The success of the housing market is strongly tied to the consumerâs confidence in the overall economy. For that reason, we believe 2017 will be a great year for real estate. Here is just a touch of the news coverage on the subject.
âConsumersâ faith in the housing market is stronger than itâs ever been before, according to a newly released survey from Fannie Mae.â
âAmericansâ confidence continued to mount last week as the Bloomberg Consumer Comfort Index reached the highest point in a decade on more-upbeat assessments about the economy and buying climate.â
âConfidence continues to rise among Americaâs consumersâ¦the latest consumer sentiment numbers from the University of Michigan showed that in March confidence rose again.â
âU.S. consumers are the most confident in the U.S. economy in 15 years, buoyed by the strongest job market since before the Great Recession. The survey of consumer confidence roseâ¦according to the Conference Board, the private company that publishes the index. Thatâs the highest level since July 2001.â
Ivy Zelman, in her recent Z Report, probably best capsulized the reports:
"The results were incredibly strong andâ¦offer one of the most positive consumer takes on housing since the recovery started.â
âIf your house no longer fits your needs and you are planning on buying a luxury home, now is a great time to do so! We recently shared data from Truliaâs Market Mismatch Study which showed that in todayâs premium home market, buyers are in control. The inventory of homes for sale in the luxury market far exceeds those searching to purchase these properties in many areas of the country. This means that homes are often staying on the market longer, or can be found at a discount. Those who have a starter or trade-up home to sell will find buyers competing, and often entering bidding wars, to be able to call your house their new home. The sale of your starter or trade-up house will aid in coming up with a larger down payment for your new luxury home. Even a 5% down payment on a million-dollar home is $50,000. But not all who are buying luxury properties have a home to sell first. In a recent Washington post article, Daryl Judy, an associate broker with Washington Fine Properties, gave some insight into what many millennials are choosing to do:
âSome high-earning millennials save money until they are in their early 30s to buy a place and just skip over that starter-home phase. Theyâll stay in an apartment until they can afford to pay for the place they want.â
The best time to sell anything is when demand is high and supply is low. If you are currently in a starter or trade-up house that no longer fits your needs, and are looking to step into a luxury homeâ¦ Nowâs the time to list your house for sale and make your dreams come true.
Self-made millionaire David Bach was quoted in a CNBC article explaining that "the single biggest mistake millennials are making" is not purchasing a home because buying real estate is "an escalator to wealth.â Bach went on to explain:
"If millennials don't buy a home, their chances of actually having any wealth in this country are little to none. The average homeowner to this day is 38 times wealthier than a renter."
In his bestselling book, âThe Automatic Millionaire,â Bach does the math:
"As a renter, you can easily spend half a million dollars or more on rent over the years ($1,500 a month for 30 years comes to $540,000), and in the end wind up just where you started â owning nothing. Or you can buy a house and spend the same amount paying down a mortgage, and in the end wind up owning your own home free and clear!"
Who is David Bach?
Bach is a self-made millionaire who has written nine consecutive New York Times bestsellers. His book, âThe Automatic Millionaire,â spent 31 weeks on the New York Times bestseller list. He is one of the only business authors in history to have four books simultaneously on the New York Times, Wall Street Journal, BusinessWeek and USA Today bestseller lists. He has been a contributor to NBCâs Today Show appearing more than 100 times, has been a regular on ABC, CBS, Fox, CNBC, CNN, Yahoo, The View, and PBS, and has been profiled in many major publications, including The New York Times, BusinessWeek, USA Today, People, Readerâs Digest, Time, Financial Times, The Washington Post, The Wall Street Journal, Working Woman, Glamour, Family Circle, Redbook, Huffington Post, Business Insider, Investorsâ Business Daily, and Forbes.
Whenever a well-respected millionaire gives investment advice, people usually clamor to hear it. This millionaire gave simple advice â if you donât yet live in your own home, go buy one.
CoreLogic recently released a report entitled, United States Residential Foreclosure Crisis: 10 Years Later, in which they examined the years leading up to the crisis all the way through to present day. With a peak in 2010 when nearly 1.2 million homes were foreclosed on, over 7.7 million families lost their homes throughout the entire foreclosure crisis. Dr. Frank Nothaft, Chief Economist for CoreLogic, had this to say,
âThe country experienced a wild ride in the mortgage market between 2008 and 2012, with the foreclosure peak occurring in 2010. As we look back over 10 years of the foreclosure crisis, we cannot ignore the connection between jobs and homeownership. A healthy economy is driven by jobs coupled with consumer confidence that usually leads to homeownership.â
Since the peak, foreclosures have been steadily on the decline by nearly 100,000 per year all the way through the end of 2016, as seen in the chart below.
âIf this trend continues, the country will be back to 2005 levels by the end of 2017.
As the economy continues to improve, and employment numbers increase, the number of completed foreclosures should continue to decrease.
âA study by Edelman Berland reveals that 33% of homeowners who are contemplating selling their houses in the near future are planning to scale down. Letâs look at a few reasons why this might make sense for many homeowners, as the majority of the country is currently experiencing a sellerâs market. In a blog, Dave Ramsey, the financial guru, highlighted the advantages of selling your current house and downsizing into a smaller home that better serves your current needs. Ramsey explains three potential financial advantages to downsizing:
Realtor.com also addressed downsizing in an article. They suggest that you ask yourself some questions before deciding if downsizing is right for you and your family. Here are two of their questions followed by their answers (in italics) and some additional information that could help.
Q: What kind of lifestyle do I want after I downsize?
A: âFor some folks, itâs a matter of living a simpler life focused on family. Some might want to cross off travel destinations on their bucket lists. Some might want a low-maintenance community with high-end upgrades and social events. Decide what you want to achieve from your move first, and youâll be able to better narrow down your housing options.â
Comments: Many homeowners are taking the profits from the sales of their current homes and splitting it in order to put down payments on smaller homes in their current locations, as well as on vacation/retirement homes where they plan to live when they retire. This allows them to lock in the home price and mortgage interest rate at todayâs values which makes sense financially as both home prices and interest rates are projected to rise.
Q: Have I built up enough equity in my current home to make a profit?
A: âFor most homeowners, the answer is yes. This is if theyâve held on to their properties long enough to have positive equity that will be sizable enough to put a large down payment on their next home.â
Comments: A study by Fannie Mae revealed that only 37% of Americans believe that they have significant equity (> 20%) in their current home. In actuality, CoreLogicâs latest Equity Report revealed that 78.9% have greater than 20% equity. That equity could enable you to build the life youâve always dreamt about.
If you are debating downsizing your home and want to evaluate the options you currently have, meet with a real estate professional in your area who can help guide you through the process.
âAs of January 1, 2017, the New York State Housing Authority has implemented new voucher payment standards for new rentals, transfers, and annual recertification. Looking at a 3BR apartment the new standards afford you $2,270. This amount will provide a large family a great opportunity to upgrade.
Imagine getting your family out of a cramped space into a property with more breathing room for everyone. With living expenses being probably the most difficult obstacle New Yorkers face, taking advantage of this opportunity should be a no brainer, but we know some of you might still hesitate. We strongly advice against that. Think about it, whatâs going to happen once more people find out about this? Itâs already March, this went into effect January 1st. Your choices have already dropped considerably. The time for thinking about it has passed, the time for action is now.
Bottom line here folks; if you are the leader of your family and have accepted the responsibility of putting a roof over their heads, this is a chance to make things a little easier for everyone, including you. If time is an issue or you need some assistance, no problem. Contact us and we will be happy to take as much pressure off you as possible. You must remember, we live and breathe real estate and our duty is to provide unmatched customer service. Seeing a happy and healthy market means that we have a better chance of making your dreams come true.
We hear opportunity knocking, letâs answer the door together.
Here are four great reasons to consider buying a home today instead of waiting.
1. Prices Will Continue to Rise
CoreLogicâs latest Home Price Index reports that home prices have appreciated by 6.9% over the last 12 months. The same report predicts that prices will continue to increase at a rate of 4.8% over the next year. The bottom in home prices has come and gone. Home values will continue to appreciate for years. Waiting no longer makes sense.
2. Mortgage Interest Rates Are Projected to Increase
Freddie Macâs Primary Mortgage Market Survey shows that interest rates for a 30-year mortgage have remained around 4% over the last couple months. The Mortgage Bankers Association, Fannie Mae, Freddie Mac & the National Association of Realtors are in unison, projecting that rates will increase by at least a half a percentage point this time next year. An increase in rates will impact YOUR monthly mortgage payment. A year from now, your housing expense will increase if a mortgage is necessary to buy your next home.
3. Either Way, You are Paying a Mortgage
There are some renters who have not yet purchased a home because they are uncomfortable taking on the obligation of a mortgage. Everyone should realize that, unless you are living with your parents rent-free, you are paying a mortgage - either yours or your landlordâs. As an owner, your mortgage payment is a form of âforced savingsâ that allows you to build equity in your home that you can tap into later in life. As a renter, you guarantee your landlord is the person with that equity. Are you ready to put your housing cost to work for you?
4. Itâs Time to Move on with Your Life
The âcostâ of a home is determined by two major components: the price of the home and the current mortgage rate. It appears that both are on the rise. But what if they werenât? Would you wait? Look at the actual reason you are buying and decide if it is worth waiting. Whether you want to have a great place for your children to grow up, you want your family to be safer or you just want to have control over renovations, maybe now is the time to buy.
If the right thing for you and your family is to purchase a home this year, buying sooner rather than later could lead to substantial savings.
Home values have risen dramatically over the last twelve months. The latest Existing Home Sales Report from the National Association of Realtors puts the annual increase in the median existing-home price at 7.1%. CoreLogic, in their most recent Home Price Insights Report, reveals that national home prices have increased by 6.9% year-over-year. The CoreLogic report broke down appreciation even further into four different price categories:
âHere is how each category did in 2016:
âThe lower priced homes (which are more in demand) appreciated at greater rates than the homes at the upper ends of the spectrum.
âThe inventory of existing homes for sale in todayâs market was recently reported to be at a 3.6-month supply according to the National Association of Realtors latest Existing Home Sales Report. Inventory is now 7.1% lower than this time last year, marking the 20th consecutive month of year-over-year drops. Historically, inventory must reach a 6-month supply for a normal market where home prices appreciate with inflation. Anything less than a 6-month supply is a sellersâ market, where the demand for houses outpaces supply and prices go up. As you can see from the chart below, the United States has been in a sellersâ market since August 2012, but last monthâs numbers reached a new low.
âTrulia revealed that not only is there a shortage of homes on the market in general, but the homes that are available for sale are not meeting the needs of the buyers that are searching. Homes are generally bucketed into three groups by price range: starter, trade-up, and premium. Truliaâs market mismatch score measures the search interest of buyers against the category of homes that are available on the market. For example: âif 60% of buyers are searching for starter homes but only 40% of listings are starter homes, [the] market mismatch score for starter homes would be 20.â The results of their latest analysis are detailed in the chart below.
âNationally, buyers are searching for starter and trade-up homes and are coming up short with the listings available, leading to a highly competitive sellerâs market in these categories. Ninety-two of the top 100 metros have a shortage in trade-up inventory. Premium homebuyers have the best chance of less competition and a surplus of listings in their price range with an 11-point surplus, leading to more of a buyerâs market.
âIt leaves Americans who are in the market for a home increasingly chasing too fewer options in lower price ranges, and sellers of premium homes more likely to be left waiting longer for a buyer.â
Lawrence Yun, NARâs Chief Economist doesnât see an end to this coming any time soon:
âCompetition is likely to heat up even more heading into the spring for house hunters looking for homes in the lower- and mid-market price range.â
âReal estate is local. If you are thinking about buying OR selling this spring, sit with a local real estate professional who can share with you the exact market conditions in your area.
âMortgage interest rates, as reported by Freddie Mac, have increased over the last several weeks. Freddie Mac, along with Fannie Mae, the Mortgage Bankers Association and the National Association of Realtors, is calling for mortgage rates to continue to rise over the next four quarters. This has caused some purchasers to lament the fact they may no longer be able to get a rate below 4%. However, we must realize that current rates are still at historic lows. Here is a chart showing the average mortgage interest rate over the last several decades.
âThough you may have missed getting the lowest mortgage rate ever offered, you can still get a better interest rate than your older brother or sister did ten years ago, a lower rate than your parents did twenty years ago, and a better rate than your grandparents did forty years ago.
Just like our clocks this weekend in the majority of the country, the housing market will soon âspring forward!â Similar to tension in a spring, the lack of inventory available for sale in the market right now is what is holding back the market. Many potential sellers believe that waiting until Spring is in their best interest, and traditionally they would have been right. Buyer demand has seasonality to it, which usually falls off in the winter months, especially in areas of the country impacted by arctic temperatures and conditions.
That hasnât happened this year.
Demand for housing has remained strong as mortgage rates have remained near historic lows. The National Association of Realtors (NAR) recently reported that the top 10 dates sellers listed their homes in 2016 all fell in April, May or June. Those who act quickly and list now could benefit greatly from additional exposure to buyers prior to a flood of more competition coming to market in the next few months.
If you are planning on selling your home in 2017, meet with a local real estate professional to evaluate the opportunities in your market.
âThat headline might be a little aggressive. However, as the data on the 2017 housing market begins to roll in, we can definitely say one thing: If you are considering selling, IT IS TIME TO LIST YOUR HOME! The February numbers are not in yet, but the January numbers were sensational. Lawrence Yun, Chief Economist for the National Association of Realtors, said:
âMuch of the country saw robust sales activity last month as strong hiring and improved consumer confidence at the end of last year appear to have sparked considerable interest in buying a home. Market challenges remain, but the housing market is off to a prosperous start as homebuyers staved off inventory levels that are far from adequateâ¦â
And CNBC says consumer confidence in the economy is fueling the market:
âU.S. home resales surged to a 10-year high in January as buyers shrugged off higher prices and mortgage rates, a sign of growing confidence in the economy.â
The only challenge to the market is a severe lack of inventory. A balanced market would have a full six-month supply of homes for sale. Currently, there is less than a four-month supply of inventory. This represents a decrease in supply of 7.1% from the same time last year.
âWith demand increasing and supply dropping, this may be the perfect time to get the best price for your home. Contact a local real estate professional today to see whether that is the case in your neighborhood. Attention Agents: With so much demand and so little supply, your number one goal right now should be building your listing inventory, and weâre here to help.
In today's video, Rummy talks about how interest rates affect your housing costs and purchasing power.
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âAccording to a recent survey conducted by ClosingCorp, over half of all homebuyers are surprised by the closing costs required to obtain their mortgage. After surveying 1,000 first-time and repeat homebuyers, the results revealed that 17% of homebuyers were surprised that closing costs were required at all, while another 35% were stunned by how much higher the fees were than expected.
âHomebuyers reported being most surprised by mortgage insurance, followed by bank fees and points, taxes, title insurance and appraisal fees.â
Bankrate.com recently gathered closing cost data from lenders in every state and Washington, D.C. to be able to share the average costs in each state. The map below was created using the closing costs on a $200,000 mortgage with a 20% down payment.
Keep in mind that if you are in the market for a home above this price range. your costs could be significantly more. According to Freddie Mac,
âClosing costs are typically between 2 and 5% of your purchase price.â
âSpeak with your lender and agent early and often to determine how much youâll be responsible for at closing. Finding out that youâll need to come up with thousands of dollars right before closing is not a surprise anyone is ever looking forward to.
Who knew we'd still be talking about Legos in 2017? with the popularity of the recent hit movies, the Lego brand has been moving full steam ahead in a so far so good attempt to capitalize off of its success and popularity. With that being said, this is a real estate blog, so let's get to the real estate.
There have been rumblings of a plan to add a proposed $500-million Lego Land project here in New York, Middletown to be exact. The plan calls for a reconfiguration to the roads in the area of Glen Arden and Orange-Ulster BOCES. The main idea is to relocate EXIT 125 of Route 17 in order to alleviate traffic effects in the area that would certainly be caused by the popular play place. So, where do we fit into all of this?
The land around this area is bound to be prime real estate. With our knowledge of the real estate business and the area in and around this location we are looking for sellers who would be looking to capitalize off of the great opportunity. But wait, there's more. We also know some of the investors/developers involved in this project. So what does this mean for you?
We urge anyone who lives in or knows anyone who lives in this area to call us as soon as possible. With the information, dedication and insight we have into this project we are the number one source for anyone looking to benefit here. This is how real estate works. When you have a line on future increased value you move on it. Once word of mouth about this gets around you'll see and hear the excitement and everyone will probably start thinking they can just move on this by themselves, but big time investors and developers like this are looking to work with professionals to give themselves a better peace of mind. Also, as stated above; we are close to the source. Don't let this opportunity pass you by. Give us a call, not now. but right now.
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