https://files.mykcm.com/2022/03/07135327/20220308-KCM-Share-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" />
If you’re thinking about buying or selling a home, you’ll want to keep a pulse on what’s happening with mortgage rates. Rates have been climbing in recent months, especially since January of this year. And just a few weeks ago, the 30-year fixed mortgage rate from Freddie Mac approached 4% for the first time since May of 2019. But that climb has dropped slightly over the past few weeks (see graph below):
<img loading="lazy" class="aligncenter wp-image-101383" src="https://files.mykcm.com/2022/03/07135324/20220308-MEM-Eng-1.png" alt="How Global Uncertainty Is Impacting Mortgage Rates | MyKCM" width="600" height="450" srcset="https://files.mykcm.com/2022/03/07135324/20220308-MEM-Eng-1.png 1000w, https://files.mykcm.com/2022/03/07135324/20220308-MEM-Eng-1-600x450.png 600w, https://files.mykcm.com/2022/03/07135324/20220308-MEM-Eng-1-768x576.png 768w, https://files.mykcm.com/2022/03/07135324/20220308-MEM-Eng-1-100x75.png 100w" sizes="(max-width: 600px) 100vw, 600px" />
The recent decline in mortgage rates is primarily due to growing uncertainty around geopolitical tensions surrounding Russia and Ukraine. But experts say it’s to be expected.
Here’s a look at how industry leaders are explaining the impact global uncertainty has on mortgage rates:
Odeta Kushi, Deputy Chief Economist at First American, says:
“While mortgage rates trended upward in 2022, one unintended side effect of global uncertainty is that it often results in downward pressure on mortgage rates.”
In another interview, Kushi adds:
“Geopolitical events play an important role in impacting the long end of the yield curve and mortgage rates. For example, in the weeks following the ‘Brexit’ vote in 2016, the U.S. Treasury bond yield declined and led to a corresponding decline in mortgage rates.”
Kushi’s insights are a reminder that, historically, economic uncertainty can impact the 10-year treasury yield – which has a long-standing relationship with mortgage rates and is often considered a leading indicator of where rates are headed. Basically, events overseas can have an impact on mortgage rates here, and that’s what we’re seeing today.
Will Mortgage Rates Stay Down?
While no one has a crystal ball to predict exactly what will happen with rates in the future, experts agree this slight decline is temporary. Sam Khater, Chief Economist at Freddie Mac, echoes Kushi’s sentiment, but adds that the decline in rates won’t last:
“Geopolitical tensions caused U.S. Treasury yields to recede this week . . . leading to a drop in mortgage rates. While inflationary pressures remain, the cascading impacts of the war in Ukraine have created market uncertainty. Consequently, rates are expected to stay low in the short-term but will likely increase in the coming months.”
Rates will likely fluctuate in the short-term based on what’s happening globally. But before long, experts project rates will renew their climb. If you’re in the market to buy a home, doing so before rates start to rise again may be your most affordable option.
Bottom Line
Mortgage rates are an important piece of the puzzle because they help determine how much you’ll owe on your monthly mortgage payment in your next home. Let’s connect so you have up-to-date information on rates and trusted advice on how to time your next move.
2022-03-09T07:00:00-07:002022-03-09T07:17:08-07:00Donna Lernertag:donnalernerhometeam.com,2012-09-20:8498Are Home Prices Continuing To Rise?
<img width="750" height="410" src="https://files.mykcm.com/2022/03/02155552/20220303-KCM-Share.jpg" class="attachment-entry size-entry wp-post-image" alt="Are Home Prices Continuing To Rise? | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2022/03/02155552/20220303-KCM-Share.jpg 750w, https://files.mykcm.com/2022/03/02155552/20220303-KCM-Share-600x328.jpg 600w, https://files.mykcm.com/2022/03/02155552/20220303-KCM-Share-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" />
Many analysts projected home price appreciation would slow dramatically in the fall of 2021 and then continue to soften throughout 2022. So far, that hasn’t happened. The major price indices are all revealing ongoing double-digit price appreciation. Here’s a look at their reports on year-over-year price appreciation for December:
Federal Housing Finance Agency (FHFA): 17.6%
S&P Case-Shiller: 18.8%
CoreLogic: 18.5%
To show that they’re not seeing signs of softening, here’s a graph that gives the progression of all three indices for each month of 2021.
<img loading="lazy" class="aligncenter wp-image-101324" src="https://files.mykcm.com/2022/03/02155554/20220303-MEM-Eng-1.png" alt="Are Home Prices Continuing To Rise? | MyKCM" width="600" height="450" srcset="https://files.mykcm.com/2022/03/02155554/20220303-MEM-Eng-1.png 1000w, https://files.mykcm.com/2022/03/02155554/20220303-MEM-Eng-1-600x450.png 600w, https://files.mykcm.com/2022/03/02155554/20220303-MEM-Eng-1-768x576.png 768w, https://files.mykcm.com/2022/03/02155554/20220303-MEM-Eng-1-100x75.png 100w" sizes="(max-width: 600px) 100vw, 600px" />
As the graph above reveals, last year, home price appreciation accelerated dramatically from January to July according to all three indices. Then, it began to decelerate in August when prices appreciated at a slower pace, but it didn’t decline. Many thought that would be the beginning of a rapid slowdown in the level of home price appreciation, but as the data shows, that wasn’t the case. Instead, prices began to level off for a few months before two of the three indices saw appreciation re-accelerate again in December.
To clarify, deceleration is not the same as depreciation. Acceleration means prices rise at a greater year-over-year pace than the previous month. Deceleration means home values continue to rise but at a slower pace of year-over-year appreciation. Depreciation means prices drop below current values. No one is forecasting that to happen.
In fact, the FHFA revealed that price appreciation accelerated in December in six of the nine regions it tracks. Case Shiller showed that appreciation accelerated in 15 of the 20 metros they report on. As Selma Hepp, Deputy Chief Economist at CoreLogic, explains:
“After some signs of slowing home price growth . . . monthly price growth re-accelerated again, indicating home buyers have not yet thrown in the towel.”
What Does This Mean for You?
Whether you’re a first-time purchaser or someone looking to sell your current house and buy a home that better fits your needs, waiting to decide what to do will cost you in two ways:
Mortgage rates are forecast to rise this year.
Home prices should continue to appreciate at double-digit levels for some time.
If you wait, rising mortgage rates and high home price appreciation will have a dramatic impact on your monthly mortgage payment.
Bottom Line
Maybe the best thing to do is listen to the advice of Len Kiefer, Deputy Chief Economist at Freddie Mac:
“If you’re thinking about waiting until next year and that maybe rates are higher, but you’ll get a deal on prices – well that’s risky. It may be more advantageous to purchase this year relative to waiting until 2023 at this time.”
2022-03-03T07:00:00-07:002022-03-03T10:47:49-07:00Donna Lernertag:donnalernerhometeam.com,2012-09-20:8398Real Estate Voted the Best Investment Eight Years in a Row
<img width="750" height="410" src="https://files.mykcm.com/2022/02/18105859/20220221-KCM-Share.jpg" class="attachment-entry size-entry wp-post-image" alt="Real Estate Voted the Best Investment Eight Years in a Row | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2022/02/18105859/20220221-KCM-Share.jpg 750w, https://files.mykcm.com/2022/02/18105859/20220221-KCM-Share-600x328.jpg 600w, https://files.mykcm.com/2022/02/18105859/20220221-KCM-Share-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" />
In an annual Gallup poll, Americans chose real estate as the best long-term investment. And it’s not the first time it’s topped the list, either. Real estate has been on a winning streak for the past eight years, consistently gaining traction as the best long-term investment (see graph below):
<img loading="lazy" class="aligncenter wp-image-101232" src="https://files.mykcm.com/2022/02/18105653/20220221-MEM-ENG.png" alt="Real Estate Voted the Best Investment Eight Years in a Row | MyKCM" width="600" height="450" srcset="https://files.mykcm.com/2022/02/18105653/20220221-MEM-ENG.png 960w, https://files.mykcm.com/2022/02/18105653/20220221-MEM-ENG-600x450.png 600w, https://files.mykcm.com/2022/02/18105653/20220221-MEM-ENG-768x576.png 768w, https://files.mykcm.com/2022/02/18105653/20220221-MEM-ENG-100x75.png 100w" sizes="(max-width: 600px) 100vw, 600px" />If you’re thinking about purchasing a home this year, this poll should reassure you. Even when inflation is rising like it is today, Americans agree an investment like real estate truly shines.
Why Is Real Estate a Great Investment During Times of High Inflation?
With inflation reaching its highest level in 40 years, it’s more important than ever to understand the financial benefits of homeownership. Rising inflation means prices are increasing across the board. That includes goods, services, housing costs, and more. But when you purchase your home, you lock in your monthly housing payments, effectively shielding yourself from increasing housing payments. James Royal, Senior Wealth Management Reporter at Bankrate, explains it like this:
“A fixed-rate mortgage allows you to maintain the biggest portion of housing expenses at the same payment. Sure, property taxes will rise and other expenses may creep up, but your monthly housing payment remains the same.”
If you’re a renter, you don’t have that same benefit, and you aren’t protected from increases in your housing costs, especially rising rents.
History Shows During Inflationary Periods, Home Prices Rise as Well
As a homeowner, your house is an asset that typically increases in value over time, even during inflation. That‘s because, as prices rise, the value of your home does, too. And that makes buying a home a great hedge during periods of high inflation. Natalie Campisi, Advisor Staff for Forbes, notes:
“Tangible assets like real estate get more valuable over time, which makes buying a home a good way to spend your money during inflationary times.”
Bottom Line
Housing truly is a strong investment, especially when inflation is high. When you lock in a mortgage payment, you’re shielded from housing cost increases, and you own an asset that typically gains value with time. If you want to better understand how buying a home could be a great investment for you, let’s connect today.
2022-02-21T07:00:00-07:002022-02-21T08:11:02-07:00Donna Lernertag:donnalernerhometeam.com,2012-09-20:83684 Simple Graphs Showing Why This Is Not a Housing Bubble
<img width="750" height="410" src="https://files.mykcm.com/2022/02/16120300/20220217-KCM-Share.jpg" class="attachment-entry size-entry wp-post-image" alt="4 Simple Graphs Showing Why This Is Not a Housing Bubble | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2022/02/16120300/20220217-KCM-Share.jpg 750w, https://files.mykcm.com/2022/02/16120300/20220217-KCM-Share-600x328.jpg 600w, https://files.mykcm.com/2022/02/16120300/20220217-KCM-Share-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" />
A recent survey revealed that many consumers believe there’s a housing bubble beginning to form. That feeling is understandable, as year-over-year home price appreciation is still in the double digits. However, this market is very different than it was during the housing crash 15 years ago. Here are four key reasons why today is nothing like the last time.
1. Houses Are Not Unaffordable Like They Were During the Housing Boom
The affordability formula has three components: the price of the home, wages earned by the purchaser, and the mortgage rate available at the time. Conventional lending standards say a purchaser should not spend more than 28% of their gross income on their mortgage payment.
Fifteen years ago, prices were high, wages were low, and mortgage rates were over 6%. Today, prices are still high. Wages, however, have increased, and the mortgage rate, even after the recent spike, is still well below 6%. That means the average purchaser today pays less of their monthly income toward their mortgage payment than they did back then.
In the latest Affordability Report by ATTOM Data, Chief Product Officer Todd Teta addresses that exact point:
“The average wage earner can still afford the typical home across the U.S., but the financial comfort zone continues shrinking as home prices keep soaring and mortgage rates tick upward.”
Affordability isn’t as strong as it was last year, but it’s much better than it was during the boom. Here’s a chart showing that difference:
<img loading="lazy" class="aligncenter wp-image-101200" src="https://files.mykcm.com/2022/02/16120303/20220217-MEM-Eng-1.png" alt="4 Simple Graphs Showing Why This Is Not a Housing Bubble | MyKCM" width="600" height="450" srcset="https://files.mykcm.com/2022/02/16120303/20220217-MEM-Eng-1.png 1000w, https://files.mykcm.com/2022/02/16120303/20220217-MEM-Eng-1-600x450.png 600w, https://files.mykcm.com/2022/02/16120303/20220217-MEM-Eng-1-768x576.png 768w, https://files.mykcm.com/2022/02/16120303/20220217-MEM-Eng-1-100x75.png 100w" sizes="(max-width: 600px) 100vw, 600px" />
If costs were so prohibitive, how did so many homes sell during the housing boom?
2. Mortgage Standards Were Much More Relaxed During the Boom
During the housing bubble, it was much easier to get a mortgage than it is today. As an example, let’s review the number of mortgages granted to purchasers with credit scores under 620. According to credit.org, a credit score between 550-619 is considered poor. In defining those with a score below 620, they explain:
“Credit agencies consider consumers with credit delinquencies, account rejections, and little credit history as subprime borrowers due to their high credit risk.”
Buyers can still qualify for a mortgage with a credit score that low, but they’re considered riskier borrowers. Here’s a graph showing the mortgage volume issued to purchasers with a credit score less than 620 during the housing boom, and the subsequent volume in the 14 years since.
<img loading="lazy" class="aligncenter wp-image-101201" src="https://files.mykcm.com/2022/02/16120306/20220217-MEM-Eng-2.png" alt="4 Simple Graphs Showing Why This Is Not a Housing Bubble | MyKCM" width="600" height="450" srcset="https://files.mykcm.com/2022/02/16120306/20220217-MEM-Eng-2.png 1000w, https://files.mykcm.com/2022/02/16120306/20220217-MEM-Eng-2-600x450.png 600w, https://files.mykcm.com/2022/02/16120306/20220217-MEM-Eng-2-768x576.png 768w, https://files.mykcm.com/2022/02/16120306/20220217-MEM-Eng-2-100x75.png 100w" sizes="(max-width: 600px) 100vw, 600px" />
Mortgage standards are nothing like they were the last time. Purchasers that acquired a mortgage over the last decade are much more qualified. Let’s take a look at what that means going forward.
3. The Foreclosure Situation Is Nothing Like It Was During the Crash
The most obvious difference is the number of homeowners that were facing foreclosure after the housing bubble burst. The Federal Reserve issues a report showing the number of consumers with a new foreclosure notice. Here are the numbers during the crash compared to today:
<img loading="lazy" class="aligncenter wp-image-101202" src="https://files.mykcm.com/2022/02/16120309/20220217-MEM-Eng-3.png" alt="4 Simple Graphs Showing Why This Is Not a Housing Bubble | MyKCM" width="600" height="450" srcset="https://files.mykcm.com/2022/02/16120309/20220217-MEM-Eng-3.png 1000w, https://files.mykcm.com/2022/02/16120309/20220217-MEM-Eng-3-600x450.png 600w, https://files.mykcm.com/2022/02/16120309/20220217-MEM-Eng-3-768x576.png 768w, https://files.mykcm.com/2022/02/16120309/20220217-MEM-Eng-3-100x75.png 100w" sizes="(max-width: 600px) 100vw, 600px" />
There’s no doubt the 2020 and 2021 numbers are impacted by the forbearance program, which was created to help homeowners facing uncertainty during the pandemic. However, there are fewer than 800,000 homeowners left in the program today, and most of those will be able to work out a repayment plan with their banks.
Rick Sharga, Executive Vice President of RealtyTrac, explains:
“The fact that foreclosure starts declined despite hundreds of thousands of borrowers exiting the CARES Act mortgage forbearance program over the last few months is very encouraging. It suggests that the ‘forbearance equals foreclosure’ narrative was incorrect.”
Why are there so few foreclosures now? Today, homeowners are equity rich, not tapped out.
In the run-up to the housing bubble, some homeowners were using their homes as personal ATM machines. Many immediately withdrew their equity once it built up. When home values began to fall, some homeowners found themselves in a negative equity situation where the amount they owed on their mortgage was greater than the value of their home. Some of those households decided to walk away from their homes, and that led to a rash of distressed property listings (foreclosures and short sales), which sold at huge discounts, thus lowering the value of other homes in the area.
Homeowners, however, have learned their lessons. Prices have risen nicely over the last few years, leading to over 40% of homes in the country having more than 50% equity. But owners have not been tapping into it like the last time, as evidenced by the fact that national tappable equity has increased to a record $9.9 trillion. With the average home equity now standing at $300,000, what happened last time won’t happen today.
As the latest Homeowner Equity Insights report from CoreLogic explains:
“Not only have equity gains helped homeowners more seamlessly transition out of forbearance and avoid a distressed sale, but they’ve also enabled many to continue building their wealth.”
There will be nowhere near the same number of foreclosures as we saw during the crash. So, what does that mean for the housing market?
4. We Don’t Have a Surplus of Homes on the Market – We Have a Shortage
The supply of inventory needed to sustain a normal real estate market is approximately six months. Anything more than that is an overabundance and will causes prices to depreciate. Anything less than that is a shortage and will lead to continued price appreciation. As the next graph shows, there were too many homes for sale from 2007 to 2010 (many of which were short sales and foreclosures), and that caused prices to tumble. Today, there’s a shortage of inventory, which is causing the acceleration in home values to continue.
<img loading="lazy" class="aligncenter wp-image-101203" src="https://files.mykcm.com/2022/02/16120313/20220217-MEM-Eng-4.png" alt="4 Simple Graphs Showing Why This Is Not a Housing Bubble | MyKCM" width="600" height="450" srcset="https://files.mykcm.com/2022/02/16120313/20220217-MEM-Eng-4.png 1000w, https://files.mykcm.com/2022/02/16120313/20220217-MEM-Eng-4-600x450.png 600w, https://files.mykcm.com/2022/02/16120313/20220217-MEM-Eng-4-768x576.png 768w, https://files.mykcm.com/2022/02/16120313/20220217-MEM-Eng-4-100x75.png 100w" sizes="(max-width: 600px) 100vw, 600px" />
Inventory is nothing like the last time. Prices are rising because there’s a healthy demand for homeownership at the same time there’s a shortage of homes for sale.
Bottom Line
If you’re worried that we’re making the same mistakes that led to the housing crash, the graphs above show data and insights to help alleviate your concerns.
2022-02-17T07:00:00-07:002022-02-17T07:40:03-07:00Donna Lernertag:donnalernerhometeam.com,2012-09-20:8315Want Top Dollar for Your House? Now’s the Time To List It.
<img width="750" height="410" src="https://files.mykcm.com/2022/02/09124913/20220210-KCM-Share.jpg" class="attachment-entry size-entry wp-post-image" alt="Want Top Dollar for Your House? Now’s the Time To List It. | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2022/02/09124913/20220210-KCM-Share.jpg 750w, https://files.mykcm.com/2022/02/09124913/20220210-KCM-Share-600x328.jpg 600w, https://files.mykcm.com/2022/02/09124913/20220210-KCM-Share-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" />
When you’re selling any item, you usually want to sell it for the greatest profit possible. That happens when there’s a strong demand and a limited supply for that item. In the real estate market, that time is right now. If you’re thinking of selling your house this year, here are two reasons why now’s the time to list.
1. Demand Is Very Strong This Winter
A recent article in Inman News explains:
“Spring, the hottest time of year for homebuyers and sellers, has started early, according to economists. . . . ‘Home shopping season appears to already be in full swing!’”
And they aren’t the only ones saying buyers are already out in full force. That claim is backed up with data released last week by ShowingTime. The ShowingTime Showing Index tracks the average number of monthly buyer showings on active residential properties, which is a highly reliable leading indicator of current and future trends for buyer demand. The latest index reveals this December was the most active December in five years (see graph below):
<img loading="lazy" class="aligncenter wp-image-101098" src="https://files.mykcm.com/2022/02/09124916/20220210-MEM-Eng-1.png" alt="Want Top Dollar for Your House? Now’s the Time To List It. | MyKCM" width="600" height="450" srcset="https://files.mykcm.com/2022/02/09124916/20220210-MEM-Eng-1.png 1000w, https://files.mykcm.com/2022/02/09124916/20220210-MEM-Eng-1-600x450.png 600w, https://files.mykcm.com/2022/02/09124916/20220210-MEM-Eng-1-768x576.png 768w, https://files.mykcm.com/2022/02/09124916/20220210-MEM-Eng-1-100x75.png 100w" sizes="(max-width: 600px) 100vw, 600px" />
As the data indicates, buyers are very active this winter. Last December saw even more showings than December of 2020, which was already a stronger-than-usual winter. And remember – you want to sell something when there’s a strong demand for that item. That time is now.
2. Housing Supply Is Extremely Low
Each month, realtor.com releases data on the number of active residential real estate listings (listings currently for sale). Their most recent report reveals the latest monthly number is the lowest we’ve seen in any January since 2017 (see graph below):
<img loading="lazy" class="aligncenter wp-image-101099" src="https://files.mykcm.com/2022/02/09124919/20220210-MEM-Eng-2.png" alt="Want Top Dollar for Your House? Now’s the Time To List It. | MyKCM" width="600" height="450" srcset="https://files.mykcm.com/2022/02/09124919/20220210-MEM-Eng-2.png 1000w, https://files.mykcm.com/2022/02/09124919/20220210-MEM-Eng-2-600x450.png 600w, https://files.mykcm.com/2022/02/09124919/20220210-MEM-Eng-2-768x576.png 768w, https://files.mykcm.com/2022/02/09124919/20220210-MEM-Eng-2-100x75.png 100w" sizes="(max-width: 600px) 100vw, 600px" />
And don’t forget, the best time to sell an item is when there’s a limited supply of it available. This graph clearly shows how extremely low housing supply is today.
Even Though Supply Is at a Historic Low, Home Sales Are at a 15-Year High
According to the latest Existing Home Sales Report from the National Association of Realtors (NAR), existing-home sales totaled 6.12 million in 2021 – the highest annual level since 2006. This means the market is hot and homeowners are in a great place to sell now while sales are so strong.
NAR also reports available listings by calculating the current months’ supply of inventory. They explain:
“Months’ supply refers to the number of months it would take for the current inventory of homes on the market to sell given the current sales pace.”
The current 1.8-months’ supply is the lowest ever reported. Here are the December numbers over the last five years (see graph below):
<img loading="lazy" class="aligncenter wp-image-101100" src="https://files.mykcm.com/2022/02/09124921/20220210-MEM-Eng-3.png" alt="Want Top Dollar for Your House? Now’s the Time To List It. | MyKCM" width="600" height="450" srcset="https://files.mykcm.com/2022/02/09124921/20220210-MEM-Eng-3.png 1000w, https://files.mykcm.com/2022/02/09124921/20220210-MEM-Eng-3-600x450.png 600w, https://files.mykcm.com/2022/02/09124921/20220210-MEM-Eng-3-768x576.png 768w, https://files.mykcm.com/2022/02/09124921/20220210-MEM-Eng-3-100x75.png 100w" sizes="(max-width: 600px) 100vw, 600px" />
The ratio of buyers to sellers favors homeowners right now to a greater degree than at any other time in history. Buyer demand is high, and supply is low. That gives sellers like you an incredible opportunity.
Bottom Line
If you agree the best time to sell anything is when demand is high and supply is low, let’s connect to begin discussing the process of listing your house today.
2022-02-10T07:00:00-07:002022-02-10T08:12:39-07:00Donna Lernertag:donnalernerhometeam.com,2012-09-20:8244The Top Indicator if You Want To Know Where Mortgage Rates Are Heading
<img width="750" height="410" src="https://files.mykcm.com/2022/02/01171558/20220202-KCM-Share.jpg" class="attachment-entry size-entry wp-post-image" alt="The Top Indicator if You Want To Know Where Mortgage Rates Are Heading | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2022/02/01171558/20220202-KCM-Share.jpg 750w, https://files.mykcm.com/2022/02/01171558/20220202-KCM-Share-600x328.jpg 600w, https://files.mykcm.com/2022/02/01171558/20220202-KCM-Share-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" />
Mortgage rates have increased significantly since the beginning of the year. Each Thursday, Freddie Mac releases its Primary Mortgage Market Survey. According to the latest survey, the average 30-year fixed-rate mortgage has risen from 3.22% at the start of the year to 3.55% as of last week. This is important to note because any increase in mortgage rates changes what a purchaser can afford. To give you an idea of how rising mortgage rates impact your purchasing power, see the table below:
<img loading="lazy" class="aligncenter wp-image-100996" src="https://files.mykcm.com/2022/02/01171602/20220202-MEM-Eng-1.png" alt="The Top Indicator if You Want To Know Where Mortgage Rates Are Heading | MyKCM" width="600" height="450" srcset="https://files.mykcm.com/2022/02/01171602/20220202-MEM-Eng-1.png 1000w, https://files.mykcm.com/2022/02/01171602/20220202-MEM-Eng-1-600x450.png 600w, https://files.mykcm.com/2022/02/01171602/20220202-MEM-Eng-1-768x576.png 768w, https://files.mykcm.com/2022/02/01171602/20220202-MEM-Eng-1-100x75.png 100w" sizes="(max-width: 600px) 100vw, 600px" />
How Can You Know Where Mortgage Rates Are Headed?
While it’s always difficult to know exactly where mortgage rates will go, a great indicator of where they may head is by looking at the 50-year history of the 10-year treasury yield, and then following its path. Understanding the mechanics of the treasury yield isn’t as important as knowing that there’s a correlation between how it moves and how mortgage rates follow. Here’s a graph showing that relationship over the last 50 years:
<img loading="lazy" class="aligncenter wp-image-100997" src="https://files.mykcm.com/2022/02/01171606/20220202-MEM-Eng-2.png" alt="The Top Indicator if You Want To Know Where Mortgage Rates Are Heading | MyKCM" width="600" height="450" srcset="https://files.mykcm.com/2022/02/01171606/20220202-MEM-Eng-2.png 1000w, https://files.mykcm.com/2022/02/01171606/20220202-MEM-Eng-2-600x450.png 600w, https://files.mykcm.com/2022/02/01171606/20220202-MEM-Eng-2-768x576.png 768w, https://files.mykcm.com/2022/02/01171606/20220202-MEM-Eng-2-100x75.png 100w" sizes="(max-width: 600px) 100vw, 600px" />
This correlation has continued into the new year. The treasury yield has started to climb, and that’s driven rates up. As of last Thursday, the treasury yield was 1.81%. That’s 1.74% below the mortgage rate reported the same day (3.55%) and is very close to the average spread we see between the two numbers (average spread is 1.7).
Where Will the Treasury Yield Head in the Future?
With this information in mind, a 10-year treasury-yield forecast would be a good indicator of where mortgage rates may be headed. The Wall Street Journal just surveyed a panel of over 75 academic, business, and financial economists asking them to forecast the treasury yield over the next few years. The consensus was that experts project the treasury yield will climb to 2.84% by the end of 2024. Based on the 50-year history of following this yield, that would likely put mortgage rates at about 4.5% in three years.
While the correlation between the 30-year fixed mortgage rate and the 10-year treasury yield is clear in the data shown above for the past 50 years, it shouldn’t be used as an exact indicator. They’re both hard to forecast, especially in this unprecedented economic time driven by a global pandemic. Yet understanding the relationship can help you get an idea of where rates may be going. It appears, based on the information we have now, that mortgage rates will continue to rise over the next few years. If that’s the case, your best bet may be to purchase a home sooner rather than later, if you’re able.
Bottom Line
Forecasting mortgage rates is very difficult. As Mark Fleming, Chief Economist at First American, once said:
“You know, the fallacy of economic forecasting is don’t ever try and forecast interest rates and or, more specifically, if you’re a real estate economist mortgage rates, because you will always invariably be wrong.”
However, if you’re either a first-time homebuyer or a current homeowner thinking of moving into a home that better fits your changing needs, understanding what’s happening with the 10-year treasury yield and mortgage rates can help you make an informed decision on the timing of your purchase.
2022-02-02T07:00:00-07:002022-02-02T08:46:16-07:00Donna Lernertag:donnalernerhometeam.com,2012-09-20:7989There Won’t Be a Wave of Foreclosures in the Housing Market
<img width="750" height="410" src="https://files.mykcm.com/2022/01/05102012/20220106-KCM-Share.jpg" class="attachment-entry size-entry wp-post-image" alt="There Won’t Be a Wave of Foreclosures in the Housing Market | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2022/01/05102012/20220106-KCM-Share.jpg 750w, https://files.mykcm.com/2022/01/05102012/20220106-KCM-Share-600x328.jpg 600w, https://files.mykcm.com/2022/01/05102012/20220106-KCM-Share-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" />
When mortgage forbearance plans were first announced and the pandemic surged through the country in early 2020, many homeowners were allowed to pause their mortgage payments. Some analysts were concerned that once the forbearance program ended, the housing market would experience a wave of foreclosures like what happened after the housing bubble 15 years ago.
Here’s a look at why that isn’t the case.
1. There Are Fewer Homeowners in Trouble This Time
After the last housing crash, over nine million households lost their homes to a foreclosure, short sale, or because they gave it back to the bank. Many believed millions of homeowners would face the same fate again this time.
However, today’s data shows that most homeowners exited their forbearance plan either fully caught up on payments or with a plan from the bank that restructured their loan in a way that allowed them to start making payments again. The latest data from the Mortgage Bankers Association (MBA) studies how people exited the forbearance program from June 2020 to November 2021.
Here are those findings:
38.6% left the program paid in full
19.9% made their monthly payments during the forbearance period
11.8% made up all past-due payments
6.9% paid off the loan in full
44% negotiated work-out repayment plans
29.1% received a loan deferral
14.1% received a loan modification
0.8% arranged a different repayment plan
0.6% sold as a short sale or did a deed-in-lieu
16.8% left the program still in trouble and without a loss mitigation plan in place
2. Those Left in the Program Can Still Negotiate a Repayment Plan
As of last Friday, the total number of mortgages still in forbearance stood at 890,000. Those who remain in forbearance still have the chance to work out a suitable plan with the servicing company that represents their lender. And the servicing companies are under pressure to do just that by both federal and state agencies.
Rick Sharga, Executive Vice President at RealtyTrac, says in a recent tweet:
“The [Consumer Financial Protection Bureau] and state [Attorneys General] look like they’re adopting a ‘zero tolerance’ approach to mortgage servicing enforcement. Likely that this will limit #foreclosure activity for a good part of 2022, while servicers explore all possible loss [mitigation] options.”
For more information, read the warning issued by the Attorney General of New York State.
3. Most Homeowners Have More Than Enough Equity To Sell Their Homes
For those who can’t negotiate a solution and the 16.8% who left the forbearance program without a work-out, many will have enough equity to sell their homes and leave the closing with cash instead of facing foreclosures.
Due to rapidly rising home prices over the last two years, the average homeowner has gained record amounts of equity in their home. As Frank Martell, President & CEO of CoreLogic, explains:
“Not only have equity gains helped homeowners more seamlessly transition out of forbearance and avoid a distressed sale, but they’ve also enabled many to continue building their wealth.”
4. There Have Been Far Fewer Foreclosures Over the Last Two Years
One of the seldom-reported benefits of the forbearance program was that it allowed households experiencing financial difficulties prior to the pandemic to enter the program. It gave those homeowners an extra two years to get their finances in order and work out a plan with their lender. That prevented over 400,000 foreclosures that normally would have come to the market had the new forbearance program not been available. Otherwise, the real estate market would have had to absorb those foreclosures. Here’s a graph depicting this data:
<img loading="lazy" class="aligncenter wp-image-100501" src="https://files.mykcm.com/2022/01/05102015/20220106-MEM-Eng-1.png" alt="There Won’t Be a Wave of Foreclosures in the Housing Market | MyKCM" width="600" height="450" srcset="https://files.mykcm.com/2022/01/05102015/20220106-MEM-Eng-1.png 1000w, https://files.mykcm.com/2022/01/05102015/20220106-MEM-Eng-1-600x450.png 600w, https://files.mykcm.com/2022/01/05102015/20220106-MEM-Eng-1-768x576.png 768w, https://files.mykcm.com/2022/01/05102015/20220106-MEM-Eng-1-100x75.png 100w" sizes="(max-width: 600px) 100vw, 600px" />
5. The Current Market Can Easily Absorb Over a Million New Listings
When foreclosures hit the market in 2008, they added to the oversupply of houses that were already for sale. That resulted in over a nine-month supply of listings, and anything over a six-month supply can cause prices to depreciate.
It’s exactly the opposite today. The latest Existing Home Sales Report from the National Association of Realtors (NAR) reveals:
“Total housing inventory at the end of November amounted to 1.11 million units, down 9.8% from October and down 13.3% from one year ago (1.28 million). Unsold inventory sits at a 2.1-month supply at the current sales pace, a decline from both the prior month and from one year ago.”
A balanced market would have approximately a six-month supply of inventory. At 2.1 months, the market is severely understocked. Even if one million homes enter the market, there still won’t be enough inventory to meet the current demand.
Bottom Line
The end of the forbearance plan will not cause any upheaval in the housing market. Sharga puts it best:
“The fact that foreclosure starts declined despite hundreds of thousands of borrowers exiting the CARES Act mortgage forbearance program over the last few months is very encouraging. It suggests that the ‘forbearance equals foreclosure’ narrative was incorrect. . . .”
2022-01-06T07:00:00-07:002022-01-06T07:53:48-07:00Donna Lernertag:donnalernerhometeam.com,2012-09-20:7455Experts Project Mortgage Rates Will Continue To Rise in 2022
<img width="750" height="410" src="https://files.mykcm.com/2021/10/29134054/20211103-KCM-Share.jpg" class="attachment-entry size-entry wp-post-image" alt="Experts Project Mortgage Rates Will Continue To Rise in 2022 | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2021/10/29134054/20211103-KCM-Share.jpg 750w, https://files.mykcm.com/2021/10/29134054/20211103-KCM-Share-600x328.jpg 600w, https://files.mykcm.com/2021/10/29134054/20211103-KCM-Share-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" />
Mortgage rates are one of several factors that impact how much you can afford if you’re buying a home. When rates are low, they help you get more house for your money. Within the last year, mortgage rates have hit the lowest point ever recorded, and they’ve hovered in the historic-low territory. But even over the past few weeks, rates have started to rise. This past week, the average 30-year fixed rate was 3.14%.
What does this mean if you’re thinking about making a move? Waiting until next year will cost you more in the long run. Here’s a look at what several experts project for mortgage rates going into 2022.
Freddie Mac:
“The average 30-year fixed-rate mortgage (FRM) is expected to be 3.0 percent in 2021 and 3.5 percent in 2022.”
Doug Duncan, Senior VP & Chief Economist, Fannie Mae:
“Right now, we forecast mortgage rates to average 3.3 percent in 2022, which, though slightly higher than 2020 and 2021, by historical standards remains extremely low and supportive of mortgage demand and affordability.”
First American:
“Consensus forecasts predict that mortgage rates will hit 3.2 percent by the end of the year, and 3.7 percent by the end of 2022.”
If rates rise even a half-point percentage over the next year, it will impact what you pay each month over the life of your loan – and that can really add up. So, the reality is, as prices and mortgage rates rise, it will cost more to purchase a home.
As you can see from the quotes above, industry experts project rates will rise in the months ahead. Here’s a table that compares other expert views and gives an average of those projections:<img loading="lazy" class="aligncenter wp-image-99789" src="https://files.mykcm.com/2021/10/29134056/20211103-MEM-Eng-1.png" alt="Experts Project Mortgage Rates Will Continue To Rise in 2022 | MyKCM" width="600" height="338" srcset="https://files.mykcm.com/2021/10/29134056/20211103-MEM-Eng-1.png 1000w, https://files.mykcm.com/2021/10/29134056/20211103-MEM-Eng-1-600x338.png 600w, https://files.mykcm.com/2021/10/29134056/20211103-MEM-Eng-1-768x432.png 768w, https://files.mykcm.com/2021/10/29134056/20211103-MEM-Eng-1-100x56.png 100w" sizes="(max-width: 600px) 100vw, 600px" />Whether you’re thinking about buying your first home, moving up to your dream home, or downsizing because your needs have changed, purchasing before mortgage rates rise even higher will help you take advantage of today’s homebuying affordability. That could be just the game-changer you need to achieve your homeownership goals.
Bottom Line
If you’re thinking of buying or selling over the next year, it may be wise to make your move sooner rather than later – before mortgage rates climb higher.
2021-11-03T06:00:00-07:002021-11-03T06:46:24-07:00Donna Lernertag:donnalernerhometeam.com,2012-09-20:7225111,285 Reasons You Should Buy a Home This Year
<img width="750" height="410" src="https://files.mykcm.com/2021/09/30145438/20211005-KCM-Share.jpg" class="attachment-entry size-entry wp-post-image" alt="111,285 Reasons You Should Buy a Home This Year | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2021/09/30145438/20211005-KCM-Share.jpg 750w, https://files.mykcm.com/2021/09/30145438/20211005-KCM-Share-600x328.jpg 600w, https://files.mykcm.com/2021/09/30145438/20211005-KCM-Share-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" />
The financial benefits of buying a home versus renting one are always up for debate. However, one element of the equation is often ignored – the ability to build wealth as a homeowner.
According to the latest research from the National Association of Realtors (NAR):
“Homeownership is a key pathway to building wealth and narrowing the racial income and wealth inequality gap. Housing wealth (equity) accumulation takes time and is built up by price appreciation and paying off the mortgage.”
An increase in equity builds the wealth of the individual that owns it. This wealth can be passed down to future generations. The Federal Reserve in an addendum to their Survey of Consumer Finances explains:
“There are numerous ways families can transmit wealth and resources across generations. Families can directly transfer their wealth to the next generation in the form of a bequest. They can also provide the next generation with inter vivos transfers (gifts), for example, providing down payment support to enable a home purchase or a substantial wedding gift.”
The Federal Reserve also explains another way wealth (including the additional net worth generated by an increase in home equity) can benefit future generations:
“In addition to direct transfers or gifts, families can make investments in their children that indirectly increase their wealth. For example, families can invest in their children’s educational success by paying for college or private schools, which can in turn increase their children’s ability to accumulate wealth.”
Here’s a look at how equity can build your wealth over time when you own a home.
Equity over the Last 30 Years
The NAR research reveals that the average gain for homeowners over the last five years was $139,134 and over the last 10 years was $218,505. Looking even further back in time, the article says:
“Homeowners who purchased a typical single-family existing-home 30 years ago at the median sales price of $103,333 with a 10% down payment loan and who sold the property at the median sales price of $357,700 in 2021 Q2 accumulated housing wealth of $349,258.”
Homeownership builds household wealth which also enables households to more easily move to the home of their dreams. As Mark Fleming, the Chief Economist at First American, explains:
“As homeowners gain equity in their homes, they are more likely to consider using that equity to purchase a larger or more attractive home – the wealth effect of rising equity.”
If you missed out on the equity gains over the last 30 years, don’t fret. Experts are still calling for substantial growth in equity over the next five years.
Looking Forward at the Equity To Come
The most recent Home Price Expectation Survey, a survey of over one hundred economists, real estate experts, and investment and market strategists, expects home values (and therefore equity) to increase as follows:
2021: 11.74%
2022: 5.82%
2023: 3.94%
2024: 3.56%
2025: 3.55%
The survey estimates a 31.8% cumulative appreciation over the next five years. Using their annual projections, the graph below shows the equity build-up a purchaser could earn, using a $350,000 home as an example:<img loading="lazy" class="aligncenter wp-image-99448" src="https://files.mykcm.com/2021/09/30145353/20210930-MEM-ENG.png" alt="111,285 Reasons You Should Buy a Home This Year | MyKCM" width="600" height="450" srcset="https://files.mykcm.com/2021/09/30145353/20210930-MEM-ENG.png 960w, https://files.mykcm.com/2021/09/30145353/20210930-MEM-ENG-600x450.png 600w, https://files.mykcm.com/2021/09/30145353/20210930-MEM-ENG-768x576.png 768w, https://files.mykcm.com/2021/09/30145353/20210930-MEM-ENG-100x75.png 100w" sizes="(max-width: 600px) 100vw, 600px" />That’s a potential increase in household wealth of $111,285 over five years.
Bottom Line
Owning a home is one of the best ways to grow your wealth over time. House wealth can impact generations. In many cases, the largest single investment a household has is their home. As that investment appreciates in value, the financial options also increase.
2021-10-07T06:00:00-07:002021-10-07T06:30:00-07:00Donna Lernertag:donnalernerhometeam.com,2012-09-20:7004Understand Your Options To Avoid Foreclosure
<img width="750" height="410" src="https://files.mykcm.com/2021/09/07113842/20210908-KCM-Share.jpg" class="attachment-entry size-entry wp-post-image" alt="Understand Your Options To Avoid Foreclosure | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2021/09/07113842/20210908-KCM-Share.jpg 750w, https://files.mykcm.com/2021/09/07113842/20210908-KCM-Share-600x328.jpg 600w, https://files.mykcm.com/2021/09/07113842/20210908-KCM-Share-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" />
Even though experts agree there’s no chance of a large-scale foreclosure crisis, there are a number of homeowners who may be coming face-to-face with foreclosure as a possibility. And while the overall percentage of homeowners at risk is decreasing with time (see graph below), that’s little comfort to those individuals who are facing challenges today.<img loading="lazy" class="aligncenter wp-image-99251" src="https://files.mykcm.com/2021/09/07113844/20210908-MEM-Eng-1.png" alt="Understand Your Options To Avoid Foreclosure | MyKCM" width="600" height="450" srcset="https://files.mykcm.com/2021/09/07113844/20210908-MEM-Eng-1.png 1000w, https://files.mykcm.com/2021/09/07113844/20210908-MEM-Eng-1-600x450.png 600w, https://files.mykcm.com/2021/09/07113844/20210908-MEM-Eng-1-768x576.png 768w, https://files.mykcm.com/2021/09/07113844/20210908-MEM-Eng-1-100x75.png 100w" sizes="(max-width: 600px) 100vw, 600px" />If you haven’t taken advantage of the forbearance period, it may be time to research and understand your options. It starts with knowing what foreclosure is. Investopedia defines it like this:
“Foreclosure is the legal process by which a lender attempts to recover the amount owed on a defaulted loan by taking ownership of and selling the mortgaged property. Typically, default is triggered when a borrower misses a specific number of monthly payments . . .”
The good news is, there are alternatives available to help you avoid having to go through the foreclosure process, including:
Reinstatement
Loan modification
Deed-in-lieu of foreclosure
Short sale
But before you go down any of those paths, it’s worth seeing if you have enough equity in your home to sell it and protect your investment.
Understand Your Options: Sell Your House
Equity is the difference between what you owe on the home and its market value based on factors like price appreciation.
In today’s real estate market, many homeowners have far more equity in their homes than they realize. Over the last year, buyer demand has been high, but housing supply has been low. That’s led to a substantial increase in home values. When prices rise, so does the amount of equity you have in your house.
According to CoreLogic, on average, homeowners gained $33,400 in equity over the last 12 months, and the average equity on mortgaged homes is now $216,000 (see map below):<img loading="lazy" class="aligncenter wp-image-99252" src="https://files.mykcm.com/2021/09/07113848/20210908-MEM-Eng-2.png" alt="Understand Your Options To Avoid Foreclosure | MyKCM" width="600" height="450" srcset="https://files.mykcm.com/2021/09/07113848/20210908-MEM-Eng-2.png 1000w, https://files.mykcm.com/2021/09/07113848/20210908-MEM-Eng-2-600x450.png 600w, https://files.mykcm.com/2021/09/07113848/20210908-MEM-Eng-2-768x576.png 768w, https://files.mykcm.com/2021/09/07113848/20210908-MEM-Eng-2-100x75.png 100w" sizes="(max-width: 600px) 100vw, 600px" />So, what does that mean for you? Over the past year, chances are your home’s value and therefore your equity has risen dramatically. If you’ve been in your home for a while, the mortgage payments you’ve made over time chipped away at the balance of your loan. If your home’s current value is higher than what you still owe on your loan, you may be able to use that increase to your advantage.
Frank Martell, President and CEO of CoreLogic, elaborates on how equity can help:
“Homeowner equity has more than doubled over the past decade and become a crucial buffer for many weathering the challenges of the pandemic. These gains have become an important financial tool and boosted consumer confidence in the U.S. housing market.”
Don’t Go at It Alone – Lean on Experts for Advice
To find out what your house is worth in today’s market, work with a local real estate professional. We’ll be able to give you an estimate of what your house could sell for based on recent sales of similar homes in your area. Since home prices are still appreciating, you may be able to sell your house to avoid foreclosure.
If you find out that you have to pursue other options, your agent can help with that too. We’ll be able to connect you with other professionals in the industry, like housing counselors who can look into your unique situation and offer advice on next steps if selling isn’t the best alternative.
Bottom Line
If you’re a homeowner facing hardship, let’s connect to explore your options and see if you can sell your house to avoid foreclosure.
2021-09-08T06:00:00-07:002021-09-08T06:46:28-07:00Donna Lernertag:donnalernerhometeam.com,2012-09-20:69305 Reasons Today’s Housing Market Is Anything but Normal
<img width="750" height="410" src="https://files.mykcm.com/2021/08/31105500/20210902-KCM-Share.jpg" class="attachment-entry size-entry wp-post-image" alt="5 Reasons Today's Housing Market Is Anything but Normal | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2021/08/31105500/20210902-KCM-Share.jpg 750w, https://files.mykcm.com/2021/08/31105500/20210902-KCM-Share-600x328.jpg 600w, https://files.mykcm.com/2021/08/31105500/20210902-KCM-Share-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" />
There are many headlines out there that claim we’re reverting to a more normal real estate market. That would indicate the housing market is returning to the pre-pandemic numbers we saw from 2015-2019. But that’s not happening. The market is still extremely vibrant as demand is still strong even while housing supply is slowly returning.
Here’s the definition of normal from the Merriam-Webster Dictionary:
“conforming to a type, standard, or regular pattern: characterized by that which is considered usual, typical, or routine.”
Using this definition, here are five housing industry metrics that prove we’re nowhere near normal.
1. Mortgage Rates
If we look at the 30-year mortgage rate chronicled by Freddie Mac, we can see the average rates by decade:
1970s: 8.86%
1980s: 12.7%
1990s: 8.12%
2000s: 6.29%
2010s: 4.09%
Today, the average mortgage rate stands at 2.87%, which is very close to the historic low.
Currently, mortgage rates are anything but usual, typical, or routine.
2. Home Price Appreciation
According to Black Knight, a housing data and analytics company, the average annual appreciation on residential real estate prices since 1995 has been 4.14%.
According to the latest forecast from the National Association of Realtors (NAR), home price appreciation will hit 14.1% this year, which will be greater than any year since Black Knight began collecting this data.
Currently, home price appreciation is anything but usual, typical, or routine.
3. Months’ Supply of Inventory (Homes for Sale)
According to NAR:
“Months’ supply refers to the number of months it would take for the current inventory of homes on the market to sell given the current sales pace. Historically, six months of supply is associated with moderate price appreciation, and a lower level of months’ supply tends to push prices up more rapidly.”
As of the latest Existing Homes Sales Report from NAR, the current months’ supply of inventory stands at 2.6. That’s less than half of a normal supply.
Currently, the supply of homes for sale is anything but usual, typical, or routine.
4. Days It Takes To Sell a Home
The days-on-market metric gives an indication of how hot a market is and how quickly homes are selling. In 2019, prior to the pandemic, the average days on market stood at 35, according to NAR. Today, that number is cut in half and is now at 17 days.
Currently, the days-on-market metric is anything but usual, typical, or routine.
5. Number of Offers per Listing
According to NAR, the number of offers per listing stood at 2.2 in 2019. Today, that number is double at 4.5.
Currently, the number of offers per listing is anything but usual, typical, or routine.
Bottom Line
When…
Mortgage rates are near historic lows
Price appreciation is at historic highs
Housing inventory is less than half of the normal amount
The time it takes to sell a home is cut in half, and
There are twice as many offers on each house
…it’s hard to say we’re in a normal market.
2021-09-02T06:00:00-07:002021-09-02T07:12:57-07:00Donna Lernertag:donnalernerhometeam.com,2012-09-20:6813What To Do with Your Vacation Home as Summer Ends
<img width="750" height="410" src="https://files.mykcm.com/2021/08/20133508/20210824-KCM-Share.jpg" class="attachment-entry size-entry wp-post-image" alt="What To Do with Your Vacation Home as Summer Ends | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2021/08/20133508/20210824-KCM-Share.jpg 750w, https://files.mykcm.com/2021/08/20133508/20210824-KCM-Share-600x328.jpg 600w, https://files.mykcm.com/2021/08/20133508/20210824-KCM-Share-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" />
As summer comes to a close, is it time to think about selling your vacation home? Based on recent data and expert opinions, it’s something you may want to consider. According to research from the National Association of Realtors (NAR), vacation home sales are up 57.2% year-over-year for January-April 2021.
If you’ve taken your last vacation this summer, here are reasons you should consider selling your vacation home this year.
1. Remote work continues to drive demand for vacation homes.
As the report from NAR says, based on continuously evolving work needs, there could be more interest in your second home than you think:
“In 2020, across all nine divisions, the fraction of the workforce that work from home is typically higher in the vacation home counties than in the non-vacation home counties… The opportunity to work from home could further raise the demand for vacation homes in future years.
Recent data shows we’ll likely see a sustained increase in the rate of remote work over the next five years. That means your vacation home could be highly sought after by certain buyers. Lawrence Yun, Chief Economist at NAR, puts it best, saying:
“Vacation homes are a hot commodity at the moment . . . . With many businesses and employers still extending an option to work remotely to workers, vacation housing and second homes will remain a popular choice among buyers.”
2. Selling could allow you to upgrade your vacation spot – or even your day-to-day scenery.
When demand is high, so is buyer competition. When competition is strong, buyers will do everything they can to make their offer on your vacation home as appealing as possible. This can include things like all-cash offers and more. If you sell now, you’ll be able to benefit from high buyer competition and pick the offer with the best possible terms for you. That offer could give you the opportunity to purchase the primary residence of your dreams.
Or, if you find that you’ll continue working from home, you could consider taking up more permanent residence in your vacation home and selling your primary residence instead. While this isn’t a choice everyone can consider, it could be a great option.
No matter what the situation, you don’t have to make the decision on your own. Your trusted real estate advisor can help you determine your best option when you’re ready to sell.
Bottom Line
Buyers remain interested in vacation homes this year for a number of reasons. Now that summer is winding down, it’s time to think about taking advantage of today’s demand for vacation homes. Let’s connect today if you’re ready to give your second home its day in the sun.
2021-08-24T06:00:00-07:002021-08-24T06:54:51-07:00Donna Lernertag:donnalernerhometeam.com,2012-09-20:6803What Do Experts Say About Today’s Mortgage Rates?
<img width="750" height="410" src="https://files.mykcm.com/2021/08/19154921/20210823-KCM-Share.jpg" class="attachment-entry size-entry wp-post-image" alt="What Do Experts Say About Today’s Mortgage Rates? | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2021/08/19154921/20210823-KCM-Share.jpg 750w, https://files.mykcm.com/2021/08/19154921/20210823-KCM-Share-600x328.jpg 600w, https://files.mykcm.com/2021/08/19154921/20210823-KCM-Share-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" />
Mortgage rates are hovering near record lows, and that’s good news for today’s homebuyers. The graph below shows mortgage rates dating back to 2016 and where today falls by comparison.<img loading="lazy" class="aligncenter wp-image-99108" src="https://files.mykcm.com/2021/08/19154923/20210823-MEM-Eng-1.png" alt="What Do Experts Say About Today’s Mortgage Rates? | MyKCM" width="600" height="450" srcset="https://files.mykcm.com/2021/08/19154923/20210823-MEM-Eng-1.png 1000w, https://files.mykcm.com/2021/08/19154923/20210823-MEM-Eng-1-600x450.png 600w, https://files.mykcm.com/2021/08/19154923/20210823-MEM-Eng-1-768x576.png 768w, https://files.mykcm.com/2021/08/19154923/20210823-MEM-Eng-1-100x75.png 100w" sizes="(max-width: 600px) 100vw, 600px" />Generally speaking, when rates are low, you can afford more home for your money. That’s why experts across the industry agree – today’s low rates present buyers with an incredible opportunity. Here’s what they have to say:
Sam Khater, Chief Economist at Freddie Mac, points out the historic nature of today’s rates:
“As the economy works to get back to its pre-pandemic self, and the fight against COVID-19 variants unfolds, owners and buyers continue to benefit from some of the lowest mortgage rates of all-time.”
Mark Fleming, Chief Economist at First American, talks about how rates impact a buyer’s bottom line:
“Mortgage rates are generally the same across the country, so a decline in mortgage rates boosts affordability equally in each market.”
Danielle Hale, Chief Economist at realtor.com, also notes the significance of today’s low rates and urges buyers to carefully consider their timing:
“Those who haven’t yet taken advantage of low rates to buy a home or refinance still have the opportunity to do so this summer.”
Hale goes on to say that buyers who don’t act soon could see higher rates in the coming months, negatively impacting their purchasing power:
“We expect mortgage rates to fluctuate near historic lows through the summer before beginning to climb this fall.”
And while mortgage rates are still low today, the data from Freddie Mac indicates rates are fluctuating ever so slightly right now, as they moved up one week before inching slightly back down in their latest release. It’s important to keep in mind the influence rates have on your monthly mortgage payment.
Even small increases can have a big impact on what you pay each month. Trust the experts. Today’s rates give you opportunity and flexibility in what you can afford. Don’t wait on the sidelines and hope for a better rate to come along; the rates we’re seeing today are worth capitalizing on.
Bottom Line
Mortgage rates hover near record lows today, but experts forecast they’ll rise in the coming months. Waiting could prove costly when that happens. Let’s connect today to discuss today’s rates and determine if now’s the time for you to buy.
2021-08-23T06:00:00-07:002021-08-23T07:16:43-07:00Donna Lernertag:donnalernerhometeam.com,2012-09-20:6752Are Houses Less Affordable Than They Were in Past Decades?
<img width="750" height="410" src="https://files.mykcm.com/2021/08/10163351/20210811-KCM-Share.jpg" class="attachment-entry size-entry wp-post-image" alt="Are Houses Less Affordable Than They Were in Past Decades? | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2021/08/10163351/20210811-KCM-Share.jpg 750w, https://files.mykcm.com/2021/08/10163351/20210811-KCM-Share-600x328.jpg 600w, https://files.mykcm.com/2021/08/10163351/20210811-KCM-Share-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" />
There are many headlines about how housing affordability is declining. The headlines are correct: it’s less affordable to purchase a home today than it was a year ago. However, it’s important to give this trend context. Is it less expensive to buy a house today than it was in 2005? What about 1995? What happens if we go all the way back to 1985? Or even 1975?
Obviously, the price of a home has appreciated dramatically over the last 45 years. So have the prices of milk, bread, and just about every other consumable. Prices rise over time – we know it as inflation.
However, when we look at housing, price is just one component that makes up the monthly cost of the home. Another key factor is the mortgage rate at the time of purchase.
Let’s look back at the cost of a home over the last five decades and adjust it for inflation by converting that cost to 2021 dollars. Here’s the methodology for each data point of the table below:
Mortgage Amount: Take the median sales price at the end of the second quarter of each year <a href="https://fred.stlouisfed.org/series/MSPUS" title="as reported by the Fed" target="_blank" rel="noopener noreferrer">as reported by the Fed</a> and assume that the buyer made a 10% down payment.
Mortgage Rate: Look at the monthly 30-year fixed rate for June of that year <a href="http://www.freddiemac.com/pmms/pmms30.html" title="as reported by Freddie Mac" target="_blank" rel="noopener noreferrer">as reported by Freddie Mac</a>.
P&I: Use a mortgage calculator to determine the monthly principal and interest on the loan.
In 2021 Dollars: Use an <a href="https://www.usinflationcalculator.com/" title="inflation calculator" target="_blank" rel="noopener noreferrer">inflation calculator</a> to determine what each payment would be when adjusted for inflation. Green means the homes were less expensive than today. Red means they were more expensive.
<a href="https://files.mykcm.com/2021/08/10163354/20210811-MEM-Eng-1.png" target="_blank" rel="" class="use_kcm_lightbox"><img loading="lazy" class="aligncenter wp-image-98965" src="https://files.mykcm.com/2021/08/10163354/20210811-MEM-Eng-1.png" alt="Are Houses Less Affordable Than They Were in Past Decades? | MyKCM" width="600" height="450" srcset="https://files.mykcm.com/2021/08/10163354/20210811-MEM-Eng-1.png 1000w, https://files.mykcm.com/2021/08/10163354/20210811-MEM-Eng-1-600x450.png 600w, https://files.mykcm.com/2021/08/10163354/20210811-MEM-Eng-1-768x576.png 768w, https://files.mykcm.com/2021/08/10163354/20210811-MEM-Eng-1-100x75.png 100w" sizes="(max-width: 600px) 100vw, 600px" /></a>As the chart shows, when adjusted for inflation, there were only two times in the last 45 years that it was less expensive to own a home than it is today.
Last year: Prices saw strong appreciation over the last year and mortgage rates have remained relatively flat. Therefore, affordability weakened.
2010: Home values plummeted after the housing crash 15 years ago. One-third of all sales were distressed properties (foreclosures or short sales). They sold at major discounts and negatively impacted the value of surrounding homes – of course homes were more affordable then.
At every other point, even in 1975, it was more expensive to buy a home than it is today.
Bottom Line
If you want to buy a home, don’t let the headlines about affordability discourage you. You can’t get the deal your friend got last year, but you will get a better deal than your parents did 20 years ago and your grandparents did 40 years ago.
2021-08-11T06:50:00-07:002021-08-13T06:53:32-07:00Donna Lernertag:donnalernerhometeam.com,2012-09-20:6725The Community and Economic Impacts of a Home Sale
<img width="750" height="410" src="https://files.mykcm.com/2021/08/04140722/20210809-KCM-Share.jpg" class="attachment-entry size-entry wp-post-image" alt="The Community and Economic Impacts of a Home Sale | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2021/08/04140722/20210809-KCM-Share.jpg 750w, https://files.mykcm.com/2021/08/04140722/20210809-KCM-Share-600x328.jpg 600w, https://files.mykcm.com/2021/08/04140722/20210809-KCM-Share-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" />
If you’re thinking of buying or selling a house, chances are you’re focusing on the many <a href="https://www.mykcm.com/2021/05/21/americans-choose-real-estate-as-the-best-investment-infographic/" title="extraordinary ways">extraordinary ways</a> it’ll change your life. What you may not realize is that decision impacts people’s lives far beyond your own. Home purchases and sales are significant drivers of economic activity. They have a major impact on your community and the entire U.S. economy via the multiple industries and professionals that take part in the process.
The National Association of Realtors (NAR) releases a <a href="https://cdn.nar.realtor/sites/default/files/documents/2020-state-by-state-economic-impact-of-real-estate-activity-united-states-of-america-3-31-2021.pdf" title="report" target="_blank" rel="noopener noreferrer">report</a> each year that highlights just how much economic activity a home sale generates. The chart below shows how the sale of both a newly built home and an existing home impact the economy:<a href="https://files.mykcm.com/2021/08/04140724/20210809-MEM-Eng-1.png" target="_blank" rel="" class="use_kcm_lightbox"><img loading="lazy" class="aligncenter wp-image-98909" src="https://files.mykcm.com/2021/08/04140724/20210809-MEM-Eng-1.png" alt="The Community and Economic Impacts of a Home Sale | MyKCM" width="600" height="338" srcset="https://files.mykcm.com/2021/08/04140724/20210809-MEM-Eng-1.png 1000w, https://files.mykcm.com/2021/08/04140724/20210809-MEM-Eng-1-600x338.png 600w, https://files.mykcm.com/2021/08/04140724/20210809-MEM-Eng-1-768x432.png 768w, https://files.mykcm.com/2021/08/04140724/20210809-MEM-Eng-1-100x56.png 100w" sizes="(max-width: 600px) 100vw, 600px" /></a>To dive a level deeper, NAR also provides a detailed look at how that varies <a href="https://www.nar.realtor/reports/state-by-state-economic-impact-of-real-estate-activity" title="state-by-state" target="_blank" rel="noopener noreferrer">state-by-state</a> for newly-built homes (see map below):<a href="https://files.mykcm.com/2021/08/04140727/20210809-MEM-Eng-2.png" target="_blank" rel="" class="use_kcm_lightbox"><img loading="lazy" class="aligncenter wp-image-98910" src="https://files.mykcm.com/2021/08/04140727/20210809-MEM-Eng-2.png" alt="The Community and Economic Impacts of a Home Sale | MyKCM" width="600" height="338" srcset="https://files.mykcm.com/2021/08/04140727/20210809-MEM-Eng-2.png 1000w, https://files.mykcm.com/2021/08/04140727/20210809-MEM-Eng-2-600x338.png 600w, https://files.mykcm.com/2021/08/04140727/20210809-MEM-Eng-2-768x432.png 768w, https://files.mykcm.com/2021/08/04140727/20210809-MEM-Eng-2-100x56.png 100w" sizes="(max-width: 600px) 100vw, 600px" /></a>As you can see, a single home sale can have a massive effect on the overall economy. Ali Wolf, Chief Economist for Zonda, talks about this in a <a href="https://www.builderonline.com/money/economics/housing-market-is-main-driver-for-the-u-s-economy_o" title="recent article" target="_blank" rel="noopener noreferrer">recent article</a>, noting there’s a significant impact at each distinct phase of the transaction:
“The housing market contributes to the economy in four main stages: during planning and land development, throughout the actual construction of the home, at the point of sale, and upon moving in.”
When you buy or sell a home, you’re leaving a lasting impression on the community at large in addition to fulfilling your own needs. That’s because each stage of the process involves numerous contractors, specialists, lawyers, town and city officials, and so many other professionals. Every individual you work with, from your trusted <a href="https://www.mykcm.com/2021/06/14/the-right-expert-will-guide-you-through-this-unprecedented-market/" title="real estate advisor">real estate advisor</a> to the architects who design new homes, has their own team of professionals involved behind the scenes.
Bottom Line
Homebuyers and sellers are economic drivers in their community and beyond. If you’re thinking of buying or selling, let’s connect today to start the process. It won’t just change your life; it’ll make a powerful impact on our entire community.
2021-08-09T11:02:00-07:002021-08-09T11:06:01-07:00Donna Lernertag:donnalernerhometeam.com,2012-09-20:6681Key Questions To Ask Yourself Before Buying a Home
<img width="750" height="410" src="https://files.mykcm.com/2021/07/29160835/20210802-KCM-Share.jpg" class="attachment-entry size-entry wp-post-image" alt="Key Questions To Ask Yourself Before Buying a Home | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2021/07/29160835/20210802-KCM-Share.jpg 750w, https://files.mykcm.com/2021/07/29160835/20210802-KCM-Share-600x328.jpg 600w, https://files.mykcm.com/2021/07/29160835/20210802-KCM-Share-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" />
Sometimes it can feel like everyone has advice when it comes to buying a home. While your friends and loved ones may have your best interests in mind, they may also be missing crucial information about today’s housing market that you need to make your best decision.
Before you decide whether you’re ready to buy a home, you should know how to answer these three questions.
1. What’s Going on with Home Prices?
Home prices are one factor that directly impacts how much it will cost to buy a home and how much you stand to gain as a homeowner when prices appreciate.
The graph below shows just how much experts are forecasting prices to rise this year:<img loading="lazy" class="aligncenter wp-image-98865" src="https://files.mykcm.com/2021/07/29160837/20210802-MEM-Eng-1.png" alt="Key Questions To Ask Yourself Before Buying a Home | MyKCM" width="600" height="450" srcset="https://files.mykcm.com/2021/07/29160837/20210802-MEM-Eng-1.png 1000w, https://files.mykcm.com/2021/07/29160837/20210802-MEM-Eng-1-600x450.png 600w, https://files.mykcm.com/2021/07/29160837/20210802-MEM-Eng-1-768x576.png 768w, https://files.mykcm.com/2021/07/29160837/20210802-MEM-Eng-1-100x75.png 100w" sizes="(max-width: 600px) 100vw, 600px" />Continued price appreciation is great news for existing homeowners but can pose a significant challenge if you wait to buy. Using these forecasts, you can determine just how much waiting could cost you. If prices increase based on the average of all forecasts (12.46%), a median-priced home that cost $350,000 in January of 2021 will cost an additional $43,610 by the end of the year. What does this mean for you? Put simply, with home prices increasing, the longer you wait, the more it could cost you.
2. Are Today’s Low Mortgage Rates Going To Last?
Another significant factor that should inform your decision is mortgage interest rates. Today’s average rates remain close to record-lows. Much like prices, though, experts forecast rates will rise over the coming months, as the chart below shows:<img loading="lazy" class="aligncenter wp-image-98866" src="https://files.mykcm.com/2021/07/29160840/20210802-MEM-Eng-2.png" alt="Key Questions To Ask Yourself Before Buying a Home | MyKCM" width="600" height="450" srcset="https://files.mykcm.com/2021/07/29160840/20210802-MEM-Eng-2.png 1000w, https://files.mykcm.com/2021/07/29160840/20210802-MEM-Eng-2-600x450.png 600w, https://files.mykcm.com/2021/07/29160840/20210802-MEM-Eng-2-768x576.png 768w, https://files.mykcm.com/2021/07/29160840/20210802-MEM-Eng-2-100x75.png 100w" sizes="(max-width: 600px) 100vw, 600px" />Your monthly mortgage payment can be significantly impacted by even the slightest increase in mortgage rates, which makes the overall cost of the home greater over time when you wait.
3. Why Is Homeownership Important to You?
The final question is a personal one. Before deciding, you’ll need to understand your motivation to buy a home and why homeownership is an important goal for you. The financial benefits of owning a home are often easier to account for than the many emotional ones.
The 2021 National Homeownership Market Survey shows that six of the nine reasons Americans value homeownership are because of how it impacts them on a personal, aspirational level. The survey says homeownership provides:
Stability
Safety
A Sense of Accomplishment
A Life Milestone
A Stake in the Community
Personal Pride
The National Housing & Financial Capability Survey from NeighborWorks America also highlights the emotional benefits of homeownership:<img loading="lazy" class="aligncenter wp-image-98867" src="https://files.mykcm.com/2021/07/29160843/20210802-MEM-Eng-3.png" alt="Key Questions To Ask Yourself Before Buying a Home | MyKCM" width="600" height="450" srcset="https://files.mykcm.com/2021/07/29160843/20210802-MEM-Eng-3.png 1000w, https://files.mykcm.com/2021/07/29160843/20210802-MEM-Eng-3-600x450.png 600w, https://files.mykcm.com/2021/07/29160843/20210802-MEM-Eng-3-768x576.png 768w, https://files.mykcm.com/2021/07/29160843/20210802-MEM-Eng-3-100x75.png 100w" sizes="(max-width: 600px) 100vw, 600px" />Clearly, there’s a value to homeownership beyond the many great financial opportunities it provides. It gives homeowners a sense of pride, safety, security, and accomplishment – which impacts their lives and how they feel daily.
Bottom Line
Homeownership is life-changing, and buying a home can positively impact you in so many ways. With any decision this big, it helps to have a trusted advisor by your side each step of the way. If you’re ready to begin your journey toward homeownership, let’s connect to discuss your options and begin your journey.
2021-08-02T06:00:00-07:002021-08-02T05:53:18-07:00Lauren Mesagnotag:donnalernerhometeam.com,2012-09-20:6666Waiting To Buy a Home Could Cost You
<img width="1046" height="2403" src="https://files.mykcm.com/2021/07/29150353/20210723-MEM-1-1046x2403.png" class="attachment-entry size-entry wp-post-image" alt="Waiting To Buy a Home Could Cost You [INFOGRAPHIC] | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2021/07/29150353/20210723-MEM-1-1046x2403.png 1046w, https://files.mykcm.com/2021/07/29150353/20210723-MEM-1-261x600.png 261w, https://files.mykcm.com/2021/07/29150353/20210723-MEM-1-446x1024.png 446w, https://files.mykcm.com/2021/07/29150353/20210723-MEM-1-768x1765.png 768w, https://files.mykcm.com/2021/07/29150353/20210723-MEM-1-669x1536.png 669w, https://files.mykcm.com/2021/07/29150353/20210723-MEM-1-891x2048.png 891w, https://files.mykcm.com/2021/07/29150353/20210723-MEM-1-100x230.png 100w, https://files.mykcm.com/2021/07/29150353/20210723-MEM-1.png 1304w" sizes="(max-width: 1046px) 100vw, 1046px" />
Some Highlights
If you’re thinking of buying a home but wondering if waiting a few years will save you in the long run, think again.
The longer the wait, the more you’ll pay, especially when mortgage rates and home prices rise. Even the slightest change in the mortgage rate can have a big impact on your buying power no matter your price point.
Don’t assume waiting will save you money. Let’s connect to set the ball into motion today while mortgage rates are hovering near historic lows.
2021-07-30T06:00:00-07:002021-07-30T06:37:24-07:00Donna Lernertag:donnalernerhometeam.com,2012-09-20:6658Home Sellers: There Is an Extra Way To Welcome Home Our Veterans
<img width="750" height="410" src="https://files.mykcm.com/2021/07/28112146/20210729-KCM-Share.jpg" class="attachment-entry size-entry wp-post-image" alt="Home Sellers: There Is an Extra Way To Welcome Home Our Veterans | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2021/07/28112146/20210729-KCM-Share.jpg 750w, https://files.mykcm.com/2021/07/28112146/20210729-KCM-Share-600x328.jpg 600w, https://files.mykcm.com/2021/07/28112146/20210729-KCM-Share-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" />
Some veterans are finding it difficult to obtain a home in today’s market. According to the National Association of Realtors (NAR):
“Conventional conforming mortgages (mortgages that conform to guidelines set by Fannie Mae and Freddie Mac), accounted for 74% of mortgages obtained by homebuyers in May 2021, an increase from about 65% during 2018 through 2019…The share of VA-guaranteed loans has also decreased to 7% in May 2021 from about 10% in past years.”
Recent data in the latest Origination Insight Report from Ellie Mae sheds light on the continuation of this trend. Below, we can see just how small of a share of total financing VA loans made up in June of 2021, according to that Ellie Mae report:<img loading="lazy" class="aligncenter wp-image-98849" src="https://files.mykcm.com/2021/07/28112148/20210729-MEM-Eng-1.png" alt="Home Sellers: There Is an Extra Way To Welcome Home Our Veterans | MyKCM" width="600" height="450" srcset="https://files.mykcm.com/2021/07/28112148/20210729-MEM-Eng-1.png 1000w, https://files.mykcm.com/2021/07/28112148/20210729-MEM-Eng-1-600x450.png 600w, https://files.mykcm.com/2021/07/28112148/20210729-MEM-Eng-1-768x576.png 768w, https://files.mykcm.com/2021/07/28112148/20210729-MEM-Eng-1-100x75.png 100w" sizes="(max-width: 600px) 100vw, 600px" />The drop in VA loan usage can be attributed to the difficulties veterans continue to face when buying a home. The NAR article elaborates:
“It is extremely difficult for FHA/VA buyers to get accepted in a multiple offer situation. They are on the bottom of the hierarchy.”
One contributing factor is that buyers with VA loans can’t waive certain contingencies. However, just because a certain contingency must be present for a particular buyer doesn’t mean that buyer’s offer shouldn’t be considered.
What Should Sellers Do To Help Create a Level Playing Field?
As a seller, it’s important to consider every offer in front of you regardless of loan type. If you’re selecting an offer because some contingencies are waived, keep in mind that it doesn’t always mean the offer is what’s best for you.
Buyers who can’t waive specific contingencies may adjust other terms in their offer to make it more appealing to sellers. This may depend on several factors, including their loan type and location, but a motivated buyer and their agent will do everything they can to present an offer that’s as appealing to you as possible.
Ultimately, you should make sure you take time to really understand the terms of their offer and see the big picture. Working with a driven buyer who’s motivated to purchase your house may provide a better opportunity for you to reach your overall best option and what’s most important to you.
Bottom Line
If you’re ready to sell, let’s connect. Together, we can make sure you understand the terms of all offers so you can give each one fair consideration, including those buyers using a VA loan. Our veterans sacrifice so much for our country. They’ve earned our gratitude and should have the same opportunity to obtain the home of their dreams.
2021-07-29T06:00:00-07:002021-07-29T06:40:23-07:00Donna Lernertag:donnalernerhometeam.com,2012-09-20:66504 Reasons Why the End of Forbearance Will Not Lead to a Wave of Foreclosures
<img width="750" height="410" src="https://files.mykcm.com/2021/07/27160850/20210728-KCM-Share.jpg" class="attachment-entry size-entry wp-post-image" alt="4 Reasons Why the End of Forbearance Will Not Lead to a Wave of Foreclosures | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2021/07/27160850/20210728-KCM-Share.jpg 750w, https://files.mykcm.com/2021/07/27160850/20210728-KCM-Share-600x328.jpg 600w, https://files.mykcm.com/2021/07/27160850/20210728-KCM-Share-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" />
With forbearance plans about to come to an end, many are concerned the housing market will experience a wave of foreclosures like what happened after the housing bubble 15 years ago. Here are four reasons why that won’t happen.
1. There are fewer homeowners in trouble this time
After the last housing crash, about 9.3 million households lost their home to a foreclosure, short sale, or because they simply gave it back to the bank.
As stay-at-home orders were issued early last year, the overwhelming fear was the pandemic would decimate the housing industry in a similar way. Many experts projected 30% of all mortgage holders would enter the forbearance program. Only 8.5% actually did, and that number is now down to 3.5%.
As of last Friday, the total number of mortgages still in forbearance stood at 1,863,000. That’s definitely a large number, but nowhere near 9.3 million.
2. Most of the 1.86M in forbearance have enough equity to sell their home
Of the 1.86 million homeowners currently in forbearance, 87% have at least 10% equity in their homes. The 10% equity number is important because it enables homeowners to sell their houses and pay the related expenses instead of facing the hit on their credit that a foreclosure or short sale would create.
The remaining 13% might not all have the option to sell, so if the entire 13% of the 1.86M homes went into foreclosure, that would total 241,800 mortgages. To give that number context, here are the annual foreclosure numbers of the three years leading up to the pandemic:
2017: 314,220
2018: 279,040
2019: 277,520
The probable number of foreclosures coming out of the forbearance program is nowhere near the number of foreclosures coming out of the housing crash 15 years ago. The number does, however, draw a similar comparison to the three years prior to the pandemic.
3. The current market can absorb any listings coming to the market
When foreclosures hit the market in 2008, there was an excess supply of homes for sale. The situation is exactly the opposite today. In 2008, there was a 9-month supply of listings for sale. Today, that number stands at less than 3 months of inventory on the market.
As Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), explains when addressing potential foreclosures emerging from the forbearance program:
“Any foreclosure increases will likely be quickly absorbed by the market. It will not lead to any price declines.”
4. Those in power will do whatever is necessary to prevent a wave of foreclosures
Just last Friday, the White House released a fact sheet explaining how homeowners with government-backed mortgages will be given further options to enable them to keep their homes when exiting forbearance. Here are two examples mentioned in the release:
“For homeowners who can resume their pre-pandemic monthly mortgage payment and where agencies have the authority, agencies will continue requiring mortgage servicers to offer options that allow borrowers to move missed payments to the end of the mortgage at no additional cost to the borrower.”
“The new steps the Department of Housing and Urban Development (HUD), Department of Agriculture (USDA), and Department of Veterans Affairs (VA) are announcing will aim to provide homeowners with a roughly 25% reduction in borrowers’ monthly principal and interest (P&I) payments to ensure they can afford to remain in their homes and build equity long-term. This brings options for homeowners with mortgages backed by HUD, USDA, and VA closer in alignment with options for homeowners with mortgages backed by Fannie Mae and Freddie Mac.”
When evaluating the four reasons above, it’s clear there won’t be a flood of foreclosures coming to the market as the forbearance program winds down.
Bottom Line
As Ivy Zelman, founder of the major housing market analytical firm Zelman & Associates, notes:
“The likelihood of us having a foreclosure crisis again is about zero percent.”
2021-07-28T06:00:00-07:002021-07-29T06:40:35-07:00Donna Lernertag:donnalernerhometeam.com,2012-09-20:66293 Hot Topics in the Housing Market Right Now
<img width="750" height="410" src="https://files.mykcm.com/2021/07/22162939/20210726-KCM-Share.jpg" class="attachment-entry size-entry wp-post-image" alt="3 Hot Topics in the Housing Market Right Now | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2021/07/22162939/20210726-KCM-Share.jpg 750w, https://files.mykcm.com/2021/07/22162939/20210726-KCM-Share-600x328.jpg 600w, https://files.mykcm.com/2021/07/22162939/20210726-KCM-Share-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" />
If you’re a prospective buyer or seller, it’s important to understand the current real estate market conditions and how they affect you. The Counselors of Real Estate (CRE) just released its Top Ten Issues Affecting Real Estate report. Here are three hot topics from the list and how they impact today’s housing market.
Technology Acceleration and Innovation
The past year ushered in many changes to the real estate industry, especially when it comes to technology. The CRE report elaborates on this:
“Lockdown-driven changes in our work, in the economy, in social structures, and in our personal behavior have pushed our reluctance aside. The acceleration and adoption of technology during the pandemic has impacted everything, and real estate is no exception.”
For real estate, innovations like digital documentation, virtual tours, and video chat enable agents to connect with clients no matter their location. These options are ideal for prospective buyers and sellers who aren’t local to the area or those that need the added flexibility signing documents online or doing virtual tours provide. That’s why many trusted real estate advisors will continue to use these technologies moving forward to best serve their clients.
Remote Work and Mobility
Working from home became the reality for many individuals during the pandemic, and the latest list from the CRE identified remote work and mobility as an important influence on the real estate market. As the report notes:
“…the pandemic universally caused a movement away from urban cores, particularly for those with higher incomes who could afford to move and for lower-income individuals seeking lower costs of living. Most of these relocations remained within their original region—84%—and, while some are returning, it is unknown as to the permanence of these movements or whether they represent a true urban exodus.”
With the added mobility remote work offers, where people are moving and where they can ultimately purchase a home is less dependent on a physical office location. This newfound flexibility is giving remote workers the opportunity to move to more affordable areas and buy more home for their money.
Housing Supply and Affordability
Finally, the limited supply of houses for sale and the related affordability challenges also makes CRE’s list of key factors this year:
“According to the National Association of Realtors®, the state of America’s housing inventory is dire, with a chronic shortage of affordable and available homes needed to support the nation’s population.”
There is good news. Homes are still more affordable than they have been historically thanks to today’s low mortgage rates. And while housing supply is still low, we’re seeing steady increases in the number of homes coming to market, which gives hope to homebuyers. As the supply of homes for sale improves, buyers will have more options.
Bottom Line
New technology, remote work, housing supply, and home affordability are key factors in the housing market right now for both buyers and sellers. If you want to better understand how these topics can impact you, let’s connect today.
2021-07-26T06:00:00-07:002021-07-26T06:33:05-07:00Donna Lernertag:donnalernerhometeam.com,2012-09-20:6617Pop Quiz: Can You Define These Key Terms in Today’s Housing Market?
<br class="Apple-interchange-newline" /><img width="1046" height="2651" src="https://files.mykcm.com/2021/07/22135823/20210723-MEM-1046x2651.png" class="attachment-entry size-entry wp-post-image" alt="Pop Quiz: Can You Define These Key Terms in Today’s Housing Market? [INFOGRAPHIC] | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2021/07/22135823/20210723-MEM-1046x2651.png 1046w, https://files.mykcm.com/2021/07/22135823/20210723-MEM-237x600.png 237w, https://files.mykcm.com/2021/07/22135823/20210723-MEM-404x1024.png 404w, https://files.mykcm.com/2021/07/22135823/20210723-MEM-768x1947.png 768w, https://files.mykcm.com/2021/07/22135823/20210723-MEM-606x1536.png 606w, https://files.mykcm.com/2021/07/22135823/20210723-MEM-808x2048.png 808w, https://files.mykcm.com/2021/07/22135823/20210723-MEM-100x253.png 100w, https://files.mykcm.com/2021/07/22135823/20210723-MEM.png 1300w" sizes="(max-width: 1046px) 100vw, 1046px" />
Some Highlights
The language of buying and selling a home may sound scary at first, but knowing how key terms relate to today’s market can help you. For example, current low mortgage rates and higher wages positively impact affordability for buyers, while home price appreciation continues to grow home equity, which sellers can use to fuel a move up.
Terms like appraisal (what lenders rely on to validate a home’s value) and contingencies (which buyers can minimize to make their offer stand out) directly impact the transaction.
You don’t need to be fluent in the language of the market to buy or sell. Instead, let’s connect today so that we can translate the process together.
2021-07-23T06:00:00-07:002021-07-23T08:23:12-07:00Donna Lernertag:donnalernerhometeam.com,2012-09-20:65983 Charts That Show This Isn’t a Housing Bubble
<img width="750" height="410" src="https://files.mykcm.com/2021/07/19150730/20210720-KCM-Share.jpg" class="attachment-entry size-entry wp-post-image" alt="3 Charts That Show This Isn’t a Housing Bubble | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2021/07/19150730/20210720-KCM-Share.jpg 750w, https://files.mykcm.com/2021/07/19150730/20210720-KCM-Share-600x328.jpg 600w, https://files.mykcm.com/2021/07/19150730/20210720-KCM-Share-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" />
With home prices continuing to deliver double-digit increases, some are concerned we’re in a housing bubble like the one in 2006. However, a closer look at the market data indicates this is nothing like 2006 for three major reasons.
1. The housing market isn’t driven by risky mortgage loans.
Back in 2006, nearly everyone could qualify for a loan. The Mortgage Credit Availability Index (MCAI) from the Mortgage Bankers’ Association is an indicator of the availability of mortgage money. The higher the index, the easier it is to obtain a mortgage. The MCAI more than doubled from 2004 (378) to 2006 (869). Today, the index stands at 130. As an example of the difference between today and 2006, let’s look at the volume of mortgages that originated when a buyer had less than a 620 credit score.<img loading="lazy" class="aligncenter wp-image-98641" src="https://files.mykcm.com/2021/07/19150732/20210720-MEM-Eng-1.png" alt="3 Charts That Show This Isn’t a Housing Bubble | MyKCM" width="600" height="450" srcset="https://files.mykcm.com/2021/07/19150732/20210720-MEM-Eng-1.png 1000w, https://files.mykcm.com/2021/07/19150732/20210720-MEM-Eng-1-600x450.png 600w, https://files.mykcm.com/2021/07/19150732/20210720-MEM-Eng-1-768x576.png 768w, https://files.mykcm.com/2021/07/19150732/20210720-MEM-Eng-1-100x75.png 100w" sizes="(max-width: 600px) 100vw, 600px" />Dr. Frank Nothaft, Chief Economist for CoreLogic, reiterates this point:
“There are marked differences in today’s run up in prices compared to 2005, which was a bubble fueled by risky loans and lenient underwriting. Today, loans with high-risk features are absent and mortgage underwriting is prudent.”
2. Homeowners aren’t using their homes as ATMs this time.
During the housing bubble, as prices skyrocketed, people were refinancing their homes and pulling out large sums of cash. As prices began to fall, that caused many to spiral into a negative equity situation (where their mortgage was higher than the value of the house).
Today, homeowners are letting their equity build. Tappable equity is the amount available for homeowners to access before hitting a maximum 80% combined loan-to-value ratio (thus still leaving them with at least 20% equity). In 2006, that number was $4.6 billion. Today, that number stands at over $8 billion.
Yet, the percentage of cash-out refinances (where the homeowner takes out at least 5% more than their original mortgage amount) is half of what it was in 2006.<img loading="lazy" class="aligncenter wp-image-98642" src="https://files.mykcm.com/2021/07/19150734/20210720-MEM-Eng-2.png" alt="3 Charts That Show This Isn’t a Housing Bubble | MyKCM" width="600" height="450" srcset="https://files.mykcm.com/2021/07/19150734/20210720-MEM-Eng-2.png 1000w, https://files.mykcm.com/2021/07/19150734/20210720-MEM-Eng-2-600x450.png 600w, https://files.mykcm.com/2021/07/19150734/20210720-MEM-Eng-2-768x576.png 768w, https://files.mykcm.com/2021/07/19150734/20210720-MEM-Eng-2-100x75.png 100w" sizes="(max-width: 600px) 100vw, 600px" />
3. This time, it’s simply a matter of supply and demand.
FOMO (the Fear Of Missing Out) dominated the housing market leading up to the 2006 housing bubble and drove up buyer demand. Back then, housing supply more than kept up as many homeowners put their houses on the market, as evidenced by the over seven months’ supply of existing housing inventory available for sale in 2006. Today, that number is barely two months.
Builders also overbuilt during the bubble but pulled back significantly over the next decade. Sam Khater, VP and Chief Economist, Economic & Housing Research at Freddie Mac, explains that pullback is the major factor in the lack of available inventory today:
“The main driver of the housing shortfall has been the long-term decline in the construction of single-family homes.”
Here’s a chart that quantifies Khater’s remarks:<img loading="lazy" class="aligncenter wp-image-98643" src="https://files.mykcm.com/2021/07/19150737/20210720-MEM-Eng-3.png" alt="3 Charts That Show This Isn’t a Housing Bubble | MyKCM" width="600" height="450" srcset="https://files.mykcm.com/2021/07/19150737/20210720-MEM-Eng-3.png 1000w, https://files.mykcm.com/2021/07/19150737/20210720-MEM-Eng-3-600x450.png 600w, https://files.mykcm.com/2021/07/19150737/20210720-MEM-Eng-3-768x576.png 768w, https://files.mykcm.com/2021/07/19150737/20210720-MEM-Eng-3-100x75.png 100w" sizes="(max-width: 600px) 100vw, 600px" />Today, there are simply not enough homes to keep up with current demand.
Bottom Line
This market is nothing like the run-up to 2006. Bill McBride, the author of the prestigious Calculated Risk blog, predicted the last housing bubble and crash. This is what he has to say about today’s housing market:
“It’s not clear at all to me that things are going to slow down significantly in the near future. In 2005, I had a strong sense that the hot market would turn and that, when it turned, things would get very ugly. Today, I don’t have that sense at all, because all of the fundamentals are there. Demand will be high for a while because Millennials need houses. Prices will keep rising for a while because inventory is so low.”
2021-07-20T06:00:00-07:002021-07-20T06:42:58-07:00Donna Lernertag:donnalernerhometeam.com,2012-09-20:6584What You Should Do Before Interest Rates Rise
<img width="750" height="410" src="https://files.mykcm.com/2021/07/16134035/20210719-KCM-Share.jpg" class="attachment-entry size-entry wp-post-image" alt="What You Should Do Before Interest Rates Rise | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2021/07/16134035/20210719-KCM-Share.jpg 750w, https://files.mykcm.com/2021/07/16134035/20210719-KCM-Share-600x328.jpg 600w, https://files.mykcm.com/2021/07/16134035/20210719-KCM-Share-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" />
In today’s real estate market, mortgage interest rates are near record lows. If you’ve been in your current home for several years and haven’t refinanced lately, there’s a good chance you have a mortgage with an interest rate higher than today’s average. Here are some options you should consider if you want to take advantage of today’s current low rates before they rise.
Sell and Move Up (or Downsize)
Many of today’s homeowners are rethinking what they need in a home and redefining what their dream home means. For some, continued remote work is bringing about the need for additional space. For others, moving to a lower cost-of-living area or downsizing may be great options. If you’re considering either of these, there may not be a better time to move. Here’s why.
The chart below shows average mortgage rates by decade compared to where they are today:<img loading="lazy" class="aligncenter wp-image-98577" src="https://files.mykcm.com/2021/07/16134037/20210719-MEM-Eng-1.png" alt="What You Should Do Before Interest Rates Rise | MyKCM" width="600" height="450" srcset="https://files.mykcm.com/2021/07/16134037/20210719-MEM-Eng-1.png 1000w, https://files.mykcm.com/2021/07/16134037/20210719-MEM-Eng-1-600x450.png 600w, https://files.mykcm.com/2021/07/16134037/20210719-MEM-Eng-1-768x576.png 768w, https://files.mykcm.com/2021/07/16134037/20210719-MEM-Eng-1-100x75.png 100w" sizes="(max-width: 600px) 100vw, 600px" />Today’s rates are below 3%, but experts forecast rates to rise over the next few years.
If the interest rate on your current mortgage is higher than today’s average, take advantage of this opportunity by making a move and securing a lower rate. Lower rates mean you may be able to get more house for your money and still have a lower monthly mortgage payment than you might expect.
Waiting, however, might mean you miss out on this historic opportunity. Below is a chart showing how your monthly payment will change if you buy a home as mortgage rates increase:<img loading="lazy" class="aligncenter wp-image-98578" src="https://files.mykcm.com/2021/07/16134040/20210719-MEM-Eng-2.png" alt="What You Should Do Before Interest Rates Rise | MyKCM" width="600" height="450" srcset="https://files.mykcm.com/2021/07/16134040/20210719-MEM-Eng-2.png 1000w, https://files.mykcm.com/2021/07/16134040/20210719-MEM-Eng-2-600x450.png 600w, https://files.mykcm.com/2021/07/16134040/20210719-MEM-Eng-2-768x576.png 768w, https://files.mykcm.com/2021/07/16134040/20210719-MEM-Eng-2-100x75.png 100w" sizes="(max-width: 600px) 100vw, 600px" />
Breaking It All Down:
Using the chart above, let’s look at the breakdown of a $300,000 mortgage:
When mortgage rates rise, so does the monthly payment you can secure.
Even the smallest increase in rates can make a difference in your monthly mortgage payment.
As interest rates rise, you’ll need to look at a lower-priced home to try and keep the same target monthly payment, meaning you may end up with less home for your money.
No matter what, whether you’re looking to make a move up or downsize to a home that better suits your needs, now is the time. Even a small change in interest rates can have a big impact on your purchasing power.
Refinance
If making a move right now still doesn’t feel right for you, consider refinancing. With the current low mortgage rates, refinancing is a great option if you’re looking to lower your monthly payments and stay in your current home.
Bottom Line
Take advantage of today’s low rates before they begin to rise. Whether you’re thinking about moving up, downsizing, or refinancing, let’s connect today to discuss which option is best for you.
2021-07-19T06:00:00-07:002021-07-19T06:41:50-07:00Donna Lernertag:donnalernerhometeam.com,2012-09-20:6564Experts Agree: Options Are Improving for Buyers
<img width="1046" height="1908" src="https://files.mykcm.com/2021/07/15150442/20210716-MEM-1046x1908.png" class="attachment-entry size-entry wp-post-image" alt="Experts Agree: Options Are Improving for Buyers [INFOGRAPHIC] | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2021/07/15150442/20210716-MEM-1046x1908.png 1046w, https://files.mykcm.com/2021/07/15150442/20210716-MEM-329x600.png 329w, https://files.mykcm.com/2021/07/15150442/20210716-MEM-561x1024.png 561w, https://files.mykcm.com/2021/07/15150442/20210716-MEM-768x1401.png 768w, https://files.mykcm.com/2021/07/15150442/20210716-MEM-842x1536.png 842w, https://files.mykcm.com/2021/07/15150442/20210716-MEM-1123x2048.png 1123w, https://files.mykcm.com/2021/07/15150442/20210716-MEM-100x182.png 100w, https://files.mykcm.com/2021/07/15150442/20210716-MEM.png 1300w" sizes="(max-width: 1046px) 100vw, 1046px" />
Some Highlights
Buyers hoping for more homes to choose from may be in luck as housing inventory begins to rise. Many experts agree – new sellers listing their homes is great news for buyers and the overall market.
Although the supply increases are modest, more homes means more options for buyers. A rise in inventory may also help slow the price gains we’ve seen recently and could be a sign of good things to come.
If you’re searching for a home, rising inventory is welcome news. Let’s connect today to discuss new listings in our area.
2021-07-16T06:00:00-07:002021-07-23T08:23:27-07:00Donna Lernertag:donnalernerhometeam.com,2012-09-20:6518Your Home Equity Can Take You Places
<img width="1046" height="2095" src="https://files.mykcm.com/2021/07/08155756/20210709-MEM-1046x2095.png" class="attachment-entry size-entry wp-post-image" alt="Your Home Equity Can Take You Places [INFOGRAPHIC] | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2021/07/08155756/20210709-MEM-1046x2095.png 1046w, https://files.mykcm.com/2021/07/08155756/20210709-MEM-300x600.png 300w, https://files.mykcm.com/2021/07/08155756/20210709-MEM-511x1024.png 511w, https://files.mykcm.com/2021/07/08155756/20210709-MEM-768x1538.png 768w, https://files.mykcm.com/2021/07/08155756/20210709-MEM-767x1536.png 767w, https://files.mykcm.com/2021/07/08155756/20210709-MEM-1022x2048.png 1022w, https://files.mykcm.com/2021/07/08155756/20210709-MEM-100x200.png 100w, https://files.mykcm.com/2021/07/08155756/20210709-MEM.png 1300w" sizes="(max-width: 1046px) 100vw, 1046px" />
Some Highlights
The amount of wealth Americans have stored in their homes has increased astronomically.
On average, homeowners gained $33,400 in equity over the last 12 months, and the average equity on mortgaged homes is now $216,000.
When it’s time to sell, your home equity can help accomplish your goals. Let’s connect to discuss how you can take advantage of today’s sellers’ market to get the most out of your home sale.
2021-07-09T06:00:00-07:002021-07-09T07:06:32-07:00Donna Lernertag:donnalernerhometeam.com,2012-09-20:6479A Look at Home Price Appreciation Through 2025
<img width="750" height="410" src="https://files.mykcm.com/2021/07/02143314/20210706-KCM-Share.jpg" class="attachment-entry size-entry wp-post-image" alt="A Look at Home Price Appreciation Through 2025 | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2021/07/02143314/20210706-KCM-Share.jpg 750w, https://files.mykcm.com/2021/07/02143314/20210706-KCM-Share-600x328.jpg 600w, https://files.mykcm.com/2021/07/02143314/20210706-KCM-Share-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" />
Home prices have increased significantly over the last year, which in turn has grown the net worth of homeowners. Appreciation and home equity are directly linked – as the value of a home increases, so does a homeowner’s equity. And with these recent gains, homeowners are witnessing their financial stability and well-being grow to record levels.
In more good news for homeowners, the most recent Home Price Expectations Survey – a survey of a national panel of over one hundred economists, real estate experts, and investment and market strategists – forecasts home prices will continue appreciating over the next five years, adding to the record amount of equity homeowners have already gained over the past year. Below are the expected year-over-year rates of home price appreciation from the report:<img loading="lazy" class="aligncenter wp-image-98476" src="https://files.mykcm.com/2021/07/02143316/20210706-MEM-Eng-1.png" alt="A Look at Home Price Appreciation Through 2025 | MyKCM" width="600" height="450" srcset="https://files.mykcm.com/2021/07/02143316/20210706-MEM-Eng-1.png 1000w, https://files.mykcm.com/2021/07/02143316/20210706-MEM-Eng-1-600x450.png 600w, https://files.mykcm.com/2021/07/02143316/20210706-MEM-Eng-1-768x576.png 768w, https://files.mykcm.com/2021/07/02143316/20210706-MEM-Eng-1-100x75.png 100w" sizes="(max-width: 600px) 100vw, 600px" />
What Does This Mean for Homeowners?
Home prices are climbing today, and the data in the survey indicates they’ll continue to increase, but at rates that approach a more normal pace. Even still, the amount of household wealth a homeowner stands to earn going forward is substantial. This truly becomes clear when we consider a scenario using a median-priced home purchased in January of 2021 and the projected rate of appreciation on that home over the next five years. As the graph below illustrates, a homeowner could increase their net worth by a significant amount – over $93,000 dollars by 2026.<img loading="lazy" class="aligncenter wp-image-98477" src="https://files.mykcm.com/2021/07/02143318/20210706-MEM-Eng-2.png" alt="A Look at Home Price Appreciation Through 2025 | MyKCM" width="600" height="450" srcset="https://files.mykcm.com/2021/07/02143318/20210706-MEM-Eng-2.png 1000w, https://files.mykcm.com/2021/07/02143318/20210706-MEM-Eng-2-600x450.png 600w, https://files.mykcm.com/2021/07/02143318/20210706-MEM-Eng-2-768x576.png 768w, https://files.mykcm.com/2021/07/02143318/20210706-MEM-Eng-2-100x75.png 100w" sizes="(max-width: 600px) 100vw, 600px" />
Home Price Appreciation and Home Equity
CoreLogic recently released their quarterly Homeowner Equity Insights Report, which tracks the year-over-year increases in equity. It shows an average annual gain of $33,400 per borrower over the past 12 months. In the report, Dr. Frank Nothaft, Chief Economist for CoreLogic, further explains:
“Double-digit home price growth in the past year has bolstered home equity to a record amount. The national CoreLogic Home Price Index recorded an 11.4% rise in the year through March 2021, leading to a $216,000 increase in the average amount of equity held by homeowners with a mortgage.”
The expected, sustained growth of home prices means homeowners can continue to build on the past year’s record levels of home equity – and their financial prosperity. It also presents today’s homeowners with a unique opportunity: using their growing equity for a home upgrade. With so few homes available to purchase and strong buyer demand, there may not be a better time to sell your current house and move into one that better meets your needs.
Bottom Line
Home prices are expected to continue appreciating over the next five years, and the associated equity gains are the quickest way homeowners can build household wealth. If you’re a current homeowner who’s ready to take advantage of your built-up equity, let’s connect today to discuss your options.
2021-07-06T06:00:00-07:002021-07-06T06:46:39-07:00Donna Lernertag:donnalernerhometeam.com,2012-09-20:6438Are We in a Housing Bubble? Experts Say No.
<img width="750" height="410" src="https://files.mykcm.com/2021/06/30105125/20210701-KCM-Share.jpg" class="attachment-entry size-entry wp-post-image" alt="Are We in a Housing Bubble? Experts Say No. | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2021/06/30105125/20210701-KCM-Share.jpg 750w, https://files.mykcm.com/2021/06/30105125/20210701-KCM-Share-600x328.jpg 600w, https://files.mykcm.com/2021/06/30105125/20210701-KCM-Share-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" />
The question of whether the real estate market is a bubble ready to pop seems to be dominating a lot of conversations – and everyone has an opinion. Yet, when it comes down to it, the opinions that carry the most weight are the ones based on experience and expertise.
Here are four expert opinions from professionals and organizations that have devoted their careers to giving great advice to the housing industry.
The Joint Center for Housing Studies in their The State of the Nation’s Housing 2021 report:
“… conditions today are quite different than in the early 2000s, particularly in terms of credit availability. The current climb in house prices instead reflects strong demand amid tight supply, helped along by record-low interest rates.”
Nathaniel Karp, Chief U.S. Economist at BBVA:
“The housing market is in line with fundamentals as interest rates are attractive and incomes are high due to fiscal stimulus, making debt servicing relatively affordable and allowing buyers to qualify for larger mortgages. Underwriting standards are still strong, so there is little risk of a bubble developing.”
Bill McBride of Calculated Risk:
“It’s not clear at all to me that things are going to slow down significantly in the near future. In 2005, I had a strong sense that the hot market would turn and that, when it turned, things would get very ugly. Today, I don’t have that sense at all, because all of the fundamentals are there. Demand will be high for a while, because Millennials need houses. Prices will keep rising for a while, because inventory is so low.”
Mark Fleming, Chief Economist at First American:
“Looking back at the bubble years, house prices exceeded house-buying power in 2006 nationally, but today house-buying power is nearly twice as high as the median sale price nationally…
Many find it hard to believe, but housing is actually undervalued in most markets and the gap between house-buying power and sale prices indicates there’s room for further house price growth in the months to come.”
Bottom Line
All four strongly believe that we’re not in a bubble and won’t see crashing home values as we did in 2008. And they’re not alone – Goldman Sachs, JP Morgan, Morgan Stanley, and Merrill Lynch share the same opinion.
2021-07-01T06:00:00-07:002021-07-01T13:02:16-07:00Donna Lernertag:donnalernerhometeam.com,2012-09-20:6373Homeowner Wealth Increases Through Growing Equity This Year
<img width="750" height="410" src="https://files.mykcm.com/2021/06/21160612/20210623-KCM-Share.jpg" class="attachment-entry size-entry wp-post-image" alt="Homeowner Wealth Increases Through Growing Equity This Year | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2021/06/21160612/20210623-KCM-Share.jpg 750w, https://files.mykcm.com/2021/06/21160612/20210623-KCM-Share-600x328.jpg 600w, https://files.mykcm.com/2021/06/21160612/20210623-KCM-Share-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" />
Building financial wealth and stability remains one of the top reasons Americans choose to own a home, and as a homeowner, your wealth often grows without you even realizing it. In a recent paper published by the Urban Institute, Home Ownership is Affordable Housing, author Mike Loftin illustrates how homeowners increase their equity and their wealth simply by making monthly mortgage payments:
“The principal portion that reduces the loan balance builds the homeowner’s equity. In doing so, the principal payments behave like an automatic savings account. The principal payment is not money going out; it is money staying in.”
But home equity – the difference between the value of your home and what you currently owe – isn’t just built through your monthly principal payments. Home price appreciation plays a vital role in growing your equity and, ultimately, your wealth.
As Freddie Mac explains:
“Homeownership has cemented its role as part of the American Dream, providing families with a place that is their own and an avenue for building wealth over time. This ‘wealth’ is built, in large part, through the creation of equity…Building equity through your monthly principal payments and appreciation is a critical part of homeownership that can help you create financial stability.”
Homeowners Continue To See Equity Increase
CoreLogic recently published their latest Homeowner Equity Insights Report, and it shows continued growth in equity amidst record home price appreciation. The report provides several key takeaways, all of which point to rising wealth for homeowners:
The average equity gain of mortgaged homes during the past year was $33,400
The current average equity of mortgaged homes is greater than $216,000
There was a 6% increase in total homeowner equity over the past year
Total U.S. homeowner equity has reached nearly $1.9 trillion
Here, you can see the equity gains by state:<img loading="lazy" class="aligncenter wp-image-98293" src="https://files.mykcm.com/2021/06/21160614/20210623-MEM-Eng-1.png" alt="Homeowner Wealth Increases Through Growing Equity This Year | MyKCM" width="600" height="450" srcset="https://files.mykcm.com/2021/06/21160614/20210623-MEM-Eng-1.png 1000w, https://files.mykcm.com/2021/06/21160614/20210623-MEM-Eng-1-600x450.png 600w, https://files.mykcm.com/2021/06/21160614/20210623-MEM-Eng-1-768x576.png 768w, https://files.mykcm.com/2021/06/21160614/20210623-MEM-Eng-1-100x75.png 100w" sizes="(max-width: 600px) 100vw, 600px" />
Equity Provides Homeowners with Flexibility
In addition to being a critical tool in building wealth, a homeowner’s equity also provides significant flexibility. When you sell your house, the accumulated equity comes back to you in the sale. Recent increases in home equity coupled with record-low mortgage rates mean it could be the perfect time for homeowners looking to make a move.
Mark Fleming, Chief Economist at First American, notes:
“Existing homeowners today are sitting on record amounts of equity. As homeowners gain equity in their homes, the temptation grows to list their current home for sale and use the equity to purchase a larger or more attractive home.”
Increasing equity also helps families facing challenges brought on by the pandemic. Frank Martell, President and CEO of CoreLogic, explains in the recent Homeowner Equity Insights Report:
“Homeowner equity has more than doubled over the past decade and become a crucial buffer for many weathering the challenges of the pandemic. These gains have become an important financial tool and boosted consumer confidence in the U.S. housing market, especially for older homeowners and baby boomers who’ve experienced years of price appreciation.”
Bottom Line
Home equity has always been a powerful wealth-building tool, and homeowners continue to see their financial stability increase. Let’s connect today so you can better understand how much equity you have in your current home or if you’re ready to take the next step in building your savings as a homeowner.
2021-06-23T06:00:00-07:002021-06-23T07:31:43-07:00Donna Lernertag:donnalernerhometeam.com,2012-09-20:6309Housing Wealth: The Missing Piece of the Affordability Equation
<img width="750" height="410" src="https://files.mykcm.com/2021/06/16101541/20210617-KCM-Share.jpg" class="attachment-entry size-entry wp-post-image" alt="Housing Wealth: The Missing Piece of the Affordability Equation | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2021/06/16101541/20210617-KCM-Share.jpg 750w, https://files.mykcm.com/2021/06/16101541/20210617-KCM-Share-600x328.jpg 600w, https://files.mykcm.com/2021/06/16101541/20210617-KCM-Share-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" />
The real estate market is soaring today. Residential home values are rising, and that’s a big win for homeowners. In 2020, there was a double-digit increase in home values – a trend that’s expected to head toward similar levels this year.
However, skyrocketing prices are causing some to start questioning affordability in the current housing market. Many are quick to emphasize the fact that homes today are less affordable than they were last year. Black Knight, a leading provider of data and analytics across the homeownership life cycle, just reported on the issue.
The findings show the historical averages of the national payment to income ratio, which they define as “the share of the median income needed to make the monthly payments on the median-priced home.” Their study reveals:
The average over the last 25 years was 23.6%
The average over the last 5 years was 20.1%
The average today stands at 20.5%
Right now, housing payments are slightly less affordable than the five-year average – but only by less than ½ a percentage point. However, they’re significantly more affordable than the 25-year average. Put another way, a buyer will likely make a slightly greater financial sacrifice to afford a home right now than if they purchased a home within the last five years. On the other hand, it also means the potential financial sacrifice is not nearly as great as it was over the last 25 years.
Does making a sacrifice to buy a home today make financial sense in the long term?
Last week, the Federal Reserve announced that, in the first three months of the year, household net worth increased by $968 billion based solely on the values of the real estate they owned. Another report from CoreLogic reveals the average annual gain in homeowner equity was $33,400 per borrower.
Homeownership continues to be the cornerstone to building personal wealth. For most Americans, their home is the largest asset they own. On top of that, the difference between the net worth of homeowners and renters is significant at every income level. Here’s a table detailing that point using data from a study done by First American:<img loading="lazy" class="aligncenter wp-image-98266" src="https://files.mykcm.com/2021/06/16102320/20210617-MEM-Eng-1a.png" alt="Housing Wealth: The Missing Piece of the Affordability Equation | MyKCM" width="600" height="450" srcset="https://files.mykcm.com/2021/06/16102320/20210617-MEM-Eng-1a.png 1000w, https://files.mykcm.com/2021/06/16102320/20210617-MEM-Eng-1a-600x450.png 600w, https://files.mykcm.com/2021/06/16102320/20210617-MEM-Eng-1a-768x576.png 768w, https://files.mykcm.com/2021/06/16102320/20210617-MEM-Eng-1a-100x75.png 100w" sizes="(max-width: 600px) 100vw, 600px" />Owning a home is an essential steppingstone to grow a household’s net worth. Despite the slightly greater sacrifice in the percentage of monthly income you’ll spend on housing today, for most homebuyers, the payoff of starting to build equity now will be worth it.
Bottom Line
Since prices have risen dramatically over the past 18 months, it’s slightly less affordable to buy a home today than it was a year ago. However, when you consider the equity gain and weigh the long-term benefits of building your net worth, you may question if you can afford not to buy now.
2021-06-17T06:00:00-07:002021-06-17T07:34:07-07:00Donna Lernertag:donnalernerhometeam.com,2012-09-20:6301Don’t Wait To Sell Your House
<img width="750" height="410" src="https://files.mykcm.com/2021/06/11124143/20210616-KCM-Share.jpg" class="attachment-entry size-entry wp-post-image" alt="Don’t Wait To Sell Your House | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2021/06/11124143/20210616-KCM-Share.jpg 750w, https://files.mykcm.com/2021/06/11124143/20210616-KCM-Share-600x328.jpg 600w, https://files.mykcm.com/2021/06/11124143/20210616-KCM-Share-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" />
We’re in the ultimate sellers’ market right now. If you’re a homeowner thinking about selling, you have a huge advantage in today’s housing market. High buyer demand paired with very few houses for sale makes this the optimal time to sell for those who are ready to do so. Whatever the move you want to make looks like, here’s an overview of what’s creating the prime opportunity to sell this summer.
High Buyer Demand
Demand is strong, and buyers are actively searching for homes to purchase. In the Realtors Confidence Index Survey published monthly by the National Association of Realtors (NAR), buyer traffic is considered “very strong” in almost every state. Homebuyers aren’t just great in number right now – they’re also determined to find their dream home. NAR shows the average home for sale today receives five offers from hopeful buyers. These increasingly frequent bidding wars can drive up the price of your house, which is why high demand from competitive homebuyers is such a win for this summer’s sellers.
Low Inventory of Houses for Sale
Purchaser demand is so high, the market is running out of available homes for sale. Danielle Hale, Chief Economist at realtor.com, explains:
“For most sellers listing sooner rather than later could really pay off with less competition from other sellers and potentially a higher sales price… They’ll also avoid some big unknowns lurking later in the year, namely another possible surge in COVID cases, rising interest rates and the potential for more sellers to enter the market.”
NAR also reveals that unsold inventory sits at a 2.4-months’ supply at the current sales pace. This is far lower than the historical norm of a 6.0-months’ supply. Homes are essentially selling as fast as they’re hitting the market. Below is a graph of the existing inventory of single-family homes for sale:<img loading="lazy" class="aligncenter wp-image-98219" src="https://files.mykcm.com/2021/06/11124146/20210616-MEM-Eng-1.png" alt="Don’t Wait To Sell Your House | MyKCM" width="600" height="450" srcset="https://files.mykcm.com/2021/06/11124146/20210616-MEM-Eng-1.png 1000w, https://files.mykcm.com/2021/06/11124146/20210616-MEM-Eng-1-600x450.png 600w, https://files.mykcm.com/2021/06/11124146/20210616-MEM-Eng-1-768x576.png 768w, https://files.mykcm.com/2021/06/11124146/20210616-MEM-Eng-1-100x75.png 100w" sizes="(max-width: 600px) 100vw, 600px" />At the same time, homebuilders are increasing construction this year, but they can’t keep up with the growing demand. While reporting on the inventory of newly constructed homes, the U.S. Census Bureau notes:
“The seasonally‐adjusted estimate of new houses for sale at the end of April was 316,000. This represents a supply of 4.4 months at the current sales rate.”
What Does This Mean for You?
If you’re thinking of putting your house on the market, don’t wait. A seller will always negotiate the best deal when demand is high and supply is low. That’s exactly what’s happening in the real estate market today.
Bottom Line
As vaccine rollouts progress and we continue to see the economy recover, more houses will come to the market. Don’t wait for the competition in your neighborhood to increase. If you’re ready to make a move, now is the time to sell. Let’s connect today to get your house listed at this optimal moment in time.
2021-06-16T06:00:00-07:002021-06-16T06:34:25-07:00Donna Lernertag:donnalernerhometeam.com,2012-09-20:6271Why This Is Not Like 2008 Again
<img width="750" height="410" src="https://files.mykcm.com/2021/06/09161403/20210610-KCM-Share.jpg" class="attachment-entry size-entry wp-post-image" alt="Why This Is Not Like 2008 Again | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2021/06/09161403/20210610-KCM-Share.jpg 750w, https://files.mykcm.com/2021/06/09161403/20210610-KCM-Share-600x328.jpg 600w, https://files.mykcm.com/2021/06/09161403/20210610-KCM-Share-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" />
During the Great Recession, just over a decade ago, the financial systems the world depended on started to collapse. It created a panic that drove some large companies out of business (ex. Lehman Brothers) and many more into bankruptcy.
The financial crisis that accompanied the current pandemic caused hardship to certain industries and hurt many small businesses. However, it hasn’t rattled the world economy. It seems that a year later, things are slowly getting back to normal for many companies.
Why is there a drastic difference between 2008 and now?
In a post from RealtyTrac, they explain:
“We changed the rules. We told banks they needed more reserves and that they could no longer underwrite toxic mortgages. It turns out that regulation — properly done — can help us navigate financial minefields.”
Here are the results of that regulation, captured in a graph depicting the number of failed banks since 2007.<img loading="lazy" class="aligncenter wp-image-98196" src="https://files.mykcm.com/2021/06/09161358/20210610-MEM-Eng-1.png" alt="Why This Is Not Like 2008 Again | MyKCM" width="600" height="450" srcset="https://files.mykcm.com/2021/06/09161358/20210610-MEM-Eng-1.png 1000w, https://files.mykcm.com/2021/06/09161358/20210610-MEM-Eng-1-600x450.png 600w, https://files.mykcm.com/2021/06/09161358/20210610-MEM-Eng-1-768x576.png 768w, https://files.mykcm.com/2021/06/09161358/20210610-MEM-Eng-1-100x75.png 100w" sizes="(max-width: 600px) 100vw, 600px" />
What was different this time?
The post mentioned above explains:
“In 2008 the government saw the foreclosure meltdown as a top-down problem and set aside $700 billion for banks under the Troubled Asset Relief Program (TARP). Not all of the $700 billion was used, but the important point is that the government did not act with equal fervor to help flailing homeowners, millions of whom lost their homes to foreclosures and short sales.
This time around the government forcefully moved to help ordinary citizens. Working from the bottom-up, an estimated $5.3 trillion went to the public in 2020 through such mechanisms as the Paycheck Protection Program (PPP), expanded unemployment benefits, tax incentives, and help for local governments. So far this year we have the $1.9 billion American Rescue Plan with millions of $1,400 checks as well as proposals to spend trillions more on infrastructure…Bank deposits increased by nearly $2 trillion during the past year and credit card debt fell.”
Bottom Line
Many have suffered over the past year. However, the economic toll of the current recession was nowhere near the scope of the Great Recession, and it won’t result in a housing crisis.
2021-06-10T06:00:00-07:002021-06-11T07:12:57-07:00Donna Lernertag:donnalernerhometeam.com,2012-09-20:6252Home Price Appreciation Is as Simple as Supply and Demand
<img width="750" height="410" src="https://files.mykcm.com/2021/06/08165524/20210609-KCM-Share.jpg" class="attachment-entry size-entry wp-post-image" alt="Home Price Appreciation Is as Simple as Supply and Demand | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2021/06/08165524/20210609-KCM-Share.jpg 750w, https://files.mykcm.com/2021/06/08165524/20210609-KCM-Share-600x328.jpg 600w, https://files.mykcm.com/2021/06/08165524/20210609-KCM-Share-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" />
Home price appreciation continues to accelerate. Today, prices are driven by the simple concept of supply and demand. Pricing of any item is determined by how many items are available compared to how many people want to buy that item. As a result, the strong year-over-year home price appreciation is simple to explain. The demand for housing is up while the supply of homes for sale hovers at historic lows.
Let’s use three maps to show how this theory continues to affect the residential real estate market.
Map #1 – State-by-state price appreciation reported by the Federal Housing Finance Agency (FHFA) for the first quarter of 2021 compared to the first quarter of 2020:<img loading="lazy" class="aligncenter wp-image-98189" src="https://files.mykcm.com/2021/06/08165519/20210609-MEM-Eng-1.png" alt="Home Price Appreciation Is as Simple as Supply and Demand | MyKCM" width="600" height="450" srcset="https://files.mykcm.com/2021/06/08165519/20210609-MEM-Eng-1.png 1000w, https://files.mykcm.com/2021/06/08165519/20210609-MEM-Eng-1-600x450.png 600w, https://files.mykcm.com/2021/06/08165519/20210609-MEM-Eng-1-768x576.png 768w, https://files.mykcm.com/2021/06/08165519/20210609-MEM-Eng-1-100x75.png 100w" sizes="(max-width: 600px) 100vw, 600px" />As the map shows, certain states (colored in red) have appreciated well above the national average of 12.6%.
Map #2 – The change in state-by-state inventory levels year-over-year reported by realtor.com:<img loading="lazy" class="aligncenter wp-image-98188" src="https://files.mykcm.com/2021/06/08165515/20210609-MEM-Eng-2.png" alt="Home Price Appreciation Is as Simple as Supply and Demand | MyKCM" width="600" height="450" srcset="https://files.mykcm.com/2021/06/08165515/20210609-MEM-Eng-2.png 1000w, https://files.mykcm.com/2021/06/08165515/20210609-MEM-Eng-2-600x450.png 600w, https://files.mykcm.com/2021/06/08165515/20210609-MEM-Eng-2-768x576.png 768w, https://files.mykcm.com/2021/06/08165515/20210609-MEM-Eng-2-100x75.png 100w" sizes="(max-width: 600px) 100vw, 600px" />Comparing the two maps shows a correlation between change in listing inventory and price appreciation in many states. The best examples are Idaho, Utah, and Arizona. Though the correlation is not as easy to see in every state, the overall picture is one of causation.
The reason prices continue to accelerate is that housing inventory is still at all-time lows while demand remains high. However, this may be changing.
Is there relief around the corner?
The report by realtor.com also shows the monthly change in inventory for each state.
Map #3 – State-by-state changes in inventory levels month-over-month reported by realtor.com:<img loading="lazy" class="aligncenter wp-image-98187" src="https://files.mykcm.com/2021/06/08165512/20210609-MEM-Eng-3.png" alt="Home Price Appreciation Is as Simple as Supply and Demand | MyKCM" width="600" height="450" srcset="https://files.mykcm.com/2021/06/08165512/20210609-MEM-Eng-3.png 1000w, https://files.mykcm.com/2021/06/08165512/20210609-MEM-Eng-3-600x450.png 600w, https://files.mykcm.com/2021/06/08165512/20210609-MEM-Eng-3-768x576.png 768w, https://files.mykcm.com/2021/06/08165512/20210609-MEM-Eng-3-100x75.png 100w" sizes="(max-width: 600px) 100vw, 600px" />As the map indicates, 39 of the 50 states (plus the District of Columbia) saw increases in inventory over the last month. This may be evidence that homeowners who have been afraid to let buyers in their homes during the pandemic are now putting their houses on the market.
We’ll know for certain as we move through the rest of the year.
Bottom Line
Some are concerned by the rapid price appreciation we’ve experienced over the last year. The maps above show that the increases were warranted based on great demand and limited supply. Going forward, if the number of homes for sale better aligns with demand, price appreciation will moderate to more historical levels.
2021-06-09T06:00:00-07:002021-06-09T07:24:00-07:00Donna Lernertag:donnalernerhometeam.com,2012-09-20:6226Why You May Want To Cash in on Your Second Home
<img width="750" height="410" src="https://files.mykcm.com/2021/06/03153705/20210607-KCM-Share.jpg" class="attachment-entry size-entry wp-post-image" alt="Why You May Want To Cash in on Your Second Home | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2021/06/03153705/20210607-KCM-Share.jpg 750w, https://files.mykcm.com/2021/06/03153705/20210607-KCM-Share-600x328.jpg 600w, https://files.mykcm.com/2021/06/03153705/20210607-KCM-Share-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" />
When stay-at-home mandates were enforced last year, many households realized their homes didn’t really fulfill their new lifestyle needs. An office (in some cases two), a media room, space for children to learn, a gym, and a large yard are all examples of amenities that became highly desirable almost overnight.
Zelman & Associates recently reported that sales of primary residences grew by 9% in 2020. That increase in demand was met by the lowest supply of homes for sale in history. High demand and low supply caused prices to skyrocket over the past twelve months. Here are three home price indexes released most recently that show how home values have risen:
FHFA Agency House Price Index shows a 13.9% increase
CoreLogic Home Price Insights Report shows an 11.3% increase
S&P Case-Shiller U.S. National Home Price Index shows a 13.2% increase
Prices increased by double digits in every region of the country and in 19 of 20 major metros. Chicago was the only exception, where prices still rose by 9%.
What does this mean to those who purchased a second home during the pandemic?
Many people didn’t want to give up a home in the city or close to their office. Instead, they purchased a larger second home farther away and moved there to stay safe and have more space. According to the same Zelman report, sales for second homes rose an astonishing 27% in 2020.
That large second-home retreat on a lake or in the mountains would demand a higher price than the average house. Let’s assume a buyer purchased such a home for $500,000. Assuming the middle 13.2% appreciation shown above, that home would now be worth about $566,000.
Those who bought second homes to improve their lifestyle during the height of the pandemic, or those who just wanted to be in a safer environment, also made a great investment.
What should these homeowners do now as the pandemic is receding, and the economy is reopening?
The buyers of those second homes now have a decision to make. Many will move back to the original home they still own (the one that’s closer to work, friends, and family). Should they keep the second home? That could depend on answers to questions like these:
Now that you may have to go back to the office (at least a few days a week) and students are required to physically attend school, would you still use the second house enough to warrant the expenses of an additional home?
Would you go to the second home on most weekends, or would you return to the movie theater, attend sporting events, eat out at fine restaurants, or spend your time traveling again?
Bottom Line
If you purchased a larger second home during the pandemic, you were able to make day-to-day life much easier for those important to you. You also made it much safer. However, with those goals already accomplished, you now need to decide whether to continue paying the extra expenses or sell the house and cash in your profit. If you decide selling makes sense, let’s connect today to discuss the value of your second home.
2021-06-07T06:00:00-07:002021-06-07T06:22:49-07:00Donna Lernertag:donnalernerhometeam.com,2012-09-20:6185Dreaming of a Bigger Home? Why Not Buy It This Year?
<img width="750" height="410" src="https://files.mykcm.com/2021/06/02104307/20210603-KCM-Share.jpg" class="attachment-entry size-entry wp-post-image" alt="Dreaming of a Bigger Home? Why Not Buy It This Year? | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2021/06/02104307/20210603-KCM-Share.jpg 750w, https://files.mykcm.com/2021/06/02104307/20210603-KCM-Share-600x328.jpg 600w, https://files.mykcm.com/2021/06/02104307/20210603-KCM-Share-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" />
Are you clamoring for extra rooms or a more functional floorplan in your house? Maybe it’s time to make a move. If you’ll be able to work remotely for the long-term or your overall needs have simply changed, it’s a great time to sell your house and move up. Why? With mortgage rates in their favor and higher-priced home sales powering more moves across the country, sellers in today’s market are finding the space they need (and have always dreamed of) by purchasing a home in the upper end of the housing market.
With so few homes available for sale and high demand from today’s homebuyers, sellers are profiting in major ways this season. Bidding wars are gaining traction, driving up the sale price of more and more homes throughout the country. This means sellers are able to leverage extra cash from higher-priced sales while also taking advantage of today’s low mortgage rates when they purchase their next home. It’s the perfect scenario to move up into a true dream home. According to the April Luxury Market Report from the Institute for Luxury Home Marketing:
“The Institute’s recent analysis of sales in 2020 for homes over 5,000 square feet support the continuing preference for larger homes. The analysis determined that there was a 17% increase in the number of 5,000+ sq ft homes sold when compared to the number of sales in 2019.
Luxury home prices continue to see record highs in the majority of affluent ex-urban communities, as the influence of being able to work from home is still driving buyers away from living in high density areas. Low interest rates also remain in play, allowing buyers to realize the affordability of owning a larger property, which further reinforces this trend.”
Lawrence Yun, Chief Economist for the National Association of Realtors (NAR), also explains:
“The market is hot pretty much everywhere and across all price points . . . The only area where there is sufficient inventory is in $1 million-plus homes . . . .”
While this price range certainly doesn’t fit every budget, if it’s in your reach this summer, you may want to make your move sooner rather than later. Today, more homes are available in this segment of the market, but as the report mentions, more buyers are investing here too, so competition may heat up sooner rather than later.
Bottom Line
If you’re planning to sell your current home to move into a larger one, let’s connect today. We’ll discuss your current situation and the opportunities in our local market.
2021-06-03T06:00:00-07:002021-06-09T07:36:19-07:00Donna Lernertag:donnalernerhometeam.com,2012-09-20:6150Homes Across the Country Are Selling Fast
<img width="1046" height="2094" src="https://files.mykcm.com/2021/05/26172158/20210528-MEM-1046x2094.png" class="attachment-entry size-entry wp-post-image" alt="Homes Across the Country Are Selling Fast [INFOGRAPHIC] | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2021/05/26172158/20210528-MEM-1046x2094.png 1046w, https://files.mykcm.com/2021/05/26172158/20210528-MEM-300x600.png 300w, https://files.mykcm.com/2021/05/26172158/20210528-MEM-512x1024.png 512w, https://files.mykcm.com/2021/05/26172158/20210528-MEM-768x1537.png 768w, https://files.mykcm.com/2021/05/26172158/20210528-MEM-767x1536.png 767w, https://files.mykcm.com/2021/05/26172158/20210528-MEM-1023x2048.png 1023w, https://files.mykcm.com/2021/05/26172158/20210528-MEM-100x200.png 100w, https://files.mykcm.com/2021/05/26172158/20210528-MEM.png 1301w" sizes="(max-width: 1046px) 100vw, 1046px" />
Some Highlights
In today’s whirlwind real estate market, houses are selling at astonishing speed – from sea to shining sea.
Four years ago, the average house spent 39 days on the market. Two years ago, homes were on the market for about 24 days. Today, that number has dropped to just 17 short days.
If you’re looking to sell your house quickly and on the best possible terms, today’s market can’t be beat. Let’s connect to discuss how to secure a speedy, top-dollar sale for your house.
2021-05-28T06:00:00-07:002021-05-28T06:39:25-07:00Donna Lernertag:donnalernerhometeam.com,2012-09-20:6142Buying a Home Is Still Affordable
<img width="750" height="410" src="https://files.mykcm.com/2021/05/25161623/20210526-KCM-Share.jpg" class="attachment-entry size-entry wp-post-image" alt="Buying a Home Is Still Affordable | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2021/05/25161623/20210526-KCM-Share.jpg 750w, https://files.mykcm.com/2021/05/25161623/20210526-KCM-Share-600x328.jpg 600w, https://files.mykcm.com/2021/05/25161623/20210526-KCM-Share-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" />
The last year has put emphasis on the importance of one’s home. As a result, some renters are making the jump into homeownership while some homeowners are re-evaluating their current house and considering a move to one that better fits their current lifestyle. Understanding how housing affordability works and the main market factors that impact it may help those who are ready to buy a home narrow down the optimal window of time in which to make a purchase.
There are three main factors that go into determining how affordable homes are for buyers:
Mortgage Rates
Mortgage Payments as a Percentage of Income
Home Prices
The National Association of Realtors (NAR) produces a Housing Affordability Index. It takes these three factors into account and determines an overall affordability score for housing. According to NAR, the index:
“…measures whether or not a typical family earns enough income to qualify for a mortgage loan on a typical home at the national and regional levels based on the most recent price and income data.”
Their methodology states:
“To interpret the indices, a value of 100 means that a family with the median income has exactly enough income to qualify for a mortgage on a median-priced home. An index above 100 signifies that family earning the median income has more than enough income to qualify for a mortgage loan on a median-priced home, assuming a 20 percent down payment.”
So, the higher the index, the more affordable it is to purchase a home. Here’s a graph of the index going back to 1990:<img loading="lazy" class="aligncenter wp-image-98103" src="https://files.mykcm.com/2021/05/25161625/20210526-MEM-Eng-1.png" alt="Buying a Home Is Still Affordable | MyKCM" width="600" height="450" srcset="https://files.mykcm.com/2021/05/25161625/20210526-MEM-Eng-1.png 1000w, https://files.mykcm.com/2021/05/25161625/20210526-MEM-Eng-1-600x450.png 600w, https://files.mykcm.com/2021/05/25161625/20210526-MEM-Eng-1-768x576.png 768w, https://files.mykcm.com/2021/05/25161625/20210526-MEM-Eng-1-100x75.png 100w" sizes="(max-width: 600px) 100vw, 600px" />The blue bar represents today’s affordability. We can see that homes are more affordable now than they’ve been at any point since the housing crash when distressed properties (foreclosures and short sales) dominated the market. Those properties were sold at large discounts not seen before in the housing market for almost one hundred years.
Why are homes so affordable today?
Although there are three factors that drive the overall equation, the one that’s playing the largest part in today’s homebuying affordability is historically low mortgage rates. Based on this primary factor, we can see that it’s more affordable to buy a home today than at any time in the last eight years.
If you’re considering purchasing your first home or moving up to the one you’ve always hoped for, it’s important to understand how affordability plays into the overall cost of your home. With that in mind, buying while mortgage rates are as low as they are now may save you quite a bit of money over the life of your home loan.
Bottom Line
If you feel ready to buy, purchasing a home this summer may save you a significant amount of money over time based on historical affordability trends. Let’s connect today to determine if now is the right time for you to make your move.
2021-05-26T06:00:00-07:002021-05-26T06:20:17-07:00Lauren Mesagno