Thinking of escaping the winter to a location with much better weather? Then now is a great time to take advantage of the equity in your home.
For those homeowners staying at their first residence, AccuWeather warns:
"The late-week cold shot should fade next week, but this is a warning shot for winter's return late in the month and early February."
Given this, it's time to go and stock up on winter weather supplies! However, if you're tired of shoveling snow and dealing with the cold weather, maybe it's time to consider obtaining a vacation home!
According to the Investment & Vacation Home Buyers 2018 Report by NAR:
"72% of vacation property owners and 71% of investment property owners believe now is a good time to buy."
It's time to take advantage of the equity in your home. As the latest Equity Report from ATTOM Data Solutions stated:
"Nearly 14.5 million U.S. properties (are) equity rich - where the combined estimated amount of loans secured by the property was 50 percent or less of the property's estimated market value - up by more than 433,000 from a year ago to a new high as far back as data is available, Q4 2013. The 14.5 million equity rich properties in Q3 2018 represented 25.7 percent of all properties with a mortgage."
This means that over a quarter of Americans who have a mortgage would be able to use some of their home equity to make a significant down payment toward a vacation home, and many are doing just that! According to the same report by NAR:
"33% of vacation buyers purchased in a beach area, 21% purchased on a lakefront, and 15% purchased a vacation home in the country."
Many homeowners who are close to retirement will use some of their equity to purchase vacation homes, which may eventually become their permanent homes post-retirement!
If you are a homeowner looking to take advantage of your home equity by investing in a vacation home, contact an agent in your area to discuss your options!
Yes, the majority of Americans still believe that homeownership is still one of the best investments out there. We talked about how owning a home improves your family's net worth and all other benefits that come with it in our previous articles. These numbers below prove them right.
An end-of-the-year survey by the Federal Reserve Bank's Center for Microeconomic Data revealed that:
"The majority of households continue to view housing as a good financial investment."
And that percentage has increased over the last three years.
Though there is some uncertainty as to how the real estate market will perform over the next twelve months, one thing remains very certain: America's belief in homeownership.
We all can get a little too excited when planning to make a big purchase. So, to make sure you won't miss out on important trends before you enter the market this year, have a read on this and be in the know.
Mortgage interest rates had been on the rise for much of 2018, but they made a welcome reversal at the end of the year. According to Freddie Mac's latest Primary Mortgage Market Survey, rates climbed to 4.94% in November before falling to 4.62% for a 30-year fixed rate mortgage last week. Despite the recent drop, interest rates are projected to reach 5% in 2019.
The interest rate you secure when buying a home not only greatly impacts your monthly housing costs, but also impacts your purchasing power.
Purchasing power, simply put, is the amount of home you can afford to buy for the budget you have available to spend. As rates increase, the price of the house you can afford to buy will decrease if you plan to stay within a certain monthly housing budget.
The chart below shows the impact that rising interest rates would have if you planned to purchase a $400,000 home while keeping your principal and interest payments between $2,020-$2,050 a month.
With each quarter of a percent increase in interest rate, the value of the home you can afford decreases by 2.5% (in this example, $10,000).
A 'normal' real estate market requires there to be a 6-month supply of homes for sale in order for prices to increase only with inflation. According to the National Association of Realtors (NAR), listing inventory is currently at a 3.9-month supply (still well below the 6-months needed), which has put upward pressure on home prices. Home prices have increased year-over-year for the last 81 straight months.
The inventory of homes for sale in the real estate market had been on a steady decline and experienced year-over-year drops for 36 straight months (from July 2015 to May 2018), but we are starting to see a shift in inventory over the last six months.
The chart below shows the change in housing supply over the last 12 months compared to the previous 12 months. As you can see, since June, inventory levels have started to increase as compared to the same time last year.
This is a trend to watch as we move further into the new year. If we continue to see an increase in homes for sale, we could start moving further away from a seller's market and closer to a normal market.
If you are planning to enter the housing market, either as a buyer or a seller, make sure that you have an experienced local agent who can help you navigate the changes in mortgage interest rates and inventory.
Paying off mortgages takes time, but it's helpful to know that there are ways to shorten your mortgage payments by months or even years. Here are some ways to help you beat the loan clock legitimately and save thousands of dollars in the process.
Any additional payments to the principal amount (the original sum of money borrowed in a loan), helps to cut down the amount of interest that you will pay over the life of your loan and can also help to shave years off the loan as well.
When you make 'extra' payments toward your loan, the key is to let your lender/bank know that you want the extra funds to go toward your principal balance as they will not automatically do this for you.
You don't have to double your mortgage payment to make a big difference either!
If you have a 30-year mortgage on a median-priced home ($250,000) with a 5% interest rate, you'll be responsible for a $1,342.05 monthly principal and interest payment. Over the course of the loan, if you pay your exact monthly payment, you will have paid $233,133.89 in interest alone!
Paying a Little Extra Can Pay Off Big
1. Pay an additional 1/12th of your mortgage payment every month
Benefit: In the example above, adding $111.84 to your monthly mortgage payment might not seem like a lot, but each year you will have paid one extra month's worth of payments which will shorten the term of your loan by 4 years and 8 months, all while saving you $42,000 in interest!
2. Pay an additional $50 per month towards your mortgage
Benefit: Fifty dollars might not seem like enough to make a difference on the term of your loan, but that small amount will save you over $21,000 in interest and will take over 2 years off the end of your loan. Twenty-eight years from now, you'll be happy to pay off your loan that much sooner!
3. Make one-time lump sum payments when you can
Benefit: If you find yourself with a little extra money after a yearly bonus, a tax return, or from investment dividends, paying that money towards the principal can cut your costs. This option, however, is less predictable than the extra monthly payments.
If you have higher interest debts, like credit cards, consider using any extra funds you have to pay those debts down before applying that money towards your mortgage. Also, if you do not plan on staying in your home for more than 10 years, paying extra toward your mortgage might not make sense.
If you're wondering what strategies would work best for you to shorten the term of your loan, consult a local real estate professional who can answer your questions or connect you with someone who can.
Despite being one of the biggest decision drivers, the price of a home for sale is often overlooked when all the other factors aligned. Values are perceived by buyers differently and could arguably be the true defining factor for a buyer to make a decision.
1. Owning your home offers stability to start and raise a family
From the best neighborhoods to the best school districts, even those without children at the time of purchase may have this in the back of their minds as a major reason for choosing the location of the home that they purchase.
2. There's no place like home
Owning your own home offers you not only safety and security, but also a comfortable place that allows you to relax after a long day!
3. You have more space for you and your family
Whether your family is expanding, an older family member is moving in, or you need to have a large backyard for your pets, you can take all this into consideration when buying your dream home!
4. You have control over renovations, updates, and style
Looking to actually try one of those complicated wall treatments that you saw on Pinterest? Tired of paying an additional pet deposit for your apartment building? Or maybe you want to finally adopt that puppy or kitten you've seen online 100 times? Who's to say that you can't do all of these things in your own home?
Whether you are a first-time homebuyer or a move-up buyer who wants to start a new chapter in your life, now is a great time to reflect on the intangible factors that make a house a home.
In our previous posts, we have shown why we believe we are far from another housing crash in 2019. Here's a few more reasons to put your mind at ease.
1. There are fewer foreclosures now than there were in 2006
A major challenge in 2006 was the number of foreclosures. There will always be foreclosures, but they spiked by over 100% prior to the crash. Foreclosures sold at a discount and, in many cases, lowered the values of adjacent homes. We are ending 2018 with foreclosures at historic pre-crash numbers -much fewer foreclosures than we ended 2006 with.
2. Most homeowners have tremendous equity in their homes
Ten years ago, many homeowners irrationally converted much, if not all, of their equity into cash with a cash-out refinance. When foreclosures rose and prices fell, they found themselves in a negative equity situation where their homes were worth less than their mortgage amounts. Many just walked away from their houses which led to even more foreclosures entering the market. Today is different. Over forty-eight percent of homeowners have at least 50% equity in their homes and they are not extracting their equity at the same rates they did in 2006.
3. Lending standards are much tougher
One of the causes of the crash ten years ago was that lending standards were almost non-existent. NINJA loans (no income, no job, and no assets) no longer exist. ARMs (adjustable rate mortgages) still exist but only as a fraction of the number from a decade ago. Though mortgage standards have loosened somewhat during the last few years, we are nowhere near the standards that helped create the housing crisis ten years ago.
4. Affordability is better now than in 2006
Though it is difficult to afford a home for many Americans, data shows that it is more affordable to purchase a home now than it was from 1985 to 2000. And, it requires much less of a percentage of your income today than it did in 2006.
The housing industry is facing some rough waters heading into 2019. However, the graphs above show that the market is much healthier than it was prior to the crash ten years ago.
If you're planning on selling your house, there is no better time than now. This fact is known to many, therefore, it's only wise to think that the market will be competitive and make the necessary preparations. Here's what you need to know to be on top.
One of the big reasons why inventory has remained so low for so long is that an entire generation of home buyers is finally buying! The millennial generation (ages 19-35) has been the driving force behind bidding wars in many areas of the country as they ditch their renter lifestyles and put down roots in new communities.
First American recently released a study entitled "How 'Renter' Millennials Will Transform the Housing Market." In their study, they explained that:
"...As more millennials age into their early-to-mid thirties, and begin to get married, have children and form households, they will continue to be the primary drivers of homeownership demand."
Because of this, it is safe to say that one aspect of 2019's housing market that WILL NOT slow down is the demand for housing from young renters who are no longer satisfied living in someone else's homes.
According to the latest Housing Vacancies and Homeownership Report from the Census Bureau, home buyers under 35 are already out-buying older Americans.
The chart below shows the year-over-year change in homeownership rate by those under and over the age of 35.
The national homeownership rate spiked to its highest level in 2004 and then steadily declined until the second quarter of 2016 when it reversed course. Homebuyers under the age of 35 are the reason for that shift.
More than half of the purchase mortgages originated by Fannie Mae and Freddie Mac in 2018 were to first-time homebuyers. In fact,
"according to Census Bureau and First American calculations, over the next 10 years, aging millennials are expected to purchase at least 10 million new homes. By 2060, it is estimated millennials will have produced more than 20 million first-time home buyers."
If you are a homeowner who is nervous that the demand for your home will slow, don't worry! If your home is priced competitively, there will be demand for years to come as this generation of renters is finally able to buy!
Some may see it as counter-intuitive to list their homes up for sale in the market this winter. The season actually holds some advantages, these are 5 great reasons to sell.
1. Demand Is Strong
The latest Buyer Traffic Report from the National Association of Realtors (NAR) shows that buyer demand remains strong throughout the vast majority of the country. These buyers are ready, willing and able to purchase... and are in the market right now! More often than not, multiple buyers are competing with each other to buy a home.
Take advantage of the buyer activity currently in the market.
2. There Is Less Competition Now
Housing inventory is still under the 6-month supply that is needed for a normal housing market. This means that, in the majority of the country, there are not enough homes for sale to satisfy the number of buyers in the market. This is good news for homeowners who have gained equity as their home values have increased. However, additional inventory could be coming to the market soon.
Historically, the average number of years a homeowner stayed in their home was six but has hovered between nine and ten years since 2011. There is a pent-up desire for many homeowners to move, as they were unable to sell over the last few years because of a negative equity situation. As home values continue to appreciate, more and more homeowners will be given the freedom to move.
The choices buyers have will continue to increase. Don't wait until this other inventory comes to market before you decide to sell.
3. The Process Will Be Quicker
Today's competitive environment has forced buyers to do all they can to stand out from the crowd, including getting pre-approved for their mortgage financing. This makes the entire selling process much faster and much simpler as buyers know exactly what they can afford before home shopping. According to Ellie Mae's latest Origination Insights Report, the time to close a loan has dropped to 46 days.
4. There Will Never Be a Better Time to Move Up
If your next move will be into a premium or luxury home, now is the time to move up! The inventory of homes for sale at these higher price ranges has forced these markets into a buyer's market. This means that if you are planning on selling a starter or trade-up home, your home will sell quickly, AND you'll be able to find a premium home to call your own!
Prices are projected to appreciate by 4.8% over the next year according to CoreLogic. If you are moving to a higher-priced home, it will wind up costing you more in raw dollars (both in down payment and mortgage payment) if you wait.
5. It's Time to Move on With Your Life
Look at the reason you decided to sell in the first place and determine whether it is worth waiting. Is money more important than being with family? Is money more important than your health? Is money more important than having the freedom to go on with your life the way you think you should?
Only you know the answers to the questions above. You have the power to take control of the situation by putting your home on the market. Perhaps the time has come for you and your family to move on and start living the life you desire.
Unbeknownst to many, homeowners increase their family's overall net worth simply by paying off their monthly mortgage. Unlike like with renting where you merely put your money out for time used, homeowners get a positive kickback from their monthly payments through home equity.
Every quarter, Pulsenomics surveys a nationwide panel of over 100 economists, real estate experts, and investment and market strategists and asks them to project how residential home prices will appreciate over the next five years for their Home Price Expectation Survey (HPES).
The latest data from their Q4 2018 Survey revealed that home prices are expected to round out the year 5.8% higher than they were in January. For the next 5 years, home values will appreciate by an average of nearly 3% a year.
This is still great news for homeowners!
For example, let's assume a young couple purchases and closes on a $250,000 home in January. Simply through their home appreciating in value, those homeowners can build their home equity by nearly $40,000 over the next five years.
Let's look at the potential equity gained over the same period of time at some higher price points:
In many cases, home equity is a large portion of a family's overall net worth.
If your plan for 2019 includes entering the housing market to purchase a home, whether it's your first or your fifth, meet with a local real estate professional who can help you understand where prices are headed in your area.
Although we have seen the reports, analyzed the forecasts and enjoyed the projections of a stabilizing market of the real estate industry across all states. One thing that buyers should be concern about is the projected mortgage interest rate increase by the Q4 of next year.
The Mortgage Bankers Association (MBA), Freddie Mac, and Fannie Mae all project that mortgage interest rates will increase by this time next year. According to CoreLogic's most recent Home Price Insights Report, home prices will appreciate by 4.8% over the next 12 months.
What Does This Mean as a Buyer?
If home prices appreciate by 4.8% over the next twelve months as predicted by CoreLogic, here is a simple demonstration of the impact that an increase in interest rate would have on the mortgage payment of a home selling for approximately $250,000 today:
If buying a home is in your plan for this year, doing it sooner rather than later could save you thousands of dollars over the terms of your loan.
As we pointed out in countless of our previous posts, there is a lot to gain from owning a home than renting. Today let us take a closer look on one of them; we have collected reports and surveys from the best sources proving the net worth of a homeowner is over forty times greater than that of a renter.
The study revealed that the median net worth of a homeowner was $231,400 - a 15% increase since 2013. At the same time, the median net worth of renters decreased by 5% ($5,200 today compared to $5,500 in 2013).
These numbers reveal that the net worth of a homeowner is over 44 times greater than that of a renter.
There are many who see that statistic and point toward how broad the range of respondents are for the Federal Reserve survey. Their study includes all economic and social groups and also includes all age groups. The argument is that older respondents have a higher likelihood of being homeowners, while the homeownership rate among younger survey takers is much lower.
Recently, the Joint Center for Housing Studies at Harvard University focused on homeowners and renters over the age of 65. Their study revealed that the difference in net worth between homeowners and renters at this age group was actually 47.5 times greater!
Homeowners over the age of 65 are much more financially prepared for retirement and often own their homes outright if they were fortunate enough to purchase their homes before the age of 36. Their 30 years of mortgage payments have paid off as they gained equity through their monthly payments and as home values appreciated.
It is no surprise that lifelong-renters have had a hard time accruing net worth as the latest Census report shows that the Median Asking Rent has been climbing consistently over the last 30 years.
As a homeowner you put your monthly mortgage payment to work for you, building your net worth with every payment.
Let's talk about what 2019 has in store for us and eliminate the fears and worries that it would be a repeat of 2018 once and for all. Forecasts and trend reports reveal light at the end of the tunnel; we are truly headed for a more normal average next year.
However, some are seeing these adjustments as red flags and are suggesting that we are headed back to the same challenges we experienced in 2008. Today, let's look at one set of statistics that prove the current market is nothing like the one that preceded the housing crash last decade.
The previous bubble was partially caused by unhealthy levels of mortgage debt. New purchasers were putting down the minimum down payment, resulting in them having little if any equity in their homes.
Existing homeowners were using their homes as ATMs by refinancing and swapping their equity for cash. When prices started to fall, many homeowners found themselves in a negative equity situation (where their mortgage was higher than the value of their home) so they walked away which caused prices to fall even further. When this happened, even more homeowners found themselves in negative equity situations which caused them to walk away as well, and so a vicious cycle formed.
Today, the equity situation is totally different. According to a new report from ATTOM Data Solutions more than 1-in-4 homes with a mortgage have at least 50% equity. The report explains:
"...nearly 14.5 million U.S. properties were equity rich - where the combined estimated amount of loans secured by the property was 50 percent or less of the property's estimated market value...The 14.5 million equity rich properties in Q3 2018 represented 25.7 percent of all properties with a mortgage."
In addition, according to the U.S. Census Bureau, 30.3% of homes in the country have no mortgage on them.
Almost 50% of all homes have at least 50% equity.
If we take both numbers, the 30.3% of all homes without a mortgage and the 17.9% with at least 50% equity (25.7% of the 69.3% of homes with a mortgage), we realize that 48.2% of all homes in the country have at least 50% equity.
Unlike 2008, almost half of the homeowners in the country are sitting on massive amounts of home equity. They will not be walking away from their homes if the housing market begins to soften.
Everyone hates hidden charges, although closing cost is a requirement that majority of buyers are aware of, the actual amount is not fixed and often than not can come as a negative surprise to buyers who are on a budget.
By law, a homebuyer will receive a loan estimate from their lender 3 days after submitting their loan application and they should receive a closing disclosure 3 days before the scheduled closing on their home. The closing disclosure includes final details about the loan and the closing costs.
But what are closing costs anyway?
According to Trulia:
"Closing costs are lender and third-party fees paid at the closing of a real estate transaction, and they can be financed as part of the deal or be paid upfront. They range from 2% to 5% of the purchase price of a home. (For those who buy a $150,000 home, for example, that would amount to between $3,000 and $7,500 in closing fees.)"
Keep in mind that if you are in the market for a home above this price range, your costs could be significantly greater. As mentioned before,
Closing costs are typically between 2% and 5% of your purchase price.
Trulia continues to give great advice, saying that:
"...understanding and educating yourself about these costs before settlement day arrives might help you avoid any headaches at the end of the deal."
Speak with your lender and agent early and often to determine how much you'll be responsible for at closing.
Finding out that you'll need to come up with thousands of dollars right before closing is not a surprise anyone is ever looking forward to.
Being the first always have more benefits than consequences. If season after season, people put up their house on sale during spring because the demand increases during that time, wouldn't it be great if you can get ahead of the pack by putting your house on the list as early as today so buyers can see yours before they have visibility on your competition?
The #1 Reason to List Your Home in the Winter Months is Less Competition!
Housing supply traditionally shrinks at this time of year, so the choices buyers have will be limited. The chart below was created using the months' supply of listings from the National Association of Realtors.
As you can see, the 'sweet spot' to list your home for the most exposure naturally occurs in the late fall and winter months (November - February).
Temperatures aren't the only thing that heats up in the spring - so do listings!
In 2017, listings increased by nearly half a million houses from December to June. Don't wait for these listings to come to market before you decide to list your house.
Added Bonus: Only Serious Buyers Are Out in the Winter
At this time of year, only those purchasers who are serious about buying a home will be in the marketplace. You and your family will not be bothered and inconvenienced by mere 'lookers.' The lookers are at the mall or online doing their holiday shopping.
If you have been debating whether or not to sell your home and are curious about market conditions in your area, talk with a local real estate professional who can help you decide the best time to list your house for sale.
Historically, people prefer to buy their dream houses in spring. Nevertheless, based on reports from our reliable sources, there is a new trend in our seasonal market that many sellers could take advantage of.
According to Bank of America's annual Home Buyer Insights Report, 41% of renters surveyed agree that spring is the best time to buy a home. The surprising result, however, is that when ranking the seasons, winter comes in second at 24%.
In many areas of the country, the spring and summer are the most competitive seasons for buyers. Families with children often want to move over the summer to make sure that their kids are ready for school in the fall. This often leads those families who haven't found homes to buy to push pause on their search in the fall and winter months.
This creates a great environment for buyers to find a home with less competition. According to moving.com, scheduling a move during the winter months also comes with the best price.
"If you define 'best' by cost then, generally speaking, you are more likely to save on a move during the late September to April window. Demand for movers usually slows down during this time frame and rates are low."
There are also many benefits to listing your house for sale during the winter months as well!
As we recently mentioned, buyers who are out in the winter are serious about wanting to find a home, and there is traditionally less competition on the market which gives you greater exposure to those buyers.
As always, the best time to buy or move all depends on each individual buyer or seller's goals and needs. If you are one of the many who would like to make a move this winter, contact a local real estate professional who can help you create a plan to make it happen!
One of the biggest misconceptions about buying a new home is that "you will need over 20% for down payment". It is the same reason why a huge number of potential first-time homeowner held back and took on extra jobs. As some were successful in making their dream a reality, some are still hustling as we speak to save for what they think is needed.
According to a new survey, 36% of millennials took on a second job to make their dreams of homeownership a reality in 2017.
Among millennials with incomes over $100,000 a year, the top ways to come up with the necessary funds were to sell stocks (20%) or to sell cryptocurrency (16%).
The most popular method of savings was the most traditional; 60% of those saving for a down payment used a percentage of their paychecks to achieve their goal, while 75% of those with salaries over $100k were able to save this way.
For those who have not yet begun to save for their down payment, 32% plan on pursuing additional employment, while 15% plan on driving for a ride-share service as their second job.
Many first-time buyers are mistaken about the down payment needed in today's real estate market. In fact,
"In a 2017 survey, 68% of renters cited saving for a down payment as an obstacle to homeownership. Thirty-nine percent of renters believe that more than 20% is needed for a down payment and many renters are unaware of low-down payment programs."
The many benefits of homeownership make the extra jobs, sacrificing new clothes, or skipping vacations well worth it.
If you have been saving for your down payment for a while now and are curious how much further you have to go, meet with a local real estate professional who can help you determine what priced home you can afford and what size down payment you'll need.
Rumor has it that females are more eager, able and willing to buy homes than males do. We are curious to find out if this claim holds ground. We've gathered reports from one of the leading and trusted experts and this is what we found out.
In 2018, for the second year in a row, single female buyers accounted for 18% of all buyers. In 2017, 60% of millennial women listed as the primary borrowers on mortgages were single.
According to the 2018 Home Buyer and Seller Generational Trends Report by the National Association of Realtors, one in five homebuyers in the U.S. were single females (most of them part of the baby boomer generation) as you can see in the graph below:
This does not come as a surprise since 50.8% of the U.S. population is female and 15.6% of them are 65 years and over, according to the Census Bureau.
What are the reasons for this demographic's booming interest in homeownership?
Bankrate published an article with what they believe to be some of the reasons:
Are they only downsizing and buying small homes?
Not really; The Institute of Luxury Home Marketing recently stated that:
"The number of female billionaires grew faster globally in 2017 than the number of male billionaires. This redistribution of wealth has seen an impact on luxury real estate both in its purchase and design attributes -and obviously, this is important for realtors to recognize when relating to their clients."
Whether you are a millennial who wants to buy a starter home, a billionaire looking for that luxury home you've always wanted, or maybe even someone who just went through a gray divorce, contact a local real estate professional who can help you create your real estate portfolio and start investing your money in real estate today!
Although it is a common knowledge that putting your home for sale during the holiday season would prove profitable, there are still few people who are hesitant and could not find a good reason to sell. How about we give you seven (7).
6. The desire to own a home doesn't stop when the holidays come. Buyers who were unable to find their dream homes during the busy spring and summer months are still searching!
7. The supply of listings increases substantially after the holidays. Also, in many parts of the country, new construction will continue to surge and reach new heights which will lessen the demand for your house in 2019.
Waiting until after the holidays to sell your home probably doesn't make sense.
Often times when we talk about home affordability, we always mention mortgage rate increase and inventory as the key drivers. This time, we are bringing in a new player in the game that will change the way we look at home affordability. Although this may vary on a case-to-case basis, this is still definitely something you should look at.
According to the National Association of Realtors' (NAR) September 2018 Housing Affordability Index, wages have increased in every region of the country:
After applying current salaries, home prices, and mortgage rates to their Home Affordability Index equation, the index, though still lower than this time last year (160.1 to 146.7), increased over the last month (141.2 to 146.7). For the complete methodology used by NAR, click here.
The percentage of income needed to own a home has also decreased each of the last three months. It currently sits at 17% which is substantially lower than historic numbers.
If you are a first-time buyer or a move-up buyer who believes that purchasing a home is not within your budget, check with a local real estate professional to find out if that is still true.
Many homeowners fear that home price increase will make it difficult for them to afford or at the very least find a home, they want to buy. Thus, they renovate. However, is it more cost effective to renovate than sell your existing home to purchase a new one? Let us look at what homeowners have to say.
According to Home Advisor, homeowners spent an average of $6,649 on home improvements over the last 12 months. If that number seems high, it also includes homeowners who recently bought fixer-uppers.
A new study from Zillow asked the question,
"Given a choice between spending a fixed amount of money on a down payment for a new home or fixing up their current home, what would you do?"
Seventy-six percent of those surveyed said that they would rather renovate their current homes than move. The results are broken down by generation below.
More and more studies are coming out about the intention that many Americans have to 'age in place' (or retire in the area in which they live). Among retirees, 91% would prefer to renovate than spend their available funds on a down payment on a new home.
If their current house fits their needs as far as space and accessibility are concerned, then a renovation could make sense. But if renovations will end up changing the identity of the home and impacting resale value, then the renovations may end up costing them more in the long run.
With home prices increasing steadily for the last 6.5 years, homeowners have naturally gained equity that they may not even be aware of. Listing your house for sale in this low-competition environment could net you more money than your renovations otherwise would.
If you are one of the many homeowners who is thinking about remodeling instead of selling, sit down with a local real estate professional who can help you make the right decision for you based on the demand for your house in today's market.
If you're into real estate news, you're probably aware that supplies have gone up again balancing the scale between supply and demand. Most of the inventory that helped make this happen came from newly constructed homes. If you're thinking of buying a brand new home, here are some tips you ought to have to follow to make sure you get the best value for your money.
1. Hire an Inspector
Despite the fact that builders must comply with town and city regulations, a home inspector will have your best interests in mind! When buying new construction, you will have between 1-3 inspections, depending on your preference (the foundation inspection, the pre-drywall inspection, and a final inspection).
These inspections are important because the inspector will often notice something that the builder missed. If possible, attend the inspection so that you can ask questions about your new home and make sure the builder fixes any problems found by the inspector.
2. Maintain good communication with your builder
Starting with the pre-construction meeting (where you will go over all the details of your home with your project manager), establish a line of communication. For example, will the builder email you every Friday with progress updates? If you are an out-of-state buyer, will you receive weekly pictures of the progress via email? Can you call the builder and if so, how often? How often can you visit the site?
3. Look for builder's incentives
The good thing about buying a new home is that you can add the countertop you need, the mudroom you want, or an extra porch off the back of your home! However, there is always a price for such additions, and they add up quickly!
Some builders offer incentives that can help reduce the amount you spend on your home. Do your homework and see what sort of incentives the builders in your area are offering.
4. Schedule extra time into the process
There are many things that can impact the progress on your home. One of these things is the weather, especially if you are building in the fall and winter. Rain can delay the pouring of a foundation as well as other necessary steps at the beginning of construction, while snow can freeze pipes and slow your timeline.
Most builders already have a one-to-two-week buffer added into their timelines, but if you are also in the process of selling your current home, you must keep that in mind! Nobody wants to be between homes for a couple of weeks.
5. Visit the site often
As we mentioned earlier, be sure to schedule time with your project manager at least once a week to see the progress on your home. It's easy for someone who is not there all the time to notice little details that the builder may have forgotten or overlooked. Additionally, don't forget to take pictures! You might need them later to see exactly where that pipe is or where those electrical connections are once they're covered up with drywall!
Watching your home come to life is a wonderful experience that can sometimes come with hassles. To avoid some of these headaches, keep these tips in mind!
If you are ready to put your current home up for sale and find out what new construction is available in your area, call a local real estate agent who can help you with the sale of your current home and the search for your new one.
A notable percentage of the Americans who decided to rent over purchasing their own home have their decisions influenced by the notion that home prices are higher today than the last 10 years. Although there is a certain level of truth to this claim, it does not necessarily mean that renting is cheaper.
For the last ten years, you could purchase a home at a dramatically discounted price and attain a mortgage at a historically low mortgage rate.
Now that home values have returned to where they should be, and mortgage rates are beginning to increase, it is less affordable to own a home than it was over the last ten years.
However, what is not being reported is that it is MORE AFFORDABLE to own a home today than at any other time since 1985 (when data was first collected on this point).
If you take out the years after the crash, affordability today is greater than it has been at almost any time in American history.
This has not been adequately reported which has led to many Americans believing that they cannot currently afford a home.
As an example, the latest edition of Freddie Mac's Research: Profile of Today's Renter reveals that 75% of renters now believe it is more affordable to rent than to own their own homes. This percentage is the highest ever recorded. The challenge is that this belief is incorrect. Study after study has proven that in today's market, it is less expensive to own a home than it is to rent a home in the United States.
Thankfully, some are starting to see this situation and accurately report on it. The National Association of Realtors, in their 2019 Housing Forecast, mentions this concern:
"While the U.S. is experiencing historically normal levels of affordability, potential buyers may be staying out of the market because of perceived problems with affordability."
If you are one of the many renters who would like to own their own homes, talk to a local real estate professional to find out if homeownership is affordable for you right now.
Don't beat yourself up for having second thought about the mortgage process. Your fears are not unfounded, and as it turns out, you are not the only one. Fear comes from things we do not completely understand, and the Mortgage Process is a long and complicated process that does not come with walk-throughs and tutorials readily available at a moment's notice.
For many, the mortgage process can be scary, but it doesn't have to be!
In order to qualify in today's market, you'll need a down payment (the average down payment on all loans last year was 5%, with many buyers putting down 3% or less), a stable income, and good credit history.
Throughout the entire home buying process, you will interact with many different professionals who will all perform necessary roles. These professionals are also valuable resources for you.
Once you're ready to apply, here are 5 easy steps that Freddie Mac suggests to follow:
Do your research, reach out to professionals, stick to your budget, and be sure that you are ready to take on the financial responsibilities of becoming a homeowner.
One of the common misconception about buying a new home has to fall under the myth of ever so scary down payment. It's not uncommon for people to say the 15%-20% is what the market demands to buy a home, which is true back then. The real estate market is an ever-changing environment, much of what we know before are either obsolete or holds little truth with our current market today.
Now that the largest generation since baby boomers has aged into prime homebuying age, there will no doubt be an uptick in the national homeownership rate. The study from Urban Institute revealed that nearly a quarter of this generation has the credit and income needed to purchase a home.
Surprisingly, the largest share of mortgage-ready millennials lives in expensive coastal cities. These cities often attract highly skilled workers who demand higher salaries for their expertise.
So, what's holding these mortgage-ready millennials back from buying?
Myths About Down Payment Requirements!
Most of the millennials surveyed for the study believe that they need at least a 15% down payment in order to buy a home when, in reality, the median down payment in the US in 2017 was just 5%, and many programs are available for even lower down payments!
The study goes on to point out that:
"Despite limited awareness, every state has programs that provide grants and loans to make homeownership more attainable, with average assistance in various states ranging from $2,436 to $21,171."
With so many young families now able to buy a home in today's market, the demand for housing will continue for years to come. If you are one of the many millennials who have questions about their ability to buy in today's market, sit with a local real estate professional who can assist you along your journey!
Despite the popularity, it's hard to believe that there are still a few brave Americans out there that's out of the loop on the information circle on their benefits. Let's extend a helping hand to make sure all of them get these well-deserved benefits for themselves.
If you are a veteran or you know someone who is, here is a breakdown of the VA Home Loan benefits that can be used to achieve the American Dream!
Top 5 Benefits of a VA Home Loan
One of the most important first steps when applying for a VA Home Loan is obtaining your Certificate of Eligibility (COE). "The COE verifies to the lender that you are eligible for a VA-backed loan."
You Can Apply for a VA Loan if You: