Manhattan, & Ft. Riley Community BlogRecently posted or modified blog posts in the category - Buying a Homehttps://www.sellsmhk.com/blog/Copyright SellsMHK.com2024-03-07T09:22:57-07:00tag:sellsmhk.com,2012-09-20:24894Your Guide to HomeownershipBuying a Home? This is for you. This resource contains everything you need to know when buying a home in the Flint Hills so you can love where you live!! Learn about the buying process, financing & home loans, commonly used terms, and ways to get in touch with us!
We would love to guide you through the, sometimes overwhelming, process & help you find your dream home! Connect with us!
<a href="https://www.canva.com/design/DAF9jNM1vWE/GMisZnRPv8JsEWRfhRuoEw/view?utm_content=DAF9jNM1vWE&utm_campaign=designshare&utm_medium=embeds&utm_source=link" target="_blank" rel="noopener">March Guide 2024 Buying a Home</a> by Sells MHK Office2024-03-06T13:19:00-07:002024-03-07T09:22:57-07:00Jolene Robertstag:sellsmhk.com,2012-09-20:29875Why You Don't Need To Fear the Return of Adjustable-Rate MortgagesWhy You Don’t Need To Fear the Return of Adjustable-Rate Mortgages
<br /><img src="https://files.keepingcurrentmatters.com/content/images/20230821/20230822-Why-You-Don-t-Need-To-Fear-the-Return-of-Adjustable-Rate-Mortgages.jpg" width="600" /><br /><br />
If you remember the housing crash back in 2008, you may recall just how popular adjustable-rate mortgages (ARMs) were back then. And after years of being virtually nonexistent, more people are once again using ARMs when buying a home. Let’s break down why that’s happening and why this isn’t cause for concern.
Why ARMs Have Gained Popularity More Recently
This graph uses <a href="http://www.mba.org/" rel="noopener noreferrer" target="_blank">data</a> from the Mortgage Bankers Association (MBA) to show how the percentage of adjustable-rate mortgages has increased over the past few years:
<a href="https://www.simplifyingthemarket.com/en/content/images/20230821/20230822-Percent-of-arms-increased-since-2021.png?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" rel="noopener noreferrer" target="_blank"><img src="https://files.keepingcurrentmatters.com/content/images/20230821/20230822-Percent-of-arms-increased-since-2021.png" /></a>
As the graph conveys, after hovering around 3% of all mortgages in 2021, many more homeowners turned to adjustable-rate mortgages again last year. There’s a simple explanation for that increase. Last year is when mortgage rates climbed dramatically. With higher borrowing costs, some homeowners decided to take out this type of loan because traditional borrowing costs were high, and an ARM gave them a lower rate.
Why Today’s ARMs Aren’t Like the Ones in 2008
To put things into perspective, let’s remember these aren’t like the ARMs that became popular leading up to 2008. Part of what caused the housing crash was loose lending standards. Back then, when a buyer got an ARM, banks and lenders didn’t require proof of their employment, assets, income, etc. Basically, people were getting loans that they shouldn’t have been awarded. This set many homeowners up for trouble because they couldn’t pay back the loans that they never had to qualify for in the first place.
This time around, lending standards are different. Banks and lenders learned from the crash, and now they verify income, assets, employment, and more. This means today’s buyers actually have to qualify for their loans and show they’ll be able to repay them.
Archana Pradhan, Economist at CoreLogic, <a href="https://www.corelogic.com/intelligence/rising-rates-lead-to-increase-in-adjustable-rate-mortgage-arm-activity/" rel="noopener noreferrer" target="_blank">explains</a> the difference between then and now:
“Around 60% of Adjustable-Rate Mortgages (ARM) that were originated in 2007 were low- or no-documentation loans . . . Similarly, in 2005, 29% of ARM borrowers had credit scores below 640 . . . Currently, almost all conventional loans, including both ARMs and Fixed-Rate Mortgages, require full documentation, are amortized, and are made to borrowers with credit scores above 640.”
In simple terms, Laurie Goodman at Urban Institute helps drive this point home by <a href="https://www.urban.org/urban-wire/should-borrowers-be-afraid-adjustable-rate-mortgages" rel="noopener noreferrer" target="_blank">saying</a>:
“Today’s Adjustable-Rate Mortgages are no riskier than other mortgage products and their lower monthly payments could increase access to homeownership for more potential buyers.”
Bottom Line
If you’re worried today’s adjustable-rate mortgages are like the ones from the housing crash, rest assured, things are different this time.
And, if you’re a first-time homebuyer and you’d like to learn more about lending options that could help you overcome today’s affordability challenges, reach out to a trusted lender.2023-08-21T12:54:00-07:002023-08-22T13:02:21-07:00Broker Robertstag:sellsmhk.com,2012-09-20:29675Where Are People Moving Today and Why?Where Are People Moving Today and Why?
<br /><img src="https://files.keepingcurrentmatters.com/content/images/20230809/20230814-Where-are-people-moving-today-and-why.jpg" width="600" /><br /><br />
Plenty of people are <a href="https://www.simplifyingthemarket.com/en/2023/07/27/homebuyers-are-still-more-active-than-usual/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" rel="noopener noreferrer" target="_blank">still moving</a> these days. And if you’re thinking of making a move yourself, you may be considering the <a href="https://www.simplifyingthemarket.com/en/2023/07/14/low-housing-inventory-is-a-sweet-spot-for-sellers-infographic/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" rel="noopener noreferrer" target="_blank">inventory</a> and affordability challenges in the <a href="https://www.simplifyingthemarket.com/en/2023/08/04/housing-market-forecast-for-the-rest-of-2023-infographic-1/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" rel="noopener noreferrer" target="_blank">housing market</a> and wondering what you can do to help offset those. A new <a href="https://474803.fs1.hubspotusercontent-na1.net/hubfs/474803/The%20State%20of%20U.S.%20Population%20Movement_0623.pdf" rel="noopener noreferrer" target="_blank">report</a> from Gravy Analytics provides insight into where people are searching for homes and what they’re prioritizing most right now. That information could help you plan your own move.
1. People Are Moving to Cities with Lower Housing Costs
One big factor motivating where buyers are going is affordability and that’s no big surprise. People are relocating to areas that have less expensive housing options. As a result, small cities are thriving. Hannah Jones, Economics Data Analyst at Realtor.com, <a href="https://www.realtor.com/news/trends/affordable-what-americas-20-hottest-housing-markets-all-have-in-common-now/" rel="noopener noreferrer" target="_blank">summarizes</a> why:
“Affordability is still very much front and center . . . a lot of what’s available is outside of the price range of many buyers. . . . so they look elsewhere for a little more bang for the buck.”
The takeaway for you? If you’re having trouble finding a home that fits your budget, it may help to browse other, more affordable locations nearby.
2. People Want to Live Where They Vacation
And, if you’re already expanding your search radius, you may be able to include a location that features your favorite type of destination, like a suburb near the beach or a mountain town. Data shows many other homeowners are making that type of move a priority today. <a href="https://474803.fs1.hubspotusercontent-na1.net/hubfs/474803/The%20State%20of%20U.S.%20Population%20Movement_0623.pdf" rel="noopener noreferrer" target="_blank">According</a> to the same report from Gravy Analytics:
“Whether it’s the opportunity to enjoy more weekend hikes in the mountains or to wake up to a lakeside sunrise, people are moving to areas that were once thought of as vacation spots.”
Even with today’s <a href="https://www.simplifyingthemarket.com/en/2023/07/17/home-prices-are-rebounding/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" rel="noopener noreferrer" target="_blank">home prices</a> and <a href="https://www.simplifyingthemarket.com/en/2023/08/03/how-inflation-affects-mortgage-rates/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" rel="noopener noreferrer" target="_blank">mortgage rates</a>, here’s why a move like this could be possible for you. If you’re already a homeowner, the <a href="https://www.simplifyingthemarket.com/en/2023/08/07/four-ways-you-can-use-your-home-equity/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" rel="noopener noreferrer" target="_blank">equity</a> you’ll get when you sell your current house can help fuel that move and give you the down payment you’d need for your dream home.
3. People Who Work Remotely Are Taking Advantage of that Flexibility
Ongoing <a href="https://www.simplifyingthemarket.com/en/2023/07/13/how-remote-work-expands-your-homebuying-horizons/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" rel="noopener noreferrer" target="_blank">remote work</a> is another major factor in where people are moving. A recent <a href="https://www.mckinsey.com/mgi/our-research/empty-spaces-and-hybrid-places-chapter-1" rel="noopener noreferrer" target="_blank">report</a> from the McKinsey Global Institute says this about recent movement patterns:
“Many of these moves happened because employees untethered from their daily commutes began to care less about how far they lived from the office.”
If you’re a remote or hybrid worker, you don’t have to live in the same city, or sometimes even the same state, as your job. That means you can prioritize other things, like being closer to loved ones, when buying a home.
In fact, the same McKinsey Global Institute report <a href="https://www.mckinsey.com/mgi/our-research/empty-spaces-and-hybrid-places-chapter-1" rel="noopener noreferrer" target="_blank">notes</a> for people who moved during the pandemic, 55% reported moving farther from the office. And since remote work is still a popular choice today, homebuyers will likely continue to take advantage of that flexibility.
Bottom Line
Lots of people are still <a href="https://www.mykcm.com/2023/07/26/tips-for-making-your-best-offer-on-a-home/" rel="noopener noreferrer" target="_blank">moving</a> today. If you want help navigating today’s inventory or affordability challenges, and expert advice to <a href="https://www.mykcm.com/2023/08/02/how-to-know-if-youre-ready-to-buy-a-home/" rel="noopener noreferrer" target="_blank">help</a> you find your ideal home, let's connect.2023-08-14T15:00:00-07:002023-08-15T19:28:41-07:00Broker Robertstag:sellsmhk.com,2012-09-20:29551How Inflation Affects Mortgage RatesHow Inflation Affects Mortgage Rates
<br /><img src="https://files.keepingcurrentmatters.com/content/images/20230731/20230803-How-Inflation-Affects-Mortgage-Rates.jpg" width="600" /><br /><br />
When you read about the housing market in the news, you might see something about a recent decision made by the Federal Reserve (the Fed). But how does this decision affect you and your plans to buy a home? Here's what you need to know.
The Fed is trying hard to reduce <a href="https://www.simplifyingthemarket.com/en/2023/06/23/homeownership-helps-protect-you-from-inflation-infographic/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" rel="noopener noreferrer" target="_blank">inflation</a>. And even though there’s been 12 straight months where inflation has cooled (see graph below), the most recent <a href="https://www.bls.gov/news.release/cpi.nr0.htm" rel="noopener noreferrer" target="_blank">data</a> shows it’s still higher than the Fed’s target of 2%:
<a href="https://www.simplifyingthemarket.com/en/content/images/20230731/20230803-Inflation-Continues-Moderating.png?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" rel="noopener noreferrer" target="_blank"><img src="https://files.keepingcurrentmatters.com/content/images/20230731/20230803-Inflation-Continues-Moderating.png" /></a>
While you may have been hoping the Fed would stop their hikes since they’re making progress on their goal of bringing down inflation, they don’t want to stop too soon, and risk inflation climbing back up as a result. Because of this, the Fed decided to increase the Federal Funds Rate again last week. As Jerome Powell, Chairman of the Fed, <a href="https://www.federalreserve.gov/mediacenter/files/FOMCpresconf20230726.pdf" rel="noopener noreferrer" target="_blank">says</a>:
“We remain committed to bringing inflation back to our 2 percent goal and to keeping longer-term inflation expectations well anchored.”
Greg McBride, Senior VP, and Chief Financial Analyst at Bankrate, <a href="https://www.nbcnews.com/business/economy/interest-rate-hike-july-2023-how-much-higher-federal-reserve-rcna96210" rel="noopener noreferrer" target="_blank">explains</a> how high inflation and a strong economy play into the Fed’s recent decision:
“Inflation remains stubbornly high. The economy has been remarkably resilient, the labor market is still robust, but that may be contributing to the stubbornly high inflation. So, Fed has to pump the brakes a bit more.”
Even though a Federal Fund Rate hike by the Fed doesn’t directly dictate what happens with mortgage rates, it does have an impact. As a recent article from Fortune <a href="https://fortune.com/recommends/mortgages/what-fed-rate-hikes-mean-for-mortgage-rates/" rel="noopener noreferrer" target="_blank">says</a>:
“The federal funds rate is an interest rate that banks charge other banks when they lend one another money . . . When inflation is running high, the Fed will increase rates to increase the cost of borrowing and slow down the economy. When it’s too low, they’ll lower rates to stimulate the economy and get things moving again.”
How All of This Affects You
In the simplest sense, when inflation is high, <a href="https://www.simplifyingthemarket.com/en/2023/07/19/explaining-todays-mortgage-rates/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" rel="noopener noreferrer" target="_blank">mortgage rates</a> are also high. But, if the Fed succeeds in bringing down inflation, it could ultimately lead to lower mortgage rates, making it more affordable for you to buy a home.
This graph helps illustrate that point by showing that when <a href="https://www.bls.gov/cpi/" rel="noopener noreferrer" target="_blank">inflation</a> decreases, <a href="https://www.freddiemac.com/pmms/archive" rel="noopener noreferrer" target="_blank">mortgage rates</a> typically go down, too (see graph below):
<a href="https://www.simplifyingthemarket.com/en/content/images/20230731/20230803-Mortgage-Rates-Follow-Behind-Inflation.png?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" rel="noopener noreferrer" target="_blank"><img src="https://files.keepingcurrentmatters.com/content/images/20230731/20230803-Mortgage-Rates-Follow-Behind-Inflation.png" /></a>
As the data above shows, inflation (shown in the blue trend line) is slowly coming down and, based on historical trends, mortgage rates (shown in the green trend line) are <a href="https://www.simplifyingthemarket.com/en/2023/07/05/two-questions-to-ask-yourself-if-youre-considering-buying-a-home/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" rel="noopener noreferrer" target="_blank">likely to follow</a>. McBride <a href="https://www.cnet.com/personal-finance/mortgages/mortgage-refinance-rates-for-july-26-2023-rates-advance/" rel="noopener noreferrer" target="_blank">says</a> this about the future of mortgage rates:
“With the backdrop of easing inflation pressures, we should see more consistent declines in mortgage rates as the year progresses, particularly if the economy and labor market slow noticeably.”
Bottom Line
What happens to mortgage rates depends on inflation. If inflation cools down, mortgage rates should go down too. Let's talk so you can get expert advice on housing market changes and what they mean for you.2023-08-07T15:00:00-07:002023-08-09T17:22:50-07:00Broker Robertstag:sellsmhk.com,2012-09-20:29442Tips for Making Your Best Offer on a HomeTips for Making Your Best Offer on a Home
<br /><img src="https://files.keepingcurrentmatters.com/content/images/20230718/20230726-Tips-for-making-your-best-offer-on-a-home.jpg" width="600" /><br /><br />
While the wild ride that was the <a href="https://www.simplifyingthemarket.com/en/2023/05/30/todays-real-estate-market-the-unicorns-have-galloped-off/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" rel="noopener noreferrer" target="_blank">‘unicorn’ years</a> of housing is behind us, today’s market is still competitive in many areas because the <a href="https://www.simplifyingthemarket.com/en/2023/07/06/todays-housing-inventory-is-a-sweet-spot-for-sellers/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" rel="noopener noreferrer" target="_blank">supply of homes</a> for sale is still low. If you’re looking to <a href="https://www.simplifyingthemarket.com/en/2023/07/13/how-remote-work-expands-your-homebuying-horizons/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" rel="noopener noreferrer" target="_blank">buy a home</a> this season, know that the peak frenzy of bidding wars is in the rearview mirror, but you may still come up against some multiple-offer scenarios.
Here are a few things to consider to help you put your best foot forward when making an offer on a <a href="https://www.simplifyingthemarket.com/en/2023/06/27/why-homeownership-wins-in-the-long-run/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" rel="noopener noreferrer" target="_blank">home</a>.
1. Lean on a Real Estate Professional
Rely on an agent who can support your goals and help you understand what’s happening in today’s housing market. <a href="https://www.simplifyingthemarket.com/en/2023/05/22/why-buyers-need-an-expert-agent-by-their-side/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" rel="noopener noreferrer" target="_blank">Agents are experts</a> in the local market and on the national trends too. They’ll use both of those areas of expertise to make sure you have all the information you need to move with confidence.
Plus, they know what’s worked for other buyers in your area and what sellers may be looking for in an offer. It may seem simple, but catering to what a seller needs can help your offer stand out. As an article from Forbes <a href="https://www.forbes.com/advisor/mortgages/real-estate/housing-market-predictions/" rel="noopener noreferrer" target="_blank">says</a>:
"Getting to know a local realtor where you’re hoping to buy can also potentially give you a crucial edge in a tight housing market."
2. Get Pre-Approved for a Home Loan
Having a <a href="https://www.simplifyingthemarket.com/en/2023/07/03/evaluating-your-wants-and-needs-as-a-homebuyer-matters-more-today/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" rel="noopener noreferrer" target="_blank">clear budget</a> in mind is especially important right now given the current <a href="https://www.simplifyingthemarket.com/en/2023/04/26/the-three-factors-affecting-home-affordability-today/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" rel="noopener noreferrer" target="_blank">affordability</a> challenges. The best way to get a clear picture of what you can borrow is to work with a lender so you can get <a href="https://www.simplifyingthemarket.com/en/2022/09/16/a-crucial-first-step-mortgage-pre-approval-infographic/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" rel="noopener noreferrer" target="_blank">pre-approved</a> for a home loan.
That’ll help you be more financially confident because you’ll have a better understanding of your numbers. It shows sellers you’re serious, too. And that can give you a competitive edge if you do get into a multiple-offer scenario.
3. Make a Fair Offer
It’s only natural to want the best deal you can get on a home. However, submitting an offer that’s too low does have some risks. You don’t want to make an offer that will be tossed out as soon as it’s received just to see if it sticks. As Realtor.com <a href="https://www.realtor.com/advice/buy/five-tips-successful-lowball-offer/" rel="noopener noreferrer" target="_blank">explains</a>:
“. . . an offer price that’s significantly lower than the listing price, is often rejected by sellers who feel insulted . . . Most listing agents try to get their sellers to at least enter negotiations with buyers, to counteroffer with a number a little closer to the list price. However, if a seller is offended by a buyer or isn’t taking the buyer seriously, there’s not much you, or the real estate agent, can do.”
The expertise your agent brings to this part of the process will help you stay competitive and find a price that’s fair to you and the seller.
4. Trust Your Agent’s Expertise Throughout Negotiations
During the <a href="https://www.simplifyingthemarket.com/en/2023/06/09/why-you-cant-compare-now-to-the-unicorn-years-of-the-housing-market-infographic/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" rel="noopener noreferrer" target="_blank">‘unicorn’ years</a> of housing, some buyers skipped home inspections or didn’t ask for concessions from the seller in order to submit the winning bid on a home. An article from Bankrate <a href="https://www.bankrate.com/real-estate/smart-way-to-waive-home-inspection/" rel="noopener noreferrer" target="_blank">explains</a> this isn’t happening as often today, and that’s good news:
“While the market has largely calmed down since then, sellers are still very much in the driver’s seat in this era of scarce housing inventory. It’s not as common for buyers to waive inspections anymore, but it does still happen. . . . It’s in the buyer’s best interest to have a home inspected . . . Inspections alert you to existing or potential problems with the home, giving you not just an early heads up but also a useful negotiating tactic.”
Fortunately, <a href="https://www.simplifyingthemarket.com/en/2023/07/05/two-questions-to-ask-yourself-if-youre-considering-buying-a-home/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" rel="noopener noreferrer" target="_blank">today’s market</a> is different, and you may have more negotiating power than before. When putting together an offer, your trusted real estate advisor will help you think through what levers to pull and which ones you may not want to compromise on.
Bottom Line
When you buy a home this summer, let’s connect so you have an expert on your side who can help you make your best offer.2023-07-31T17:30:00-07:002023-07-31T18:31:22-07:00Broker Robertstag:sellsmhk.com,2012-09-20:29320Owning Your Home Helps You Build WealthOwning Your Home Helps You Build Wealth
<br /><img src="https://files.keepingcurrentmatters.com/content/images/20230718/20230720-Owning-your-home-helps-you-build-wealth.jpg" width="600" /><br /><br />
You may have heard some people say it’s better to rent than <a href="https://www.simplifyingthemarket.com/en/2023/07/11/momentum-is-building-for-new-home-construction/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" rel="noopener noreferrer" target="_blank">buy</a> a home right now. But, even today, there are lots of <a href="https://www.simplifyingthemarket.com/en/2023/06/02/reasons-to-own-your-home-infographic/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" rel="noopener noreferrer" target="_blank">good reasons</a> to become a homeowner. One of them is that owning a home is typically viewed as a good <a href="https://www.simplifyingthemarket.com/en/2023/06/06/real-estate-is-still-considered-the-best-long-term-investment-1/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" rel="noopener noreferrer" target="_blank">long-term investment</a> that helps your net worth <a href="https://www.simplifyingthemarket.com/en/2023/06/16/how-owning-a-home-grows-your-wealth-with-time-infographic/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" rel="noopener noreferrer" target="_blank">grow</a> over time.
Homeownership Builds Wealth Regardless of Income Level
You may be surprised to learn homeowners across various income levels have a much higher net worth than renters who make the same amount. Data from <a href="https://blog.firstam.com/economics/homeownership-remains-strongly-linked-to-wealth-building" rel="noopener noreferrer" target="_blank">First American</a> helps illustrate this point (see graph below):
<a href="https://www.simplifyingthemarket.com/en/content/images/20230718/20230720-Homeowners-Build-Wealth-Across-Incomes.png?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" rel="noopener noreferrer" target="_blank"><img src="https://files.keepingcurrentmatters.com/content/images/20230718/20230720-Homeowners-Build-Wealth-Across-Incomes.png" /></a>
What makes wealth so much higher for homeowners? A recent article from Realtor.com <a href="https://www.realtor.com/advice/finance/everyones-talking-about-home-equity-heres-what-yours-means-in-todays-market/" rel="noopener noreferrer" target="_blank">says</a>:
“Homeownership has long been tied to building wealth—and for good reason. Instead of throwing rent money out the window each month, owning a home allows you to build home equity. And over time, equity can turn your mortgage debt into a sizeable asset.”
Basically, the wealth you accumulate when you own a home has a lot to do with equity. As a homeowner, equity is built up as you pay down your loan and as home <a href="https://www.simplifyingthemarket.com/en/2023/06/27/why-homeownership-wins-in-the-long-run/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" rel="noopener noreferrer" target="_blank">prices appreciate</a> over time. Mark Fleming, Chief Economist at First American, <a href="https://blog.firstam.com/economics/the-reconomy-podcast-why-it-matters-that-millennials-have-closed-the-homeownership-gap" rel="noopener noreferrer" target="_blank">explains</a> how this same benefit isn’t true for renters in a recent podcast:
“Renters as non-homeowners gain no wealth benefit as home prices rise. That wealth actually accrues to the landlord.”
Before you <a href="https://www.simplifyingthemarket.com/en/2023/06/15/why-buying-or-selling-a-home-helps-the-economy-and-your-community/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" rel="noopener noreferrer" target="_blank">decide</a> to sign another rental agreement, now is a good time to <a href="https://www.simplifyingthemarket.com/en/2023/07/03/evaluating-your-wants-and-needs-as-a-homebuyer-matters-more-today/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" rel="noopener noreferrer" target="_blank">think</a> about whether it would be better for you to <a href="https://www.simplifyingthemarket.com/en/2023/07/05/two-questions-to-ask-yourself-if-youre-considering-buying-a-home/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" rel="noopener noreferrer" target="_blank">buy a home</a> instead. The best way to figure out what makes sense for you is to have a conversation with a real estate expert you trust. That professional can talk you through the benefits that come with owning to determine if that’s the right next <a href="https://www.simplifyingthemarket.com/en/2023/06/22/what-homebuyers-need-to-know-about-credit-scores/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" rel="noopener noreferrer" target="_blank">step</a> for you.
Bottom Line
If you're not sure whether to keep renting or to <a href="https://www.mykcm.com/2023/07/04/americans-still-view-homeownership-as-the-american-dream/" rel="noopener noreferrer" target="_blank">buy a home</a>, know that owning a home, no matter how much money you make, can help build your wealth. Let's connect now to get <a href="https://www.mykcm.com/2023/06/19/saving-for-a-down-payment-heres-what-you-need-to-know/" rel="noopener noreferrer" target="_blank">started</a> on the path to homeownership.2023-07-24T16:52:45-07:002023-07-25T17:26:53-07:00Broker Robertstag:sellsmhk.com,2012-09-20:28903Why Homeownership Wins in the Long RunWhy Homeownership Wins in the Long Run
<br /><img src="https://files.keepingcurrentmatters.com/content/images/20230626/20230627-why-homeownership-wins-in-the-long-run.jpg" width="600" /><br /><br />
Today’s higher <a href="https://www.simplifyingthemarket.com/en/2023/06/07/the-main-reason-mortgage-rates-are-so-high/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" rel="noopener noreferrer" target="_blank">mortgage rates</a>, <a href="https://www.simplifyingthemarket.com/en/2023/05/24/owning-a-home-helps-protect-against-inflation/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" rel="noopener noreferrer" target="_blank">inflationary pressures</a>, and concerns about a potential <a href="https://www.simplifyingthemarket.com/en/2023/05/02/a-recession-doesnt-equal-a-housing-crisis-2/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" rel="noopener noreferrer" target="_blank">recession</a> have some people questioning: should I still buy a home this year? While it’s true this year has unique challenges for homebuyers, it’s important to think about the long-term benefits of <a href="https://www.simplifyingthemarket.com/en/2023/06/01/the-true-value-of-homeownership/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" rel="noopener noreferrer" target="_blank">homeownership</a> when making your decision.
Consider this: if you know people who bought a home 5, 10, or even 30 years ago, you’re probably going to have a hard time finding someone who regrets their decision. Why is that? The reason is tied to how home values grow with time and how, by extension, that grows your own wealth. That may be why, in a recent Fannie Mae <a href="https://www.fanniemae.com/media/47726/display" rel="noopener noreferrer" target="_blank">survey</a>, 70% of respondents say they believe buying a home is a safe <a href="https://www.simplifyingthemarket.com/en/2023/06/06/real-estate-is-still-considered-the-best-long-term-investment-1/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" rel="noopener noreferrer" target="_blank">investment</a>.
Here’s a look at how just the home price appreciation piece can really add up over the years.
Home Price Growth over Time
The map below uses <a href="https://www.fhfa.gov/DataTools/Tools/Pages/House-Price-Index-(HPI).aspx" rel="noopener noreferrer" target="_blank">data</a> from the Federal Housing Finance Agency (FHFA) to show just how noteworthy price gains have been over the last five years. And, since home prices vary by area, the map is broken out regionally to help convey larger market trends.
<a href="https://www.simplifyingthemarket.com/en/content/images/20230626/20230627-percent-change-in-home-prices-over-5-years.png?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" rel="noopener noreferrer" target="_blank"><img src="https://files.keepingcurrentmatters.com/content/images/20230626/20230627-percent-change-in-home-prices-over-5-years.png" /></a>
If you look at the percent change in home prices, you can see home prices grew on average by just over 56% nationwide over a five-year period.
Some regions are slightly above or below that average, but overall, home prices gained solid ground in a short time. And if you expand that time frame even more, the benefit of homeownership and the drastic gains homeowners made over the years become even clearer (see map below):
<a href="https://www.simplifyingthemarket.com/en/content/images/20230626/20230627-percent-change-in-home-prices-since-q1-1991.png?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" rel="noopener noreferrer" target="_blank"><img src="https://files.keepingcurrentmatters.com/content/images/20230626/20230627-percent-change-in-home-prices-since-q1-1991.png" /></a>
The second map shows, nationwide, home prices appreciated by an average of over 290% over a roughly 30-year span.
This nationwide average tells you the typical homeowner who bought a house 30 years ago saw their home almost triple in value over that time. That’s a key factor in why so many homeowners who bought their homes years ago are still happy with their decision.
And while you may have heard talk in late 2022 that <a href="https://www.simplifyingthemarket.com/en/2023/06/05/oops-home-prices-didnt-crash-after-all/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" rel="noopener noreferrer" target="_blank">home prices</a> would crash, it didn’t happen. Even though home prices have moderated from the record peak we saw during the <a href="https://www.simplifyingthemarket.com/en/2023/05/30/todays-real-estate-market-the-unicorns-have-galloped-off/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" rel="noopener noreferrer" target="_blank">‘unicorn’ years</a>, prices are already <a href="https://www.simplifyingthemarket.com/en/2023/05/16/the-worst-home-price-declines-are-behind-us/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" rel="noopener noreferrer" target="_blank">rebounding</a> in many areas today. That means, in most markets, your home should grow in value over the next year.
The alternative to buying a home is <a href="https://www.simplifyingthemarket.com/en/2023/06/23/homeownership-helps-protect-you-from-inflation-infographic/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" rel="noopener noreferrer" target="_blank">renting</a>, and rental prices have been climbing for decades. So why rent and deal with annual lease hikes for no long-term financial benefit? Instead, consider buying a home.
Bottom Line
If you’re questioning if it still makes sense to buy a home today, remember the incredible long-term benefits of homeownership. If you’re ready to start the conversation, let’s connect today.2023-06-28T18:31:52-07:002023-07-03T07:15:33-07:00Broker Robertstag:sellsmhk.com,2012-09-20:28827What Homebuyers Need To Know About Credit ScoresWhat Homebuyers Need To Know About Credit Scores
<br /><img src="https://files.keepingcurrentmatters.com/content/images/20230621/20230622-what-homebuyers-need-to-know-about-credit-scores.jpg" width="600" /><br /><br />
If you’re thinking about <a href="https://www.simplifyingthemarket.com/en/2023/06/06/real-estate-is-still-considered-the-best-long-term-investment-1/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" rel="noopener noreferrer" target="_blank">buying a home</a>, you should know your credit score’s a critical piece of the puzzle when it comes to qualifying for a home loan. Lenders review your credit to assess your ability to make payments on time, to pay back debts, and more. It’s also a factor that helps determine your <a href="https://www.simplifyingthemarket.com/en/2023/06/07/the-main-reason-mortgage-rates-are-so-high/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" rel="noopener noreferrer" target="_blank">mortgage rate</a>. An article from Bankrate <a href="https://www.bankrate.com/real-estate/what-credit-score-do-you-need-to-buy-a-house/" rel="noopener noreferrer" target="_blank">explains</a>:
“Your credit score is one of the most important factors lenders consider when you apply for a mortgage. Not just to qualify for the loan itself, but for the conditions: Typically, the higher your score, the lower the interest rates and better terms you’ll qualify for.”
This means your credit score may feel even more important to your homebuying plans right now since <a href="https://www.simplifyingthemarket.com/en/2023/05/19/the-impact-of-changing-mortgage-rates-infographic/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" rel="noopener noreferrer" target="_blank">mortgage rates</a> are a key factor in <a href="https://www.simplifyingthemarket.com/en/2023/05/31/keys-to-success-for-first-time-homebuyers/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" rel="noopener noreferrer" target="_blank">affordability</a>, especially today. According to the Federal Reserve Bank of New York, the median credit score in the U.S. for those taking out a mortgage is <a href="https://www.newyorkfed.org/medialibrary/interactives/householdcredit/data/pdf/HHDC_2023Q1" rel="noopener noreferrer" target="_blank">765</a>. But, that doesn’t mean your credit score has to be perfect. An article from Business Insider <a href="https://www.businessinsider.com/personal-finance/what-credit-score-is-needed-to-buy-a-house" rel="noopener noreferrer" target="_blank">explains</a> generally how your <a href="https://www.myfico.com/credit-education/credit-scores" rel="noopener noreferrer" target="_blank">FICO</a> score range can make an impact:
“. . . you don't need a perfect credit score to buy a house. . . . Aiming to get your credit score in the ‘Good’ range (670 to 739) would be a great start towards qualifying for a mortgage. But if you're wanting to qualify for the lowest rates, try to get your score within the ‘Very Good’ range (740 to 799).”
Working with a trusted lender’s the best way to get more information on how your credit score could factor into your home loan and the mortgage rate you’re able to get. As FICO <a href="https://www.myfico.com/credit-education/credit-scores" rel="noopener noreferrer" target="_blank">says</a>:
“While many lenders use credit scores like FICO Scores to help them make lending decisions, each lender has its own strategy, including the level of risk it finds acceptable. There is no single "cutoff score" used by all lenders and there are many additional factors that lenders may use to determine your actual interest rates.”
If you’re looking for ways to improve your score, Experian <a href="https://www.experian.com/blogs/ask-experian/what-is-the-average-credit-score-in-the-u-s/" rel="noopener noreferrer" target="_blank">highlights</a> some things you may want to focus on:
Your Payment History: Late payments can have a negative impact by dropping your score. Focus on making payments on time and paying any existing late charges quickly.
Your Debt Amount (relative to your credit limits): When it comes to your available credit amount, the less you’re using, the better. Focus on keeping this number as low as possible.
Credit Applications: If you’re looking to buy, don’t apply for other credit. When you apply for new credit, it could result in a hard inquiry on your credit that drops your score.
When you’re ready to start the <a href="https://www.simplifyingthemarket.com/en/2023/06/02/reasons-to-own-your-home-infographic/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" rel="noopener noreferrer" target="_blank">homebuying</a> process, a lender will be able to assess which range your score falls in and tell you more about the specifics for each loan type.
Bottom Line
With affordability challenges today, prioritizing ways you can have a positive impact on your credit score could help you get a better mortgage rate. If you want to learn more, let’s connect.2023-06-26T18:12:44-07:002023-06-26T18:16:12-07:00Broker Robertstag:sellsmhk.com,2012-09-20:28693Saving for a Down Payment? Here's What You Need To Know.Saving for a Down Payment? Here’s What You Need To Know.
<br /><img src="https://files.keepingcurrentmatters.com/content/images/20230615/20230619-saving-for-a-down-payment-heres-what-you-should-know.jpg" width="600" /><br /><br />
If you're planning to buy your <a href="https://www.simplifyingthemarket.com/en/2023/05/31/keys-to-success-for-first-time-homebuyers/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" rel="noopener noreferrer" target="_blank">first home</a>, then you're probably focused on saving for all the costs involved in such a big purchase. One of the expenses that may be at the top of your mind is your down payment. If you’re intimidated by how much you need to save for that, it may be because you believe you must put 20% down. That doesn’t necessarily have to be the case. As the National Association of Realtors (NAR) <a href="https://www.nar.realtor/blogs/economists-outlook/tackling-home-financing-and-down-payment-misconceptions" rel="noopener noreferrer" target="_blank">notes</a>:
“One of the biggest misconceptions among housing consumers is what the typical down payment is and what amount is needed to enter homeownership.”
And a recent Freddie Mac survey <a href="https://myhome.freddiemac.com/buying/down-payments-and-pmi" rel="noopener noreferrer" target="_blank">finds</a>:
“. . . nearly a third of prospective homebuyers think they need a down payment of 20% or more to buy a home. This myth remains one of the largest perceived barriers to achieving homeownership.”
Here’s the good news. Unless specified by your loan type or lender, it’s typically not required to put 20% down. This means you could be closer to your homebuying dream than you realize.
According to NAR, the <a href="https://www.nar.realtor/research-and-statistics/research-reports/highlights-from-the-profile-of-home-buyers-and-sellers" rel="noopener noreferrer" target="_blank">median down payment</a> hasn’t been over 20% since 2005. In fact, the median down payment for all homebuyers today is only 14%. And it’s even lower for first-time homebuyers at just 6% (see graph below):
<a href="https://www.simplifyingthemarket.com/en/content/images/20230615/20230619-todays-median-down-payment-is-less-than-20-percent.png?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" rel="noopener noreferrer" target="_blank"><img src="https://files.keepingcurrentmatters.com/content/images/20230615/20230619-todays-median-down-payment-is-less-than-20-percent.png" /></a>
What does this mean for you? It means you may not need to save as much as you originally thought.
Learn About Options That Can Help You Toward Your Goal
And it’s not just how much you need for your down payment that isn’t clear. There are also misconceptions about down payment assistance programs. For starters, many people believe there’s only assistance available for first-time homebuyers. While first-time buyers have many options to explore, repeat buyers have some, too.
According to <a href="https://downpaymentresource.com/" rel="noopener noreferrer" target="_blank">Down Payment Resource</a>, there are over 2,000 homebuyer assistance programs in the U.S., and the majority are intended to help with down payments. That same resource goes on to say:
“You don’t have to be a first-time buyer. Over 38% of all programs are for repeat homebuyers who have owned a home in the last 3 years.”
Plus, there are even loan types, like <a href="https://www.hud.gov/buying/loans" rel="noopener noreferrer" target="_blank">FHA loans</a> with down payments as low as <a href="https://www.benefits.gov/benefit/504" rel="noopener noreferrer" target="_blank">3.5%</a> as well as options like <a href="https://www.va.gov/housing-assistance/home-loans/loan-types/" rel="noopener noreferrer" target="_blank">VA loans</a> and <a href="https://www.rd.usda.gov/programs-services/single-family-housing-programs/single-family-housing-guaranteed-loan-program" rel="noopener noreferrer" target="_blank">USDA loans</a> with no down payment requirements for qualified applicants.
If you’re interested in learning more about down payment assistance programs, information is available through sites like <a href="https://downpaymentresource.com/" rel="noopener noreferrer" target="_blank">Down Payment Resource</a>. Then, partner with a trusted lender to learn what you qualify for on your <a href="https://www.simplifyingthemarket.com/en/2023/06/01/the-true-value-of-homeownership/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" rel="noopener noreferrer" target="_blank">homebuying</a> journey.
Bottom Line
Remember, a 20% down payment isn’t always required. If you want to purchase a home this year, let’s connect to start the conversation about your homebuying goals.2023-06-19T19:05:44-07:002023-06-19T19:11:00-07:00Broker Robertstag:sellsmhk.com,2012-09-20:28580Are Home Prices Going Up or Down? That Depends...Are Home Prices Going Up or Down? That Depends…
<br /><img src="https://files.keepingcurrentmatters.com/content/images/20230609/20230612-are-home-prices-going-up-or-down-that-depends.jpg" width="600" /><br /><br />
Media coverage about what’s happening with home prices can be confusing. A large part of that is due to the type of data being used and what they’re choosing to draw attention to. For home prices, there are two different methods used to compare home prices over different time periods: year-over-year (Y-O-Y) and month-over-month (M-O-M). Here's an explanation of each.
Year-over-Year (Y-O-Y):
This comparison measures the change in home prices from the same month or quarter in the previous year. For example, if you're comparing Y-O-Y home prices for April 2023, you would compare them to the home prices for April 2022.
Y-O-Y comparisons focus on changes over a one-year period, providing a more comprehensive view of long-term trends. They are usually useful for evaluating annual growth rates and determining if the market is generally appreciating or depreciating.
Month-over-Month (M-O-M):
This comparison measures the change in home prices from one month to the next. For instance, if you're comparing M-O-M home prices for April 2023, you would compare them to the home prices for March 2023.
Meanwhile, M-O-M comparisons analyze changes within a single month, giving a more immediate snapshot of short-term movements and price fluctuations. They are often used to track immediate shifts in demand and supply, seasonal trends, or the impact of specific events on the housing market.
The key difference between Y-O-Y and M-O-M comparisons lies in the time frame being assessed. Both approaches have their own merits and serve different purposes depending on the specific analysis required.
Why Is This Distinction So Important Right Now?
We’re about to enter a few months when <a href="https://www.simplifyingthemarket.com/en/2023/05/12/the-worst-home-price-declines-are-behind-us-infographic/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" rel="noopener noreferrer" target="_blank">home prices</a> could possibly be lower than they were the same month last year. April, May, and June of 2022 were three of the best months for home prices in the history of the American housing market. Those same months this year might not measure up. That means, the Y-O-Y comparison will probably show values are depreciating. The <a href="https://cdn.nar.realtor/sites/default/files/documents/ehs-04-2023-breakouts-of-single-family-condo-and-co-op-2023-05-18.pdf" rel="noopener noreferrer" target="_blank">numbers</a> for April seem to suggest that’s what we’ll see in the months ahead (see graph below):
<a href="https://files.keepingcurrentmatters.com/content/images/20230609/20230612-comparing-now-to-last-years-record-numbers.png" rel="noopener noreferrer" target="_blank"><img src="https://files.keepingcurrentmatters.com/content/images/20230609/20230612-comparing-now-to-last-years-record-numbers.png" /></a>
That’ll generate troubling headlines that say home <a href="https://www.simplifyingthemarket.com/en/2023/06/05/oops-home-prices-didnt-crash-after-all/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" rel="noopener noreferrer" target="_blank">values are falling</a>. That’ll be accurate on a Y-O-Y basis. And, those headlines will lead many consumers to believe that home values are currently cascading downward.
However, on a closer look at M-O-M home prices, we can see prices have actually been appreciating for the last several months. Those M-O-M numbers more accurately reflect what’s truly happening with home values: after several months of depreciation, it appears we’ve hit bottom and are bouncing back.
Here’s an example of M-O-M home price movements for the last 16 months from the CoreLogic Home Price Insights <a href="https://www.corelogic.com/tag/home-price-index/" rel="noopener noreferrer" target="_blank">report</a> (see graph below):
<a href="https://files.keepingcurrentmatters.com/content/images/20230609/20230612-home-prices-appear-to-have-bottomed-out.png" rel="noopener noreferrer" target="_blank"><img src="https://files.keepingcurrentmatters.com/content/images/20230609/20230612-home-prices-appear-to-have-bottomed-out.png" /></a>
Why Does This Matter to You?
So, if you’re hearing negative headlines about home prices, remember they may not be painting the full picture. For the next few months, we’ll be comparing prices to last year’s record peak, and that may make the Y-O-Y comparison feel more negative. But, if we look at the more immediate, M-O-M trends, we can see home prices are actually on the way <a href="https://www.simplifyingthemarket.com/en/2023/05/16/the-worst-home-price-declines-are-behind-us/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" rel="noopener noreferrer" target="_blank">back up</a>.
There’s an advantage to buying a home now. You’ll buy at a discount from last year’s price and before prices start to pick up even more momentum. It’s called “buying at the bottom,” and that’s a good thing.
Bottom Line
If you have questions about what’s happening with home prices, or if you’re ready to buy before prices climb higher, let’s connect.2023-06-12T19:17:40-07:002023-06-13T17:36:41-07:00Broker Robertstag:sellsmhk.com,2012-09-20:27089Why Buying a Home Makes More Sense Than Renting TodayWhy Buying a Home Makes More Sense Than Renting Today
<br /><img src="https://files.keepingcurrentmatters.com/content/images/20230428/20230501-why-buying-a-home-makes-more-sense-than-renting-today.jpg" width="600" /><br /><br />
Wondering if you should continue renting or if you should <a href="https://www.simplifyingthemarket.com/en/2023/03/10/buying-a-home-may-make-more-sense-than-renting-infographic/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" rel="noopener noreferrer" target="_blank">buy a home</a> this year? If so, consider this. Rental affordability is still a challenge and has been for years. That’s because, historically, rents trend up over time. <a href="https://www.census.gov/housing/hvs/files/currenthvspress.pdf" rel="noopener noreferrer" target="_blank">Data</a> from the Census shows rents have been climbing pretty steadily since 1988.
And, data from the <a href="https://www.realtor.com/research/march-2023-rent/" rel="noopener noreferrer" target="_blank">latest rental report</a> from Realtor.com shows rents continue to grow today, even though it’s at a slower pace than we saw at the height of the pandemic:
“In March 2023, the U.S. rental market experienced single-digit growth for the eighth month in a row . . . The median asking rent was $1,732, up by $15 from last month and down by $32 from the peak but is still $354 (25.7%) higher than the same time in 2019 (pre-pandemic).”
With rents much higher now than they were in more normal, pre-pandemic years, owning your home may be a better option, especially if the long-term trend of rents increasing each year continues. In contrast, homeowners with a fixed-rate mortgage can lock in a monthly mortgage payment for the duration of their loan (typically 15-30 years).
Owning a Home Could Be More Affordable if You Need More Space
The graph below uses national data on the <a href="https://www.realtor.com/research/march-2023-rent/" rel="noopener noreferrer" target="_blank">median rental payment</a> from Realtor.com and <a href="https://cdn.nar.realtor/sites/default/files/documents/hai-02-2023-housing-affordability-index-2023-04-14.pdf" rel="noopener noreferrer" target="_blank">median mortgage payment</a> from the National Association of Realtors (NAR) to compare the two options. As the graph shows, depending on how much space you need, it’s typically more affordable to own than to rent if you need two or more bedrooms:
<a href="https://files.keepingcurrentmatters.com/content/images/20230428/20230501-the-cost-difference-between-renting-and-buying-based-on-the-number-of-bedrooms.png" rel="noopener noreferrer" target="_blank"><img src="https://files.keepingcurrentmatters.com/content/images/20230428/20230501-the-cost-difference-between-renting-and-buying-based-on-the-number-of-bedrooms.png" /></a>
So, if you’re looking to live somewhere where you have two or more bedrooms to accommodate your household, give you more breathing room to spread out your belongings, or dedicate the extra space to practice your hobbies, it might make sense to consider homeownership.
Homeownership Allows You To Start Building Equity
In addition to shielding you from rising rents and being more affordable when you need more space, owning your home also allows you to start building your own <a href="https://www.simplifyingthemarket.com/en/2023/04/07/the-key-advantage-of-investing-in-a-home-infographic/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" rel="noopener noreferrer" target="_blank">equity</a>, which in turn grows your net worth.
And, as home values typically rise over time and you pay off your mortgage, you build <a href="https://www.simplifyingthemarket.com/en/2023/04/06/trying-to-buy-a-home-hang-in-there/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" rel="noopener noreferrer" target="_blank">equity</a>. That equity can set you up for success later on because you can use it to help fuel a move to an even bigger space down the line. That’s why, <a href="https://www.builderonline.com/data-analysis/what-is-the-millennial-mindset-on-owning-vs-renting_o" rel="noopener noreferrer" target="_blank">according</a> to Zonda, the top reason millennial homeowners bought their home over the past year was to build their own equity instead of someone else’s.
Bottom Line
If you’re trying to decide whether to buy a home or continue renting, let’s connect to explore your options. With rents rising, it may make more sense to pursue your dream of homeownership. 2023-05-01T12:35:09-07:002023-05-01T12:39:59-07:00Broker Robertstag:sellsmhk.com,2012-09-20:27001The Three Factors Affecting Home Affordability TodayThe Three Factors Affecting Home Affordability Today
<br /><img src="https://files.keepingcurrentmatters.com/content/images/20230425/20230426-the-three-factors-affecting-home-affordability-today.jpg" width="600" /><br /><br />
There’s been a lot of focus on higher mortgage rates and how they’re creating affordability challenges for today’s homebuyers. It’s true that <a href="https://www.freddiemac.com/pmms/archive" rel="noopener noreferrer" target="_blank">rates climbed</a> dramatically since the record-low we saw during the pandemic. But home affordability is based on more than just mortgage rates – it’s determined by a combination of mortgage rates, home prices, and wages.
Considering how each one of these factors is changing gives you the full picture of home affordability today. Here’s the latest.
1. Mortgage Rates
While mortgage rates are higher than they were a year ago, they’ve hovered primarily between 6% and 7% for nearly eight months now (see graph below):
<a href="https://files.keepingcurrentmatters.com/content/images/20230425/20230426-mortgage-rates-hover-between-6-7.png" rel="noopener noreferrer" target="_blank"><img src="https://files.keepingcurrentmatters.com/content/images/20230425/20230426-mortgage-rates-hover-between-6-7.png" /></a>
As the graph shows, mortgage rates have experienced some volatility during that time. And even a <a href="https://www.simplifyingthemarket.com/en/2023/04/03/how-changing-mortgage-rates-can-affect-you/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" rel="noopener noreferrer" target="_blank">small change</a> in mortgage rates impacts your purchasing power. That’s why it’s so important to lean on your team of real estate professionals for expert advice to stay up to date on what’s happening in the market. While it’s hard to project where mortgage rates will go from here, many experts <a href="https://themortgagereports.com/32667/mortgage-rates-forecast-fha-va-usda-conventional" rel="noopener noreferrer" target="_blank">agree</a> they’ll likely continue to remain around 6%-7% in the immediate future.
2. Home Prices
Over the past few years, <a href="https://www.simplifyingthemarket.com/en/2023/04/05/why-arent-home-prices-crashing/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" rel="noopener noreferrer" target="_blank">home prices</a> appreciated rapidly as the record-low mortgage rates we saw during the pandemic led to a surge in buyer demand. The heightened buyer demand happened while the supply of homes for sale was at record lows, and that imbalance put upward pressure on home prices. However, today’s higher mortgage rates have slowed down price appreciation.
And, the truth is, <a href="https://www.simplifyingthemarket.com/en/2023/04/17/think-twice-before-waiting-for-lower-home-prices/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" rel="noopener noreferrer" target="_blank">home price appreciation</a> varies by market. Some areas are seeing slight declines while others have prices that are climbing. As Selma Hepp, Chief Economist at CoreLogic, <a href="https://www.corelogic.com/intelligence/us-home-price-insights-april-2023/" rel="noopener noreferrer" target="_blank">explains</a>:
“The divergence in home price changes across the U.S. reflects a tale of two housing markets. Declines in the West are due to the tech industry slowdown and a severe lack of affordability after decades of undersupply. The consistent gains in the Southeast and South reflect strong job markets, in-migration patterns and relative affordability due to new home construction.”
To find out what’s happening with prices in your local market, reach out to a trusted real estate agent.
3. Wages
The most positive factor in affordability right now is rising income. The graph below uses <a href="https://www.bls.gov/" rel="noopener noreferrer" target="_blank">data</a> from the Bureau of Labor Statistics (BLS) to show how wages have grown over time:
<a href="https://files.keepingcurrentmatters.com/content/images/20230425/20230426-average-hourly-earnings-of-all-employees.png" rel="noopener noreferrer" target="_blank"><img src="https://files.keepingcurrentmatters.com/content/images/20230425/20230426-average-hourly-earnings-of-all-employees.png" /></a>
Higher wages improve affordability because they reduce the percentage of your income it takes to pay your mortgage since you don’t have to put as much of your paycheck toward your monthly housing cost.
Home affordability comes down to a combination of rates, prices, and wages. If you have questions or want to learn more, reach out to a real estate professional who can explain what’s happening locally and how these factors work together.
Bottom Line
If you’re planning to <a href="https://www.sellsmhk.com/" rel="noopener noreferrer" target="_blank">buy</a> a home, knowing the key factors that impact affordability is important so you can make an informed decision. To stay up to date on the latest on each, let’s connect today.2023-04-26T08:56:49-07:002023-04-26T11:11:51-07:00Broker Robertstag:sellsmhk.com,2012-09-20:26769The Power of Pre-ApprovalThe Power of Pre-Approval
<br /><img src="https://files.keepingcurrentmatters.com/content/images/20230421/20230424-what-homebuyers-need-to-know-about-credit-scores.jpg" width="600" /><br /><br />
If you’re buying a home this spring, today’s housing market can feel like a <a href="https://www.simplifyingthemarket.com/en/2023/04/06/trying-to-buy-a-home-hang-in-there/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" rel="noopener noreferrer" target="_blank">challenge</a>. With so few homes on the market right now, plus higher <a href="https://www.simplifyingthemarket.com/en/2023/04/03/how-changing-mortgage-rates-can-affect-you/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" rel="noopener noreferrer" target="_blank">mortgage rates</a>, it’s essential to have a firm grasp on your homebuying budget. You’ll also need a sense of determination to find the right house and act quickly when you go to put in an offer. One thing you can do to help you prepare is to get pre-approved.
To understand why it’s such an important step, you need to know what pre-approval is. As part of the process, a lender looks at your finances to determine what they’d be willing to loan you. From there, your lender will give you a pre-approval letter to help you understand how much money you can borrow.
Freddie Mac <a href="https://myhome.freddiemac.com/blog/homebuying/how-do-i-get-pre-approved-mortgage" rel="noopener noreferrer" target="_blank">explains</a> it like this:
“A pre-approval is an indication from your lender that they are willing to lend you a certain amount of money to buy your future home. . . . Keep in mind that the loan amount in the pre-approval letter is the lender’s maximum offer. Ultimately, you should only borrow an amount you are comfortable repaying.”
Basically, pre-approval gives you critical information about the homebuying process that’ll help you understand how much you may be able to borrow so you have a stronger grasp of your options. And with higher mortgage rates impacting affordability for many buyers today, a solid understanding of your numbers is even more important.
Pre-Approval Helps Show You’re a Serious Buyer
That’s not the only thing pre-approval can do. Another added benefit is it can help a seller feel more confident in your offer because it shows you’re serious about buying their house. And, with sellers seeing a slight increase in the <a href="https://www.simplifyingthemarket.com/en/2023/04/11/the-big-advantage-if-you-sell-this-spring/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" rel="noopener noreferrer" target="_blank">number of offers</a> again this spring, making a strong offer when you find the perfect house is key.
As a recent article from the Wall Street Journal (WSJ) <a href="https://www.wsj.com/buyside/personal-finance/mortgage-pre-approval-25dd076c" rel="noopener noreferrer" target="_blank">says</a>:
“If you plan to use a mortgage for your home purchase, preapproval should be among the first steps in your search process. Not only can getting preapproved help you zero in on the right price range, but it can give you a leg up on other buyers, too.”
Bottom Line
Getting pre-approved is an important first step when you’re buying a home. It lets you know what you can borrow for your loan and shows sellers you’re serious. Connect with a local real estate professional and a trusted lender so you have the tools you need to purchase a home in today’s market.2023-04-24T08:20:22-07:002023-04-24T08:28:10-07:00Broker Robertstag:sellsmhk.com,2012-09-20:266785 Reasons Millennials Are Buying Homes5 Reasons Millennials Are Buying Homes
<br /><img src="https://files.keepingcurrentmatters.com/content/images/20230417/20230418-5-reasons-millennials-are-buying-homes.jpg" width="600" /><br /><br />
In the United States, there are over <a href="https://www.statista.com/statistics/797321/us-population-by-generation/" rel="noopener noreferrer" target="_blank">72 million</a> millennials. If you’re part of that generation and have thought about buying a home, you aren’t alone. <a href="https://www.builderonline.com/data-analysis/what-is-the-millennial-mindset-on-owning-vs-renting_o" rel="noopener noreferrer" target="_blank">According</a> to Zonda, 98% of millennials want to become a homeowner at some point if they aren’t already. But why? There are plenty of reasons you may choose to become a homeowner. Here’s why other millennials have made that decision (see graph below):
<a href="https://files.keepingcurrentmatters.com/content/images/20230417/20230418-why-did-millennials-decide-to-buy.png" rel="noopener noreferrer" target="_blank"><img src="https://files.keepingcurrentmatters.com/content/images/20230417/20230418-why-did-millennials-decide-to-buy.png" /></a>
This graph shows why millennials are buying homes <a href="https://www.builderonline.com/data-analysis/what-is-the-millennial-mindset-on-owning-vs-renting_o" rel="noopener noreferrer" target="_blank">according</a> to Zonda’s 6th annual millennial survey. The top reasons include building equity, a change in life stage, wanting stability, rising home values, and wanting to make somewhere truly their own. Here’s a look at each in more detail.
Building equity – Homeownership is a long-term investment that allows you to build wealth, increase your net worth, and become more financially stable. Beyond that, the alternative to owning a home is typically renting. With the way rents have risen so dramatically over time, it may make sense to build your own equity instead of the equity of the person you’re renting from.
A change in life stage – As a millennial, you’re reaching your prime homebuying years. That means you may be at the point where you need more space or a different location.
Stability or settling down – This could mean establishing your career or just generally deciding more concretely what you want your life to look and feel like. As that idea becomes clearer, you may want to establish that lifestyle in a particular place and put down roots.
Rising home values – By purchasing a home, you own an asset that traditionally increases in value over time. That can mean your home will have a higher resale value if you decide to move again.
Wanting to make somewhere “mine” – Owning a home gives a sense of freedom because you can customize it however you want, make updates as you see fit, and be yourself in a place that’s solely your own.
Bottom Line
There are plenty of great reasons why millennials are buying homes today. If you’ve thought about becoming a homeowner and any of these reasons resonate with you too, let’s connect to explore your options.2023-04-19T08:57:36-07:002023-04-19T09:01:48-07:00Broker Robertstag:sellsmhk.com,2012-09-20:26634Think Twice Before Waiting for Lower Home PricesThink Twice Before Waiting for Lower Home Prices
<br /><img src="https://files.keepingcurrentmatters.com/content/images/20230414/20230417-think-twice-before-waiting-for-lower-home-prices-KCM.jpg" width="600" /><br /><br />
As the housing market continues to change, you may be wondering where it’ll go from here. One factor you’re probably thinking about is home prices, which have come down a bit since they peaked last June. And you’ve likely heard something in the news or on social media about a price crash on the horizon. As a result, you may be holding off on <a href="https://www.simplifyingthemarket.com/en/2023/04/06/trying-to-buy-a-home-hang-in-there/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" rel="noopener noreferrer" target="_blank">buying a home</a> until prices drop significantly. But that’s not the best strategy.
A recent <a href="https://www.builderonline.com/data-analysis/what-is-the-millennial-mindset-on-owning-vs-renting_o" rel="noopener noreferrer" target="_blank">survey</a> from Zonda shows 53% of millennials are still renting right now because they’re waiting for home prices to come down. But here’s the thing: the most recent data shows that home prices appear to have bottomed out and are now on the rise again. Selma Hepp, Chief Economist at CoreLogic, <a href="https://www.corelogic.com/intelligence/us-home-price-insights-april-2023/" rel="noopener noreferrer" target="_blank">reports</a>:
“U.S. home prices rose by 0.8% in February . . . indicating that prices in most markets have already bottomed out.”
And the latest data from Black Knight shows the same shift. The graph below <a href="https://www.blackknightinc.com/wp-content/uploads/2023/04/BKI_MM_FEB2023_Report.pdf" rel="noopener noreferrer" target="_blank">compares</a> home price trends in November to those in February:
<a href="https://files.keepingcurrentmatters.com/content/images/20230414/20230417-home-prices-up-in-majority-of-country-KCM.png" rel="noopener noreferrer" target="_blank"><img src="https://files.keepingcurrentmatters.com/content/images/20230414/20230417-home-prices-up-in-majority-of-country-KCM.png" /></a>
So, should you keep waiting to buy a home until prices come down? If you factor in what the experts are saying, you probably shouldn’t. The <a href="https://pulsenomics.com/surveys/#home-price-expectations" rel="noopener noreferrer" target="_blank">data</a> shows prices are increasing in much of the country, not decreasing. And the latest data from the Home Price Expectation Survey indicates that experts project home prices will rise steadily and return to more normal levels of appreciation after 2023. The best way to understand what home values are doing in your area is to work with a local real estate professional who can give you the latest insights and expert advice.
Bottom Line
If you’re waiting to buy a home until prices come down, you may want to reconsider. Let’s connect to make sure you understand what’s happening in our local housing market.2023-04-17T08:10:42-07:002023-04-17T08:22:54-07:00Broker Robertstag:sellsmhk.com,2012-09-20:26549Your Tax Refund Can Help You Achieve Your Homebuying GoalsYour Tax Refund Can Help You Achieve Your Homebuying Goals
<br /><img src="https://files.keepingcurrentmatters.com/content/images/20230411/20230411-your-tax-refund-can-help-you-reach-your-homebuying-goals-KCM.jpg" width="600" /><br /><br />
Have you been saving up to <a href="https://www.simplifyingthemarket.com/en/2023/04/07/the-key-advantage-of-investing-in-a-home-infographic/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" rel="noopener noreferrer" target="_blank">buy</a> a home this year? If so, you know there are a variety of expenses involved – from your down payment to closing costs. But there’s good news – your tax refund can help you <a href="https://www.simplifyingthemarket.com/en/2023/03/23/why-buying-a-home-is-a-sound-decision/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" rel="noopener noreferrer" target="_blank">achieve</a> your goals by paying for some of these expenses.
SmartAsset <a href="https://smartasset.com/data-studies/states-with-the-largest-tax-refunds-2023" rel="noopener noreferrer" target="_blank">estimates</a> the average American will receive a $1,798 tax refund this year. The map below provides a more detailed estimate by state:
<a href="https://files.keepingcurrentmatters.com/content/images/20230411/20230412-average-tax-refund-in-2023-MEM.png" rel="noopener noreferrer" target="_blank"><img src="https://files.keepingcurrentmatters.com/content/images/20230411/20230412-average-tax-refund-in-2023-MEM.png" /></a>
According to <a href="https://myhome.freddiemac.com/blog/homeownership/how-use-your-tax-refund-buy-home" rel="noopener noreferrer" target="_blank">Freddie Mac</a>, there are multiple ways your refund check can help you as a homebuyer. If you’re getting a refund this year and thinking about buying a home, here are a few tips to keep:
Saving for a down payment – One of the largest barriers to homeownership is saving for a <a href="https://www.simplifyingthemarket.com/en/2023/02/03/you-may-not-need-as-much-as-you-think-for-your-down-payment-infographic/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" rel="noopener noreferrer" target="_blank">down payment</a>. You could reach your savings goal more quickly than expected by using your tax refund to help with your down payment.
Paying for closing costs – You have to pay fees to your lender, real estate agent, and other parties involved in the homebuying transaction before you can officially take ownership of your home. You could direct your tax refund toward these <a href="https://www.simplifyingthemarket.com/en/2023/03/31/facts-about-closing-costs-infographic/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" rel="noopener noreferrer" target="_blank">closing costs</a>.
Lowering your interest rate – Your lender might give you the option to <a href="https://myhome.freddiemac.com/buying/mortgage-rates" rel="noopener noreferrer" target="_blank">buy down</a> your mortgage interest rate during the homebuying process. That means, you could pay upfront to have a lower interest rate on your fixed-rate mortgage.
The best way to <a href="https://www.simplifyingthemarket.com/en/2023/03/15/balancing-your-wants-and-needs-as-a-homebuyer-this-spring/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" rel="noopener noreferrer" target="_blank">prepare</a> to buy a home is to work with a trusted real estate professional who understands the process. They’ll help you navigate the costs you may encounter as you <a href="https://www.simplifyingthemarket.com/en/2023/03/22/reasons-to-consider-condos-in-your-home-search/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" rel="noopener noreferrer" target="_blank">begin</a> your homebuying journey.
Bottom Line
Your tax refund can help you reach your goals of <a href="https://www.sellsmhk.com/" rel="noopener noreferrer" target="_blank">homeownership</a>. Let’s <a href="https://www.sellsmhk.com/" rel="noopener noreferrer" target="_blank">connect</a> to discuss how you can start your journey today.
2023-04-12T09:17:00-07:002023-04-12T09:25:23-07:00Broker Robertstag:sellsmhk.com,2012-09-20:26132Why Buying a Home Is a Sound DecisionWhy Buying a Home Is a Sound Decision
<br /><img src="https://files.keepingcurrentmatters.com/content/images/20230321/20230322-why-buying-a-home-is-a-sound-decision-KCM.jpg" width="600" /><br /><br />
If you’re <a href="https://www.sellsmhk.com/" rel="noopener noreferrer" target="_blank">thinking</a> about <a href="https://www.sellsmhk.com/" rel="noopener noreferrer" target="_blank">buying</a> a home, you want to know the decision will be a good one. And for many, that means thinking about what home prices are <a href="https://www.sellsmhk.com/" rel="noopener noreferrer" target="_blank">projected to do</a> in the coming years and how that could impact your investment.
This year, we aren’t seeing home prices fall dramatically. As the year goes on, however, some markets may go up in value while others may lose value. That’s why it’s helpful to keep the <a href="https://www.sellsmhk.com/" rel="noopener noreferrer" target="_blank">long-term</a> view in mind. Experts project a return to a steadier rate of price appreciation in the years that follow.
Home Price Appreciation in the Years Ahead
Over 100 economists, investment strategists, and housing market analysts were polled by Pulsenomics in their latest quarterly <a href="https://pulsenomics.com/surveys/#home-price-expectations" rel="noopener noreferrer" target="_blank">Home Price Expectation Survey</a> (HPES). The report indicates what they believe will happen with home prices over the next five years. As the graph below shows, after mild depreciation this year, these experts forecast home prices will return to more normal levels of appreciation through 2027.
<a href="https://files.keepingcurrentmatters.com/content/images/20230321/20230327-estimated-national-price-performance-MEM.png" rel="noopener noreferrer" target="_blank"><img src="https://files.keepingcurrentmatters.com/content/images/20230321/20230327-estimated-national-price-performance-MEM.png" /></a>
The big takeaway is experts aren’t forecasting a drastic fall in home prices nationally, even though some markets will see home price appreciation while others may depreciate. And when they look further out, they see steady price appreciation in the long run. That’s a great example of why homeownership wins over time.
What Does This Mean for You?
Once you buy a home, price appreciation raises your home’s value, and that grows your household wealth. Here’s how a typical home’s value could change over the next few years using the expert price appreciation projections from the survey mentioned above (see graph below):
<a href="https://files.keepingcurrentmatters.com/content/images/20230321/20230327-potential-growth-in-household-wealth-hpes-MEM.png" rel="noopener noreferrer" target="_blank"><img src="https://files.keepingcurrentmatters.com/content/images/20230321/20230327-potential-growth-in-household-wealth-hpes-MEM.png" /></a>
In this example, if you bought a $400,000 home at the beginning of this year and factor in the forecast from the HPES, you could accumulate over $54,000 in household wealth over the next five years. So, if you’re wondering if buying a home is a sound decision, keep in mind what a strong wealth-building tool it is long term.
Bottom Line
According to the experts, while we may see slight depreciation this year, home prices are expected to grow over the next five years. If you’re ready to become a <a href="https://www.sellsmhk.com/" rel="noopener noreferrer" target="_blank">homeowner</a>, know that <a href="https://www.sellsmhk.com/" rel="noopener noreferrer" target="_blank">buying</a> today can set you up for long-term success as home values (and your own net worth) are projected to grow. <a href="https://www.sellsmhk.com/" rel="noopener noreferrer" target="_blank">Let’s connect</a> to begin the homebuying process today.2023-04-05T07:00:00-07:002023-04-03T13:20:13-07:00Broker Robertstag:sellsmhk.com,2012-09-20:25086One Major Benefit of Investing in a HomeOne Major Benefit of Investing in a Home
<img width="750" height="410" src="https://files.mykcm.com/2023/02/23151144/one-major-benefit-of-investing-in-a-home-KCM.jpg" class="attachment-entry size-entry wp-post-image" alt="One Major Benefit of Investing in a Home | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2023/02/23151144/one-major-benefit-of-investing-in-a-home-KCM.jpg 750w, https://files.mykcm.com/2023/02/23151144/one-major-benefit-of-investing-in-a-home-KCM-600x328.jpg 600w, https://files.mykcm.com/2023/02/23151144/one-major-benefit-of-investing-in-a-home-KCM-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" /><br /><br />
One of the many reasons to buy a home is that it’s a major way to <a href="https://www.simplifyingthemarket.com/2023/01/27/homeownership-builds-your-wealth-over-time-infographic/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="build wealth" target="_blank" rel="noopener noreferrer">build wealth</a> and gain financial stability. According to <a href="https://myhome.freddiemac.com/owning/equity-and-appreciation.html" title="Freddie Mac" target="_blank" rel="noopener noreferrer">Freddie Mac</a>:
“Building equity through your monthly principal payments and appreciation is a critical part of homeownership that can help you create financial stability.”
With spring approaching, now’s a great time to consider if <a href="https://www.simplifyingthemarket.com/2023/02/23/how-to-make-your-dream-of-homeownership-a-reality/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="buying a home" target="_blank" rel="noopener noreferrer">buying a home</a> makes sense for you. The best way to figure that out is to talk with a trusted real estate professional.
The Largest Part of Most Homeowners’ Net Worth Is Their Equity
You may be surprised to learn just how much of a homeowner’s net worth actually comes from owning their home. The National Association of Realtors (NAR) <a href="https://www.nar.realtor/blogs/economists-outlook/single-family-homeowners-typically-accumulated-225K-in-housing-wealth-over-10-years" title="shares" target="_blank" rel="noopener noreferrer">shares</a>:
“Homeownership is the largest source of wealth among families, with the median value of a primary residence worth about ten times the median value of financial assets held by families. Housing wealth (home equity or net worth) gains are built up through price appreciation and by paying off the mortgage.”
In other words, home equity does more to build the average household’s wealth than anything else. And according to data from <a href="https://blog.firstam.com/economics/homeownership-remains-strongly-linked-to-wealth-building" title="First American" target="_blank" rel="noopener noreferrer">First American</a>, this holds true across different income levels (see graph below):
<a href="https://files.mykcm.com/2023/02/23151142/housing-piece-of-net-worth-is-crucial-MEM.png" target="_blank" rel="noopener noreferrer"><img class="aligncenter wp-image-107614" src="https://files.mykcm.com/2023/02/23151142/housing-piece-of-net-worth-is-crucial-MEM.png" /></a>
Bottom Line
One of the biggest benefits of owning a home, regardless of your income level, is that it provides financial stability and an avenue to build wealth. Let’s connect today so you can start investing in homeownership.
2023-03-13T08:00:00-07:002023-03-08T10:04:37-07:00Broker Robertstag:sellsmhk.com,2012-09-20:24966Is It Really Better To Rent Than To Own a Home Right NowIs It Really Better To Rent Than To Own a Home Right Now?
<img width="750" height="410" src="https://files.mykcm.com/2023/03/03104539/is-it-really-better-to-rent-than-to-own-KCM.jpg" class="attachment-entry size-entry wp-post-image" alt="Is It Really Better To Rent Than To Own a Home Right Now? | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2023/03/03104539/is-it-really-better-to-rent-than-to-own-KCM.jpg 750w, https://files.mykcm.com/2023/03/03104539/is-it-really-better-to-rent-than-to-own-KCM-600x328.jpg 600w, https://files.mykcm.com/2023/03/03104539/is-it-really-better-to-rent-than-to-own-KCM-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" /><br /><br />
You may have seen reports in the news recently saying it’s better to rent right now than it is to <a href="https://www.simplifyingthemarket.com/2023/02/23/how-to-make-your-dream-of-homeownership-a-reality/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="own your home" target="_blank" rel="noopener noreferrer">own your home</a>. But before you let that impact your decisions, you should understand what these claims are based on.
A lot of the time, these reports are assuming things that aren’t realistic for the average household. For example, the <a href="https://business.fau.edu/executive-education/bhj-buy-vs-rent-index/methodology/index.php" title="methodology" target="_blank" rel="noopener noreferrer">methodology</a> behind one of those reports says that renting is the smarter financial option because of the opportunity to invest money elsewhere. It assumes renters take the money they’d spend on costs tied to buying a home and put it in an investment portfolio.
But here’s the thing – most people who rent aren’t making those investments. Ken Johnson, Co-Author of the BH&J National Price-to-Rent Index, explains:
“One of the difficulties with the rent and reinvest model is many people . . . simply rent and spend the difference. . . . That’s wealth destroying.”
The reason homeownership is one of the best investments you can make is the wealth it helps you build. That’s why there’s a significant difference between the <a href="https://www.federalreserve.gov/publications/files/scf20.pdf" title="net worth" target="_blank" rel="noopener noreferrer">net worth</a> of the average homeowner and the average renter (see graph below):
<a href="https://files.mykcm.com/2023/03/03104540/a-homeowners-net-worth-is-more-than-40-times-greater-than-a-renters-MEM.png" target="_blank" rel="noopener noreferrer"><img class="aligncenter wp-image-107762" src="https://files.mykcm.com/2023/03/03104540/a-homeowners-net-worth-is-more-than-40-times-greater-than-a-renters-MEM.png" /></a>
So, before you renew your rental agreement, think about the opportunity to build wealth that <a href="https://www.simplifyingthemarket.com/2023/02/10/how-to-win-as-a-buyer-in-todays-housing-market-infographic/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="homeownership" target="_blank" rel="noopener noreferrer">homeownership</a> provides.
Bottom Line
If you’re unsure whether to continue renting or to buy a home, let’s connect to help you make the best decision.
2023-03-08T09:00:00-07:002023-03-08T09:59:17-07:00Broker Robertstag:sellsmhk.com,2012-09-20:24809How To Make Your Dream of Homeownership a RealityHow To Make Your Dream of Homeownership a Reality
<img width="750" height="410" src="https://files.mykcm.com/2023/02/22131011/how-to-make-your-dream-of-homeownership-a-reality-KCM.jpg" class="attachment-entry size-entry wp-post-image" alt="How To Make Your Dream of Homeownership a Reality | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2023/02/22131011/how-to-make-your-dream-of-homeownership-a-reality-KCM.jpg 750w, https://files.mykcm.com/2023/02/22131011/how-to-make-your-dream-of-homeownership-a-reality-KCM-600x328.jpg 600w, https://files.mykcm.com/2023/02/22131011/how-to-make-your-dream-of-homeownership-a-reality-KCM-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" /><br /><br />
According to a recent Harris Poll survey, <a href="https://www.nerdwallet.com/article/mortgages/2023-home-buyer-report" title="8 in 10" target="_blank" rel="noopener noreferrer">8 in 10</a> Americans say buying a home is a priority, and 28 million Americans actually plan to buy within the next 12 months. Homeownership provides many financial and nonfinancial <a href="https://www.simplifyingthemarket.com/2022/12/22/what-makes-a-house-a-home/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="benefits" target="_blank" rel="noopener noreferrer">benefits</a>, so that interest is understandable.
However, it’s unlikely all 28 million Americans will accomplish that goal in the coming year. Experts <a href="https://www.simplifyingthemarket.com/2022/12/16/2023-housing-market-forecast-infographic/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="project" target="_blank" rel="noopener noreferrer">project</a> a total of around five million homes will be sold in 2023. Why is there such a big difference? It’s partly because there can be challenges to buying a home.
In the same survey, when asked, “Which of the following are preventing you from pursuing homeownership at this time?”:
34% answered, “I don’t have enough saved for a down payment”
30% answered, “My credit score”
If you’re aiming to buy a home, here’s what you need to know to accomplish that goal.
Save for Your Down Payment
Your <a href="https://www.simplifyingthemarket.com/2023/02/03/you-may-not-need-as-much-as-you-think-for-your-down-payment-infographic/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="down payment" target="_blank" rel="noopener noreferrer">down payment</a> is a big chunk of what you pay up front for your home. For most home purchases, buyers put down some amount of cash up front (a down payment) and then take out a loan (a mortgage) to pay for the rest.
It’s a longstanding myth that you need to pay 20% of the purchase price for your down payment. In reality, 20% down isn’t always required. In fact, according to the <a href="https://www.nar.realtor/research-and-statistics/research-reports/highlights-from-the-profile-of-home-buyers-and-sellers" title="National Association of Realtors" target="_blank" rel="noopener noreferrer">National Association of Realtors</a> (NAR), today’s median down payment is 14% for the average buyer and just 6% for a first-time buyer.
Regardless of how much money you can save for your <a href="https://www.simplifyingthemarket.com/2023/01/03/wondering-how-much-you-need-to-save-for-a-down-payment/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="down payment" target="_blank" rel="noopener noreferrer">down payment</a>, know there’s help available. A local lender can show you <a href="https://downpaymentresource.com/" title="options" target="_blank" rel="noopener noreferrer">options</a> to help you get closer to your down payment goal. Plus, there are even loan types, like <a href="https://www.hud.gov/buying/loans" title="FHA loans" target="_blank" rel="noopener noreferrer">FHA loans</a>, with down payments as low as 3.5% for some buyers, as well as options like <a href="https://www.simplifyingthemarket.com/2022/11/10/va-loans-can-help-veterans-achieve-their-dream-of-homeownership/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="VA loans" target="_blank" rel="noopener noreferrer">VA loans</a> and <a href="https://www.rd.usda.gov/programs-services/single-family-housing-programs/single-family-housing-guaranteed-loan-program" title="USDA loans" target="_blank" rel="noopener noreferrer">USDA loans</a> with no down payment requirements for qualified applicants.
Beyond assistance programs and different loan types, <a href="https://www.nerdwallet.com/article/mortgages/payment-buy-home" title="here" target="_blank" rel="noopener noreferrer">here</a> are a few other tips to help you as you save for your down payment:
Remember to factor in closing costs. In addition to your down payment, <a href="https://www.simplifyingthemarket.com/2023/02/13/what-you-should-know-about-closing-costs/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="closing costs" target="_blank" rel="noopener noreferrer">closing costs</a> are usually 2-5% of the home's purchase price.
Maintain your savings. Your down payment shouldn’t deplete all your savings. It’s important to still have some money set aside for homeownership expenses after you move in.
Explore your options and lean on your trusted advisor for expert guidance. Do your research, ask questions, and look into the resources available for buyers like you.
Improve Your Credit Score
Your credit score is a number that indicates how financially reliable you are to lenders. A higher credit score usually means you’ll be able to borrow more money at a better interest rate. If your credit score is preventing you from getting an affordable mortgage, there are steps you can take to improve it. Here are two:
Pay your bills on time. When you pay your bills on time, your credit score improves. When you’re late, it takes a hit. One way to make paying your bills on time easier? Set up automatic payments when and where you can.
Mix it up. From auto loans, to credit cards, to mortgages – there are several different types of credit. And having a mix of them improves your credit score.
Bottom Line
If you want to purchase a home this year, let’s connect so we can <a href="https://www.simplifyingthemarket.com/2023/02/10/how-to-win-as-a-buyer-in-todays-housing-market-infographic/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="start preparing" target="_blank" rel="noopener noreferrer">start preparing</a>.
2023-03-01T07:00:00-07:002023-02-24T09:48:30-07:00Broker Robertstag:sellsmhk.com,2012-09-20:24705Should You Consider Buying a Newly Built Home?Should You Consider Buying a Newly Built Home?
<img width="750" height="410" src="https://files.mykcm.com/2023/02/14110909/should-you-consider-buying-a-newly-built-home-KCM.jpg" class="attachment-entry size-entry wp-post-image" alt="Should You Consider Buying a Newly Built Home? | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2023/02/14110909/should-you-consider-buying-a-newly-built-home-KCM.jpg 750w, https://files.mykcm.com/2023/02/14110909/should-you-consider-buying-a-newly-built-home-KCM-600x328.jpg 600w, https://files.mykcm.com/2023/02/14110909/should-you-consider-buying-a-newly-built-home-KCM-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" /><br /><br />
If you’re thinking about buying a home, you might be focusing on previously owned ones. But with so few houses for sale <a href="https://www.simplifyingthemarket.com/2023/02/09/why-todays-housing-market-isnt-headed-for-a-crash/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="today" target="_blank" rel="noopener noreferrer">today</a>, it makes sense to consider all your options, and that includes a home that’s newly built.
The Number of Newly Built Homes Is on the Rise
While there are more houses for sale right now than there were at this time last year, there’s still a historically low number of <a href="https://www.simplifyingthemarket.com/2023/02/08/number-of-homes-for-sale-up-from-last-year-but-below-pre-pandemic-years/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="homes available" target="_blank" rel="noopener noreferrer">homes available</a> on the market. One reason for that is years of underbuilding—meaning there haven’t been enough new homes built to keep up with demand.
<a href="https://files.mykcm.com/2023/02/14110907/single-family-housing-units-completed-MEM.png" target="_blank" rel="noopener noreferrer"><img class="aligncenter wp-image-107444" src="https://files.mykcm.com/2023/02/14110907/single-family-housing-units-completed-MEM.png" /></a>
The graph above shows how low the production of newly constructed homes has been over the <a href="https://www.census.gov/construction/nrc/data/series.html" title="past 14 years" target="_blank" rel="noopener noreferrer">past 14 years</a>. But it also shows another important trend: the number of new homes being built each year is on the rise. As Mark Fleming, Chief Economist at First American, <a href="https://blog.firstam.com/economics/why-housing-market-potential-increased-for-the-second-straight-month" title="shares" target="_blank" rel="noopener noreferrer">shares</a>, that’s good news for buyers:
“While existing-home inventory remains limited, the silver lining for home buyers is that new-home inventory is on the rise, and a new home at the right price is a pretty good substitute.”
Builder Incentives Can Provide a Boost
While there a growing number of new homes for sale, builders are slowing that pace until they sell more of their current inventory. According to Logan Mohtashami, Lead Analyst at <a href="https://www.housingwire.com/articles/homebuilders-still-need-lower-mortgage-rates/" title="HousingWire" target="_blank" rel="noopener noreferrer">HousingWire</a>:
“The builders have to work off the backlog of homes, but instead of 3%-4% mortgage rates, they’re dealing with 6% plus mortgage rates, which means they have to provide many incentives to make sure those homes sell.”
Many builders are now offering incentives to help buyers purchase these homes. Fleming also explains:
“The National Association of Home Builders reported that nearly two-thirds of builders were offering incentives, including mortgage rate buydowns, paying points for buyers and price reductions, which could entice potential home buyers.”
A builder who’s willing to pay to reduce your mortgage rate could be a game changer. Ksenia Potapov, Economist at First American, <a href="https://blog.firstam.com/economics/why-mortgage-rates-hold-the-key-to-improved-affordability-in-2023" title="puts it" target="_blank" rel="noopener noreferrer">puts it</a> this way:
“A one percentage-point decline in mortgage rates has the same impact on affordability as an 11 percent decline in house prices.”
Should You Buy a Brand-New Home?
The best way to decide what type of home to buy is to work with a trusted real estate professional who can help you weigh the pros and cons of each option. They know which homes are available in your local market, and which builders might be offering incentives that make sense for you.
Bottom Line
Even though there aren’t a lot of homes for sale today, new home inventory is on the rise, and many builders are offering incentives. Let’s connect so I can help you weigh the pros and cons of shopping for a new home versus an existing one.
2023-02-20T10:07:23-07:002023-02-20T10:11:02-07:00Broker Robertstag:sellsmhk.com,2012-09-20:24055Think Twice Before Waiting for 3% Mortgage RatesThink Twice Before Waiting for 3% Mortgage Rates
<img width="750" height="410" src="https://files.mykcm.com/2023/01/12145408/think-twice-about-waiting-for-3-percent-mortgage-rates-KCM.jpg" class="attachment-entry size-entry wp-post-image" alt="Think Twice Before Waiting for 3% Mortgage Rates | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2023/01/12145408/think-twice-about-waiting-for-3-percent-mortgage-rates-KCM.jpg 750w, https://files.mykcm.com/2023/01/12145408/think-twice-about-waiting-for-3-percent-mortgage-rates-KCM-600x328.jpg 600w, https://files.mykcm.com/2023/01/12145408/think-twice-about-waiting-for-3-percent-mortgage-rates-KCM-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" /><br /><br />
Last year, the Federal Reserve took action to try to bring down inflation. In response to those efforts, <a href="https://www.simplifyingthemarket.com/2022/12/21/what-to-expect-from-the-housing-market-in-2023/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="mortgage rates" target="_blank" rel="noopener noreferrer">mortgage rates</a> jumped up rapidly from the record lows we saw in 2021, peaking at just over 7% <a href="https://www.freddiemac.com/pmms/archive" title="last October" target="_blank" rel="noopener noreferrer">last October</a>. Hopeful <a href="https://www.simplifyingthemarket.com/2023/01/04/avoid-the-rental-trap-in-2023/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="buyers" target="_blank" rel="noopener noreferrer">buyers</a> experienced a hit to their purchasing power as a result, and some decided to press pause on their plans.
Today, the rate of inflation is starting to drop. And as a result, mortgage rates have dipped below last year’s peak. Sam Khater, Chief Economist at Freddie Mac, <a href="https://freddiemac.gcs-web.com/news-releases/news-release-details/mortgage-rates-inch-3" title="shares" target="_blank" rel="noopener noreferrer">shares</a>:
“While mortgage market activity has significantly shrunk over the last year, inflationary pressures are easing and should lead to lower mortgage rates in 2023.”
That’s potentially great news if you’re a <a href="https://www.simplifyingthemarket.com/2023/01/02/what-are-your-goals-in-the-housing-market-this-year/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="buyer" target="_blank" rel="noopener noreferrer">buyer</a> aiming to jump back into the housing market. Any drop in mortgage rates helps boost your <a href="https://www.simplifyingthemarket.com/2022/12/19/mortgage-rates-are-dropping-what-does-that-mean-for-you/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="purchasing power" target="_blank" rel="noopener noreferrer">purchasing power</a> by bringing down your expected monthly mortgage payment. This means the lower mortgage rates <a href="https://www.simplifyingthemarket.com/2023/01/09/what-experts-are-saying-about-the-2023-housing-market/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="experts" target="_blank" rel="noopener noreferrer">experts</a> forecast <a href="https://www.simplifyingthemarket.com/2022/12/16/2023-housing-market-forecast-infographic/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="this year" target="_blank" rel="noopener noreferrer">this year</a> could be just what you need to reignite your homebuying goals.
While this opens up a window of opportunity for you, remember: you shouldn’t expect rates to drop back down to record lows like we saw in 2021. Experts agree that’s not the range buyers should bank on. Greg McBride, Chief Financial Analyst at Bankrate, <a href="https://www.bankrate.com/mortgages/mortgage-rate-forecast/#forecast" title="explains" target="_blank" rel="noopener noreferrer">explains</a>:
“I think we could be surprised at how much mortgage rates pull back this year. But we’re not going back to 3 percent anytime soon, because inflation is not going back to 2 percent anytime soon.”
It’s important to have a realistic vision for what you can expect this year, and that’s where the advice of expert <a href="https://www.simplifyingthemarket.com/2022/12/27/confused-about-whats-going-on-in-the-housing-market-lean-on-a-professional/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="real estate " target="_blank" rel="noopener noreferrer">real estate </a>advisors is critical. You may be surprised by the impact even a mild drop in mortgage rates has on your budget. If you’re ready to <a href="https://www.simplifyingthemarket.com/2023/01/03/wondering-how-much-you-need-to-save-for-a-down-payment/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="buy a home" target="_blank" rel="noopener noreferrer">buy a home</a> now, today’s market presents the opportunity to get a more affordable mortgage rate, find your dream home, and face <a href="https://www.simplifyingthemarket.com/2022/12/14/you-may-have-more-negotiation-power-when-you-buy-a-home-today/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="less competition" target="_blank" rel="noopener noreferrer">less competition</a> from other buyers.
Bottom Line
The recent pullback in mortgage rates is great news – but if you’re ready to buy now, holding out for 3% is a mistake. Work with a local lender to learn how today’s rates impact your goals, and let’s connect to explore your options in our area.
2023-01-18T09:09:41-07:002023-01-18T09:14:15-07:00Broker Robertstag:sellsmhk.com,2012-09-20:23815Wondering How Much You Need To Save for a Down Payment?Wondering How Much You Need To Save for a Down Payment?
<img width="750" height="410" src="https://files.mykcm.com/2022/12/22134046/wondering-how-much-you-need-to-save-for-a-down-payment-KCM.jpg" class="attachment-entry size-entry wp-post-image" alt="Wondering How Much You Need To Save for a Down Payment? | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2022/12/22134046/wondering-how-much-you-need-to-save-for-a-down-payment-KCM.jpg 750w, https://files.mykcm.com/2022/12/22134046/wondering-how-much-you-need-to-save-for-a-down-payment-KCM-600x328.jpg 600w, https://files.mykcm.com/2022/12/22134046/wondering-how-much-you-need-to-save-for-a-down-payment-KCM-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" /><br /><br />
If you’re getting ready to buy your first home, you’re likely focused on saving up for everything that purchase involves. One cost that’s likely top of mind is your down payment. But don't let a common misconception about how much you need to save make the process harder than it could be.
Understand 20% Isn’t Always the Typical Down Payment
Freddie Mac <a href="https://myhome.freddiemac.com/buying/down-payments-and-pmi" title="explains" target="_blank" rel="noopener noreferrer">explains</a>:
“. . . nearly a third of prospective homebuyers think they need a down payment of 20% or more to buy a home. This myth remains one of the largest perceived barriers to achieving homeownership.”
Unless specified by your loan type or lender, it’s typically not required to put 20% down. This means you could be closer to your homebuying dream than you realize. According to the <a href="https://www.nar.realtor/research-and-statistics/research-reports/highlights-from-the-profile-of-home-buyers-and-sellers" title="National Association of Realtors" target="_blank" rel="noopener noreferrer">National Association of Realtors</a> (NAR), the median down payment hasn’t been over 20% since 2005. In fact, the median down payment today is only 14%. And it’s even lower for first-time homebuyers at just 6% (see graph below):
<a href="https://files.mykcm.com/2022/12/22134044/todays-median-down-payment-is-less-than-20-percent-MEM.png" target="_blank" rel="noopener noreferrer"><img class="aligncenter wp-image-106555" src="https://files.mykcm.com/2022/12/22134044/todays-median-down-payment-is-less-than-20-percent-MEM.png" alt="Wondering How Much You Need To Save for a Down Payment? | MyKCM" width="600" height="450" /></a>
Learn About Options That Can Help You Toward Your Goal
If saving for a down payment still feels like a challenge, know that there’s help available. A real estate professional and trusted lender can show you options that could help you get closer to your down payment goal. According to latest <a href="https://downpaymentresource.com/professional-resource/homebuyer-assistance-programs-proliferate-in-q3-as-median-u-s-down-payment-skyrockets/" title="Homeownership Program Index" target="_blank" rel="noopener noreferrer">Homeownership Program Index</a> from Down Payment Resource, there are over 2,000 homebuyer assistance programs in the U.S., and the majority are intended to help with down payments.
Plus there are even loan types, like <a href="https://www.hud.gov/buying/loans" title="FHA loans" target="_blank" rel="noopener noreferrer">FHA loans</a>, with down payments as low as 3.5%, as well as options like <a href="https://www.simplifyingthemarket.com/2022/11/10/va-loans-can-help-veterans-achieve-their-dream-of-homeownership/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="VA loans" target="_blank" rel="noopener noreferrer">VA loans</a> and USDA loans with no down payment requirements for qualified applicants.
To understand your options, be sure to do your homework. If you’re interested in learning more about down payment assistance programs, information is available through sites like <a href="http://www.downpaymentresource.com/" title="Down Payment Resource" target="_blank" rel="noopener noreferrer">Down Payment Resource</a>. Then, partner with a trusted lender to learn what you qualify for on your homebuying journey.
Bottom Line
Remember, a 20% down payment isn’t always required. If you want to purchase a home this year, let’s connect. You’ll also want to make sure you have a trusted lender so you can explore your down payment options.
2023-01-04T08:42:30-07:002023-01-04T21:46:20-07:00Broker Robertstag:sellsmhk.com,2012-09-20:23457You May Have More Negotiation Power When You Buy a Home TodayYou May Have More Negotiation Power When You Buy a Home Today
<img width="750" height="410" src="https://files.mykcm.com/2022/12/13093905/you-may-have-more-negotiation-power-when-you-buy-a-home-today-kcm.jpg" class="attachment-entry size-entry wp-post-image" alt="You May Have More Negotiation Power When You Buy a Home Today | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2022/12/13093905/you-may-have-more-negotiation-power-when-you-buy-a-home-today-kcm.jpg 750w, https://files.mykcm.com/2022/12/13093905/you-may-have-more-negotiation-power-when-you-buy-a-home-today-kcm-600x328.jpg 600w, https://files.mykcm.com/2022/12/13093905/you-may-have-more-negotiation-power-when-you-buy-a-home-today-kcm-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" /><br /><br />
Did the frequency and intensity of bidding wars over the past two years make you put your <a href="https://www.simplifyingthemarket.com/2022/12/07/key-advantages-of-buying-a-home-today/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="home search" target="_blank" rel="noopener noreferrer">home search</a> on hold? If so, you should know the hyper competitive market has cooled this year as buyer demand has moderated and <a href="https://www.simplifyingthemarket.com/2022/11/23/what-buyers-need-to-know-about-the-inventory-of-homes-available-for-sale/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="housing supply" target="_blank" rel="noopener noreferrer">housing supply</a> has grown. Those two factors combined mean you may see less competition from other buyers.
And with less competition comes more <a href="https://www.simplifyingthemarket.com/2022/11/01/3-trends-that-are-good-news-for-todays-homebuyers/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="opportunity" target="_blank" rel="noopener noreferrer">opportunity</a>. Here are two trends that may be the news you need to reenter the market.
1. The Return of Contingencies
Over the last two years, more buyers were willing to skip important steps in the <a href="https://www.simplifyingthemarket.com/2022/12/05/prioritizing-your-wants-and-needs-as-a-homebuyer-in-todays-market/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="homebuying" target="_blank" rel="noopener noreferrer">homebuying</a> process, like the appraisal or the inspection, in hopes of gaining an advantage in a bidding war. But now, things are different.
The latest <a href="https://cdn.nar.realtor/sites/default/files/documents/2022-10-realtors-confidence-index-11-18-2022.pdf" title="data" target="_blank" rel="noopener noreferrer">data</a> from the National Association of Realtors (NAR) shows the percentage of buyers waiving their home inspection or appraisal is down. And a recent <a href="https://www.realtor.com/advice/buy/buyers-may-have-more-power-than-they-realize-right-now/" title="article" target="_blank" rel="noopener noreferrer">article</a> from realtor.com points out more sellers are accepting contingencies:
“A year ago, sellers were calling all the shots and buyers were launching legendary bidding wars, waiving contingencies, and paying for homes in cash. But now, the shoe is on the other foot, and 92% of home sellers are accepting some buyer-friendly terms (frequently related to home inspections, financing, or appraisals), . . .”
This doesn’t mean we’re in a buyers’ market now, but it does mean you have a bit more leverage when it comes time to negotiate with a seller. The days of feeling like you may need to waive contingencies or pay drastically over asking price to get your offer considered may be coming to a close.
2. Sellers Are More Willing To Help with Closing Costs
Before the pandemic, it was a common negotiation tactic for sellers to cover some of the buyer’s <a href="https://www.simplifyingthemarket.com/2022/10/31/taking-the-fear-out-of-saving-for-a-home/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="closing costs" target="_blank" rel="noopener noreferrer">closing costs</a> to sweeten the deal. This didn’t happen as much during the peak buyer frenzy over the past two years.
Today, data suggests this is making a comeback. A realtor.com <a href="https://news.move.com/2022-08-30-Realtor-com-R-Survey-Bargaining-Power-is-Back-92-of-Recent-Sellers-Accepted-Buyer-Friendly-Terms" title="survey" target="_blank" rel="noopener noreferrer">survey</a> shows 32% of sellers paid some or all of their buyer’s closing costs. This may be a negotiation tool you’ll see as you go to purchase a home. Just keep in mind, limits on closing cost credits are set by your lender and can vary by state and loan type. Work closely with your loan advisor to understand how much a seller can contribute to closing costs in your area.
Bottom Line
Despite the extremely competitive housing market of the past several years, today’s data suggests negotiations are starting to come back to the table. To find out how the market is shifting in our area, let’s connect today.
2022-12-15T10:00:00-07:002023-01-16T12:11:42-07:00Broker Robertstag:sellsmhk.com,2012-09-20:23276Prioritizing Your Wants and Needs as a Homebuyer in Today's MarketPrioritizing Your Wants and Needs as a Homebuyer in Today’s Market
<img width="750" height="410" src="https://files.mykcm.com/2022/12/01164657/prioritizing-your-wants-and-needs-as-a-homebuyer-in-todays-market-KCM.jpg" class="attachment-entry size-entry wp-post-image" alt="Prioritizing Your Wants and Needs as a Homebuyer in Today’s Market | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2022/12/01164657/prioritizing-your-wants-and-needs-as-a-homebuyer-in-todays-market-KCM.jpg 750w, https://files.mykcm.com/2022/12/01164657/prioritizing-your-wants-and-needs-as-a-homebuyer-in-todays-market-KCM-600x328.jpg 600w, https://files.mykcm.com/2022/12/01164657/prioritizing-your-wants-and-needs-as-a-homebuyer-in-todays-market-KCM-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" /><br /><br />
There’s no denying <a href="https://www.simplifyingthemarket.com/2022/11/21/mortgage-rates-will-come-down-its-just-a-matter-of-time/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="mortgage rates" target="_blank" rel="noopener noreferrer">mortgage rates</a> are higher now than they were last year. And if you’re thinking about buying a home, this may be top of mind for you. That’s because those higher rates impact how much it costs to borrow money for your home loan. As you set out to make a purchase this winter, you’ll need to be strategic so you can find a home that meets your needs and <a href="https://www.simplifyingthemarket.com/2022/11/07/key-factors-affecting-home-affordability-today/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="budget" target="_blank" rel="noopener noreferrer">budget</a>.
Danielle Hale, Chief Economist at realtor.com, <a href="https://twitter.com/RDC_Economics/status/1590722818639269889" title="explains" target="_blank" rel="noopener noreferrer">explains</a>:
“The key to making a good decision in this challenging housing market is to be laser focused on what you need now and in the years ahead, . . . Another key point is to avoid stretching your budget, as tempting as it may be given the diminished purchasing power.”
In other words, it’s important to be mindful of what’s a necessity and what’s a nice-to-have when searching for a home. And the best way to understand this is to put together a list of desired features for your home search.
The first step? Get <a href="https://www.simplifyingthemarket.com/2022/09/16/a-crucial-first-step-mortgage-pre-approval-infographic/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="pre-approved" target="_blank" rel="noopener noreferrer">pre-approved</a> for a mortgage. <a href="https://www.simplifyingthemarket.com/2022/10/24/pre-approval-is-a-critical-first-step-on-your-homebuying-journey/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="Pre-approval" target="_blank" rel="noopener noreferrer">Pre-approval</a> helps you better understand what you can borrow for your home loan, and that plays an important role in how you’ll craft your list. After all, you don’t want to fall in love with a home that’s out of reach. Once you have a good grasp of your budget, you can begin to list (and prioritize) all the features of a home you would like.
Here’s a great way to think about them before you begin:
Must-Haves – If a house doesn’t have these features, it won’t work for you and your lifestyle (examples: distance from work or loved ones, number of bedrooms/bathrooms, etc.).
Nice-To-Haves – These are features that you’d love to have but can live without. Nice-To-Haves aren’t dealbreakers, but if you find a home that hits all the must-haves and some of the these, it’s a contender (examples: a second home office, a garage, etc.).
Dream State – This is where you can really think big. Again, these aren’t features you’ll need, but if you find a home in your budget that has all the must-haves, most of the nice-to-haves, and any of these, it’s a clear winner (examples: farmhouse sink, multiple walk-in closets, etc.).
Finally, once you’ve created your list and categorized it in a way that works for you, discuss it with your real estate advisor. They’ll be able to help you refine the list further, coach you through the best way to stick to it, and find a home in your area that meets your needs.
Bottom Line
Putting together your list of necessary features for your next home might seem like a small task, but it’s a crucial first step on your homebuying journey today. If you’re ready to find a home that fits your needs, let’s connect.
2022-12-05T10:25:59-07:002023-01-16T12:12:22-07:00Broker Robertstag:sellsmhk.com,2012-09-20:228163 Trends That Are Good News for Today’s Homebuyers3 Trends That Are Good News for Today’s Homebuyers
<img width="750" height="410" src="https://files.mykcm.com/2022/10/31110909/3-trends-that-are-good-news-for-todays-homebuyers-KCM.jpg" class="attachment-entry size-entry wp-post-image" alt="3 Trends That Are Good News for Today’s Homebuyers | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2022/10/31110909/3-trends-that-are-good-news-for-todays-homebuyers-KCM.jpg 750w, https://files.mykcm.com/2022/10/31110909/3-trends-that-are-good-news-for-todays-homebuyers-KCM-600x328.jpg 600w, https://files.mykcm.com/2022/10/31110909/3-trends-that-are-good-news-for-todays-homebuyers-KCM-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" /><br /><br />
While higher <a href="https://www.simplifyingthemarket.com/2022/10/04/the-cost-of-waiting-for-mortgage-rates-to-go-down/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="mortgage rates" target="_blank" rel="noopener noreferrer">mortgage rates</a> are creating affordability challenges for <a href="https://www.simplifyingthemarket.com/2022/10/19/should-you-still-buy-a-home-with-the-latest-news-about-inflation/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="homebuyers" target="_blank" rel="noopener noreferrer">homebuyers</a> this year, there is some good news for those people still looking to buy a home.
As the market has cooled this year, some of the intensity buyers faced during the peak frenzy of the pandemic has cooled too. Here are just a few trends that may benefit you when you go to buy a home today.
1. More Homes To Choose from
During the pandemic, housing supply hit a record low at the same time buyer demand skyrocketed. This combination made it difficult to find a home because there just weren’t enough to meet buyer demand. According to Calculated Risk, the supply of homes for sale increased by <a href="https://www.calculatedriskblog.com/2022/10/housing-october-31st-weekly-update.html" title="39.5%" target="_blank" rel="noopener noreferrer">39.5%</a> for the week ending October 28 compared to the same week last year.
Even though it’s still a sellers’ market and supply is still lower than more normal levels, you have more to choose from in your home search. That makes finding your dream home a bit less difficult.
2. Bidding Wars Have Eased
One of the top stories in real estate over the past two years was the intensity and frequency of bidding wars. But today, things are different. With more options, you’ll likely see less competition from other buyers looking for homes. According to the <a href="https://cdn.nar.realtor/sites/default/files/documents/2022-09-realtors-confidence-index-10-20-2022.pdf" title="National Association of Realtors" target="_blank" rel="noopener noreferrer">National Association of Realtors</a> (NAR), the average number of offers on recently sold homes has declined. This September, the average was 2.5 offers per sale. In contrast, last September, the average was 3.7 offers per sale.
If you tried to buy a house over the past two years, you probably experienced the bidding war frenzy firsthand and may have been outbid on several homes along the way. Now you have a chance to jump back into the market and enjoy searching for a home with less competition.
3. More Negotiation Power
And when you have less competition, you also have more negotiating power as a buyer. Over the last two years, more buyers were willing to skip important steps in the homebuying process, like the appraisal or <a href="https://www.simplifyingthemarket.com/2022/08/19/why-a-home-inspection-is-important-infographic/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="inspection" target="_blank" rel="noopener noreferrer">inspection</a>, to try to win a bidding war. But the <a href="https://cdn.nar.realtor/sites/default/files/documents/2022-09-realtors-confidence-index-10-20-2022.pdf" title="latest data" target="_blank" rel="noopener noreferrer">latest data</a> from the National Association of Realtors (NAR) shows the percentage of buyers waiving those contingencies is going down.
As a buyer, this is good news. The appraisal and the inspection give you important information about the value and condition of the home you’re buying. And if something turns up in the inspection, you have more power today to renegotiate with the seller.
A <a href="https://www.realtor.com/research/2022-summer-sellers-survey/" title="survey" target="_blank" rel="noopener noreferrer">survey</a> from realtor.com confirms more sellers are accepting offers that include contingencies today. According to that report, 95% of sellers said buyers requested a home inspection, and 67% negotiated with buyers on repairs as a result of the inspection findings.
Bottom Line
While buyers still face challenges today, they’re not necessarily the same ones you may have been up against just a year or so ago. If you were outbid or had trouble finding a home in the past, now may be the moment you’ve been waiting for. Let’s connect to start the homebuying process today.
2022-11-02T08:46:14-07:002023-01-20T11:42:59-07:00Broker Robertstag:sellsmhk.com,2012-09-20:22646Should You Still Buy a Home with the Latest News About Inflation?Should You Still Buy a Home with the Latest News About Inflation?
<img width="750" height="410" src="https://files.mykcm.com/2022/10/18114302/20221019-KCM-Share-2.jpg" class="attachment-entry size-entry wp-post-image" alt="Should You Still Buy a Home with the Latest News About Inflation? | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2022/10/18114302/20221019-KCM-Share-2.jpg 750w, https://files.mykcm.com/2022/10/18114302/20221019-KCM-Share-2-600x328.jpg 600w, https://files.mykcm.com/2022/10/18114302/20221019-KCM-Share-2-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" /><br /><br />
While the Federal Reserve is working hard to <a href="https://www.simplifyingthemarket.com/2022/09/27/how-an-expert-can-help-you-understand-inflation-mortgage-rates/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="bring down inflation" target="_blank" rel="noopener noreferrer">bring down inflation</a>, the latest data shows the <a href="https://www.bls.gov/news.release/cpi.nr0.htm" title="inflation rate" target="_blank" rel="noopener noreferrer">inflation rate</a> is still high, remaining around 8%. This news impacted the stock market and added fuel to the fire for conversations about a recession.
You’re likely feeling the impact in your day-to-day life as you watch the cost of goods and services climb. The <a href="https://www.simplifyingthemarket.com/2022/09/13/three-things-buyers-can-do-in-todays-housing-market/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="pinch" target="_blank" rel="noopener noreferrer">pinch</a> it’s creating on your wallet and the looming economic uncertainty may leave you wondering: “should I still <a href="https://www.simplifyingthemarket.com/2022/10/05/the-long-term-benefit-of-homeownership/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="buy a home" target="_blank" rel="noopener noreferrer">buy a home</a> right now?” If that question is top of mind for you, here’s what you need to know.
Homeownership Is Historically a Great Hedge Against Inflation
In an inflationary economy, prices rise across the board. Historically, homeownership is a great hedge against those rising costs because you can lock in what’s likely your largest monthly payment (your mortgage) for the duration of your loan. That helps stabilize some of your monthly expenses. James Royal, Senior Wealth Management Reporter at Bankrate, <a href="https://www.bankrate.com/investing/inflation-hedges-to-protect-against-rising-prices/" title="explains" target="_blank" rel="noopener noreferrer">explains</a>:
“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.”
And with <a href="https://www.simplifyingthemarket.com/2022/09/30/why-buying-a-home-may-make-more-sense-than-renting-infographic/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="rents" target="_blank" rel="noopener noreferrer">rents</a> being as high as they are, the ability to stabilize your monthly payments and protect yourself from future rent hikes may be even more important. Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), <a href="https://www.nar.realtor/blogs/economists-outlook/instant-reaction-inflation-october-13-2022" title="explains" target="_blank" rel="noopener noreferrer">explains</a> what happened to rents in the latest inflation report:
“Inflation refuses to budge. In September, consumer prices rose by 8.2%. Rents rose by 7.2%, the highest pace in 40 years.”
When you rent, your monthly payment is determined by your lease, which typically renews on an annual basis. With inflation high, your landlord may be more likely to increase your payments to offset the impact of inflation. That may be part of the reason why a <a href="https://www.realtor.com/research/july-2022-rent/" title="survey" target="_blank" rel="noopener noreferrer">survey</a> from realtor.com shows 72% of landlords said they plan to raise the rent on one or more of their properties in the next year.
Becoming a homeowner, if you’re ready and able to do so, can provide lasting stability and a reliable shelter in times of economic uncertainty.
Bottom Line
The best hedge against inflation is a fixed housing cost. If you’re ready to learn more and start your journey to homeownership, let’s connect.
2022-10-21T11:59:03-07:002023-01-20T11:43:45-07:00Broker Robertstag:sellsmhk.com,2012-09-20:22437 The Long-Term Benefit of HomeownershipThe Long-Term Benefit of Homeownership
<img width="750" height="410" src="https://files.mykcm.com/2022/10/04143006/20221005-KCM-Share.jpg" class="attachment-entry size-entry wp-post-image" alt="The Long-Term Benefit of Homeownership | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2022/10/04143006/20221005-KCM-Share.jpg 750w, https://files.mykcm.com/2022/10/04143006/20221005-KCM-Share-600x328.jpg 600w, https://files.mykcm.com/2022/10/04143006/20221005-KCM-Share-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" /><br /><br />
Today’s cooling <a href="https://www.simplifyingthemarket.com/2022/09/14/is-the-real-estate-market-slowing-down-or-is-this-a-housing-bubble/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="housing market" target="_blank" rel="noopener noreferrer">housing market</a>, the rise in mortgage rates, and mounting economic concerns have some people questioning: should I still buy a home this year? While it’s true this year has unique challenges for homebuyers, it’s important to factor the long-term benefits of homeownership into your decision.
Consider this: if you know people who bought a home 5, 10, or even 30 years ago, you’re probably going to have a hard time finding someone who regrets their decision. Why is that? The reason is tied to how you gain <a href="https://www.simplifyingthemarket.com/2022/09/20/watching-the-stock-market-check-the-value-of-your-home-for-good-news/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="equity" target="_blank" rel="noopener noreferrer">equity</a> and <a href="https://www.simplifyingthemarket.com/2022/09/26/the-true-strength-of-homeowners-today/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="wealth" target="_blank" rel="noopener noreferrer">wealth</a> as home values grow with time.
The National Association of Realtors (NAR) <a href="https://www.nar.realtor/research-and-statistics/research-reports/metro-area-housing-wealth-gains" title="explains" target="_blank" rel="noopener noreferrer">explains</a>:
“Home equity gains are built up through price appreciation and by paying off the mortgage through principal payments.”
Here’s a look at how just the home price appreciation piece can really add up over the years.
Home Price Growth Over Time
Even though <a href="https://www.simplifyingthemarket.com/2022/08/30/whats-actually-happening-with-home-prices-today/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="home price appreciation" target="_blank" rel="noopener noreferrer">home price appreciation</a> has moderated this year, home values have still increased significantly in recent years. The map below uses <a href="https://www.fhfa.gov/DataTools/Tools/Pages/House-Price-Index-(HPI).aspx" title="data" target="_blank" rel="noopener noreferrer">data</a> from the Federal Housing Finance Agency (FHFA) to show just how noteworthy those gains have been over the last five years.
<a href="https://files.mykcm.com/2022/10/04143008/20221003-MEM-Eng-1.png" target="_blank" rel="noopener noreferrer"><img class="aligncenter wp-image-105026" src="https://files.mykcm.com/2022/10/04143008/20221003-MEM-Eng-1.png" alt="The Long-Term Benefit of Homeownership | MyKCM" width="600" height="450" /></a>
If you look at the percent change in home prices, you can see home prices grew on average by almost 64% nationwide over that period.
That means a home’s value can increase substantially in a short time. And if you expand that time frame even more, the benefit of homeownership and the <a href="https://www.simplifyingthemarket.com/2022/09/06/how-owning-a-home-builds-your-net-worth/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="drastic gains" target="_blank" rel="noopener noreferrer">drastic gains</a> you stand to make become even clearer (see map below):
<a href="https://files.mykcm.com/2022/10/04143010/20221003-MEM-Eng-2.png" target="_blank" rel="noopener noreferrer"><img class="aligncenter wp-image-105027" src="https://files.mykcm.com/2022/10/04143010/20221003-MEM-Eng-2.png" alt="The Long-Term Benefit of Homeownership | MyKCM" width="600" height="450" /></a>
The second map shows, nationwide, home prices appreciated by an average of over 290% over roughly a thirty-year span.
While home price growth varies by state and local area, the nationwide average tells you the typical homeowner who bought a house thirty years ago saw their home almost triple in value over that time. This is why homeowners who bought their homes years ago are still happy with their decision.
Even if home price appreciation eases as the market cools this year, <a href="https://www.simplifyingthemarket.com/2022/09/22/what-experts-say-will-happen-with-home-prices-next-year/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="experts say" target="_blank" rel="noopener noreferrer">experts say</a> home prices are still expected to appreciate nationally in 2023. That means, in most markets, your home should grow in value over the next year even if the pace is slower than it was during the peak market frenzy when prices skyrocketed.
The alternative to buying a home is <a href="https://www.simplifyingthemarket.com/2022/09/30/why-buying-a-home-may-make-more-sense-than-renting-infographic/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="renting" target="_blank" rel="noopener noreferrer">renting</a>, and rental prices have been climbing for decades. So why rent and fight annual lease hikes for no long-term financial benefit? Instead, consider <a href="https://www.simplifyingthemarket.com/2022/09/15/buyers-are-regaining-some-of-their-negotiation-power-in-todays-housing-market/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="buying a home" target="_blank" rel="noopener noreferrer">buying a home</a>. It’s an investment in your future that could set you up for long-term gains.
Bottom Line
Don’t let the shifting market delay your dreams. Data shows home values typically appreciate over time, and that gives your net worth a nice boost. If you’re ready to start your journey to homeownership, let’s connect today.
2022-10-07T12:08:00-07:002023-01-20T12:36:20-07:00Broker Robertstag:sellsmhk.com,2012-09-20:22366The Cost of Waiting for Mortgage Rates To Go DownThe Cost of Waiting for Mortgage Rates To Go Down
<img width="750" height="410" src="https://files.mykcm.com/2022/10/03144306/20221003-KCM-Share.jpg" class="attachment-entry size-entry wp-post-image" alt="The Cost of Waiting for Mortgage Rates To Go Down | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2022/10/03144306/20221003-KCM-Share.jpg 750w, https://files.mykcm.com/2022/10/03144306/20221003-KCM-Share-600x328.jpg 600w, https://files.mykcm.com/2022/10/03144306/20221003-KCM-Share-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" /><br /><br />
Mortgage rates have <a href="https://www.freddiemac.com/pmms/archive" title="increased significantly" target="_blank" rel="noopener noreferrer">increased significantly</a> in recent weeks. And that may mean you have questions about what this means for you if you’re planning to buy a home. Here’s some information that can help you make an informed decision when you set your homebuying plans.
The Impact of Rising Mortgage Rates
As mortgage rates rise, they impact your purchasing power by raising the cost of buying a home and limiting how much you can comfortably afford. Here’s how it works.
Let’s assume you want to buy a $400,000 home (the median-priced home according to the National Association of Realtors is <a href="https://www.nar.realtor/newsroom/existing-home-sales-slipped-0-4-in-august" title="$389,500" target="_blank" rel="noopener noreferrer">$389,500</a>). If you’re trying to shop at that price point and keep your monthly payment about $2,500-2,600 or below, here’s how your purchasing power can change as mortgage rates climb (see chart below). The red shows payments above that threshold and the green indicates a payment within your target range.
<a href="https://files.mykcm.com/2022/10/03144304/20221004-MEM-Eng-1.png" target="_blank" rel="noopener noreferrer"><img class="aligncenter wp-image-105012" src="https://files.mykcm.com/2022/10/03144304/20221004-MEM-Eng-1.png" alt="The Cost of Waiting for Mortgage Rates To Go Down | MyKCM" width="600" height="450" /></a>
As the chart shows, as rates go up, the amount you can afford to borrow decreases and that may mean you have to look at homes at a different price point. That’s why it’s important to work with a <a href="https://www.simplifyingthemarket.com/2022/09/09/why-its-so-important-to-hire-a-pro-infographic/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="real estate advisor" target="_blank" rel="noopener noreferrer">real estate advisor</a> to understand how mortgage rates impact your monthly mortgage payment at various home loan amounts.
Are Mortgage Rates Going To Go Down?
The rise in mortgage rates and the resulting decrease in purchasing power may leave you wondering if you should wait for rates to go down before making your purchase. Realtor.com <a href="https://www.realtor.com/news/trends/column-homebuyers-have-hard-the-bad-news-heres-the-good/" title="says" target="_blank" rel="noopener noreferrer">says</a> this about where rates could go from here:
“Many homebuyers likely winced . . . upon hearing that the Federal Reserve yet again boosted its short-term interest rates by three-quarters of a percentage point—a move that’s pushing mortgage rates through the roof. And the already high rates are just going to get higher.”
So, if you’re waiting for mortgage rates to drop, you may be waiting for a while as the Federal Reserve works to get <a href="https://www.simplifyingthemarket.com/2022/09/27/how-an-expert-can-help-you-understand-inflation-mortgage-rates/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="inflation" target="_blank" rel="noopener noreferrer">inflation</a> under control.
And if you’re considering renting as your alternative while you wait it out, remember that’s going to get more expensive with time too. As Nadia Evangelou, Senior Economist and Director of Forecasting at the National Association of Realtors (NAR), <a href="https://www.nar.realtor/blogs/economists-outlook/instant-reaction-mortgage-rates-september-15-2022" title="says" target="_blank" rel="noopener noreferrer">says</a>:
“There is no doubt that these higher rates hurt housing affordability. Nevertheless, apart from borrowing costs, rents additionally rose at their highest pace in nearly four decades.”
Basically, it is true that it costs more to buy a home today than it did last year, but the same is true for renting. This means, either way, you’re going to be paying more. The difference is, with homeownership, you’re also gaining <a href="https://www.simplifyingthemarket.com/2022/09/20/watching-the-stock-market-check-the-value-of-your-home-for-good-news/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="equity" target="_blank" rel="noopener noreferrer">equity</a> over time which will help grow your <a href="https://www.simplifyingthemarket.com/2022/09/06/how-owning-a-home-builds-your-net-worth/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="net worth" target="_blank" rel="noopener noreferrer">net worth</a>. The question now becomes: what makes more sense for you?
Bottom Line
Each person’s situation is unique. To make the best decision for you, let's connect to explore your options.
2022-10-05T07:54:00-07:002023-01-20T12:38:39-07:00Broker Robertstag:sellsmhk.com,2012-09-20:22059Buyers Are Regaining Some of Their Negotiation Power in Today’s Housing MarketBuyers Are Regaining Some of Their Negotiation Power in Today’s Housing Market
<img width="750" height="410" src="https://files.mykcm.com/2022/09/13143439/20220915-KCM-Share.jpg" class="attachment-entry size-entry wp-post-image" alt="Buyers Are Regaining Some of Their Negotiation Power in Today’s Housing Market | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2022/09/13143439/20220915-KCM-Share.jpg 750w, https://files.mykcm.com/2022/09/13143439/20220915-KCM-Share-600x328.jpg 600w, https://files.mykcm.com/2022/09/13143439/20220915-KCM-Share-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" /><br /><br />
If you're thinking about buying a home today, there's welcome news. Even though it’s still a <a href="https://www.simplifyingthemarket.com/2022/08/04/why-its-still-a-sellers-market/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="sellers’ market" target="_blank" rel="noopener noreferrer">sellers’ market</a>, it’s a more moderate sellers’ market than last year. And the days of feeling like you may need to waive contingencies or pay drastically over asking price to get your offer considered may be coming to a close.
Today, you should have less competition and more negotiating power as a buyer. That’s because the intensity of buyer demand and <a href="https://www.simplifyingthemarket.com/2022/08/31/buyers-you-may-face-less-competition-as-bidding-wars-ease/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="bidding wars" target="_blank" rel="noopener noreferrer">bidding wars</a> is easing this year. So, if bidding wars were the biggest factor that had you sitting on the sidelines, here are two trends that may be just what you need to re-enter the market.
1. The Return of Contingencies
Over the last two years, more buyers were willing to skip important steps in the homebuying process, like the appraisal or inspection, to try to win a bidding war. But now, fewer people are waiving the <a href="https://www.simplifyingthemarket.com/2022/08/19/why-a-home-inspection-is-important-infographic/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="inspection" target="_blank" rel="noopener noreferrer">inspection</a> and appraisal.
The <a href="https://cdn.nar.realtor/sites/default/files/documents/2022-07-realtors-confidence-index-08-18-2022.pdf" title="latest data" target="_blank" rel="noopener noreferrer">latest data</a> from the National Association of Realtors (NAR) shows the percentage of buyers waiving their home inspection and appraisal is declining. And a <a href="https://www.realtor.com/research/2022-summer-sellers-survey/" title="recent survey" target="_blank" rel="noopener noreferrer">recent survey</a> from realtor.com confirms more sellers are accepting offers that include these conditions today. According to their August study:
95% of sellers reported buyers requested a home inspection
67% of sellers negotiated with buyers on repairs as a result of the inspection findings
This goes to show buyers are more able to include these conditions in their offers today and negotiate as needed based on the outcome of the inspection.
2. Sellers Are More Willing To Help with Closing Costs
Generally, closing costs range between <a href="https://www.simplifyingthemarket.com/2022/03/15/dont-get-caught-off-guard-by-closing-costs/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="2% and 5%" target="_blank" rel="noopener noreferrer">2% and 5%</a> of the purchase price for the home. Before the pandemic, it was a common negotiation tactic for sellers to cover some of the buyer’s closing costs to sweeten the deal. This didn't happen as much during the peak buyer frenzy over the past two years.
Today, as the market shifts and demand slows, data from realtor.com suggests this is making a comeback. A <a href="https://news.move.com/2022-08-30-Realtor-com-R-Survey-Bargaining-Power-is-Back-92-of-Recent-Sellers-Accepted-Buyer-Friendly-Terms" title="recent article" target="_blank" rel="noopener noreferrer">recent article</a> shows 32% of sellers paid some or all of their buyer’s closing costs. This may be a negotiation tool you’ll see as you go to purchase a home. Just keep in mind, limits on closing cost credits are set by your lender and can vary by state and loan type. Work closely with your loan advisor to understand how much a seller can contribute to closing costs in your area.
Bottom Line
Regardless of the extremely competitive housing market of the past several years, today’s data suggests negotiations are starting to come back on the table. This is good news if you're planning to enter the housing market. To find out how the market is shifting in our area, let's connect.
2022-09-19T11:00:00-07:002023-01-20T12:39:14-07:00Broker Robertstag:sellsmhk.com,2012-09-20:21849You May Face Less Competition as Bidding Wars EaseBuyers: You May Face Less Competition as Bidding Wars Ease
<img width="750" height="410" src="https://files.mykcm.com/2022/08/30093818/20220831-KCM-Share.jpg" class="attachment-entry size-entry wp-post-image" alt="Buyers: You May Face Less Competition as Bidding Wars Ease | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2022/08/30093818/20220831-KCM-Share.jpg 750w, https://files.mykcm.com/2022/08/30093818/20220831-KCM-Share-600x328.jpg 600w, https://files.mykcm.com/2022/08/30093818/20220831-KCM-Share-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" /><br /><br />
One of the top stories in recent real estate headlines was the intensity and frequency of bidding wars. With so many buyers looking to purchase a home and so few of them available for sale, fiercely competitive bidding wars became the norm during the pandemic – and it drove <a href="https://www.simplifyingthemarket.com/2022/08/11/what-does-the-rest-of-the-year-hold-for-home-prices/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="home prices" target="_blank" rel="noopener noreferrer">home prices</a> up. If you tried to buy a house over the past two years, you probably experienced this firsthand and may have been outbid on several homes along the way.
But here’s the news you’ve been waiting for: data shows clear signs bidding wars are easing this year.
According to the National Association of Realtors (NAR), the average <a href="https://cdn.nar.realtor/sites/default/files/documents/2022-07-realtors-confidence-index-08-18-2022.pdf" title="number of offers" target="_blank" rel="noopener noreferrer">number of offers</a> on recently sold homes has declined considerably over the past few months (see graph below):
<a href="https://files.mykcm.com/2022/08/30093816/20220831-MEM-Eng.png" target="_blank" rel="noopener noreferrer"><img class="aligncenter wp-image-104405" src="https://files.mykcm.com/2022/08/30093816/20220831-MEM-Eng.png" alt="Buyers: You May Face Less Competition as Bidding Wars Ease | MyKCM" width="600" height="450" /></a>
The graph shows homes were seeing a high of around five offers earlier this year. But the latest data shows that average was down to just shy of three offers per recently sold home. This shift is happening largely because rising mortgage rates moderated buyer demand and slowed home sales, resulting in a growing <a href="https://www.simplifyingthemarket.com/2022/08/25/why-you-may-want-to-start-your-home-search-today/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="supply" target="_blank" rel="noopener noreferrer">supply</a> of homes on the market. Essentially, more choices for buyers.
What This Means for You
If you put your home search on pause because you were outbid last year or because you didn’t want to deal with the peak intensity of bidding wars, you can breathe a welcome sigh of relief. While it’s still a <a href="https://www.simplifyingthemarket.com/2022/08/04/why-its-still-a-sellers-market/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="sellers’ market" target="_blank" rel="noopener noreferrer">sellers’ market</a>, an uptick in inventory gives you a window of opportunity to jump back in. You may still be competing with some buyers, but it likely won’t be anything like it was just a few short months ago.
Bottom Line
If you put your plans on pause because of intense bidding wars in recent years, it may be time to kick off your home search. Today, bidding wars are easing and that may mean less competition for you as a buyer. If you’re serious about buying a home or making a move, let’s connect to get started today.
2022-09-07T14:11:00-07:002023-01-20T12:39:47-07:00Broker Robertstag:sellsmhk.com,2012-09-20:21721Why You May Want To Start Your Home Search TodayWhy You May Want To Start Your Home Search Today
<img width="750" height="410" src="https://files.mykcm.com/2022/08/24123207/20220825-KCM-Share.jpg" class="attachment-entry size-entry wp-post-image" alt="Why You May Want To Start Your Home Search Today | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2022/08/24123207/20220825-KCM-Share.jpg 750w, https://files.mykcm.com/2022/08/24123207/20220825-KCM-Share-600x328.jpg 600w, https://files.mykcm.com/2022/08/24123207/20220825-KCM-Share-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" /><br /><br />
If you’re thinking about <a href="https://www.simplifyingthemarket.com/2022/08/10/is-the-shifting-market-a-challenge-or-an-opportunity-for-homebuyers/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="buying a home" target="_blank" rel="noopener noreferrer">buying a home</a>, you likely have a lot of factors on your mind. You’re weighing your own needs against higher <a href="https://www.simplifyingthemarket.com/2022/08/05/housing-market-forecast-for-the-rest-of-2022-infographic/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="mortgage rates" target="_blank" rel="noopener noreferrer">mortgage rates</a>, today’s home prices, and more to try to decide if you want to jump into the market. While some buyers may wait things out, there’s a reason serious buyers are making moves right now, and that’s the growing number of homes for sale.
So far this year, <a href="https://www.simplifyingthemarket.com/2022/07/26/a-window-of-opportunity-for-homebuyers/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="housing inventory" target="_blank" rel="noopener noreferrer">housing inventory</a> has been increasing and that’s making the prospect of finding your dream home less difficult. While there are always reasons you could delay making a big decision, there are also always reasons to consider moving forward. And having a <a href="https://www.simplifyingthemarket.com/2022/07/22/great-news-about-housing-inventory-infographic/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="growing number of options" target="_blank" rel="noopener noreferrer">growing number of options</a> for your home search may be exactly what you needed to feel more confident in making a move.
What’s Causing Housing Inventory To Grow?
As new data comes out, we're getting an updated picture of why housing supply is increasing so much this year. As Bill McBride, Author of Calculated Risk, <a href="https://calculatedrisk.substack.com/p/1st-look-at-local-housing-markets-fb2" title="explains" target="_blank" rel="noopener noreferrer">explains</a>:
“We are seeing a significant change in inventory, but no pickup in new listings. Most of the increase in inventory so far has been due to softer demand - likely because of higher mortgage rates.”
Basically, the inventory growth is primarily from homes staying on the market a bit longer (known as active listings). And that’s happening because higher mortgage rates and <a href="https://www.simplifyingthemarket.com/2022/08/11/what-does-the-rest-of-the-year-hold-for-home-prices/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="home prices" target="_blank" rel="noopener noreferrer">home prices</a> have helped moderate the peak frenzy of buyer demand.
The graph below uses <a href="https://www.realtor.com/research/data/" title="data" target="_blank" rel="noopener noreferrer">data</a> from realtor.com to show how much active listings have risen over the past five months as a result (shown in green):
<a href="https://files.mykcm.com/2022/08/24123205/20220825-MEM-Eng-1.png" target="_blank" rel="noopener noreferrer"><img class="aligncenter wp-image-104287" src="https://files.mykcm.com/2022/08/24123205/20220825-MEM-Eng-1.png" alt="Why You May Want To Start Your Home Search Today | MyKCM" width="600" height="450" /></a>
Why This Growth Is Good News for You
Regardless of the source, the increase in available housing supply is good for buyers. More housing supply actively for sale means you have more options as your search for your next home. A <a href="https://www.realtor.com/research/july-2022-data/" title="recent article" target="_blank" rel="noopener noreferrer">recent article</a> from realtor.com explains just how significant the inventory growth has been and why it’s good news for your plans to buy:
“Nationally, the inventory of homes actively for sale on a typical day in July increased by 30.7% over the past year, the largest increase in inventory in the data history and higher than last month’s growth rate of 18.7% which was itself record-breaking. This amounted to 176,000 more homes actively for sale on a typical day in July compared to the previous year and more choice for buyers who are still looking for a new home.”
The growth this year is certainly good news for you, especially if you’ve had trouble finding a home that meets your needs. If you start your search today, those additional options should make it less difficult to find a home than it would have been over the past two years.
Bottom Line
If you’re ready to jump into the market and take advantage of the increasing supply of homes for sale, let’s connect today. The opportunity is knocking, will you answer?
2022-08-29T09:46:00-07:002023-01-20T12:40:01-07:00Broker Robertstag:sellsmhk.com,2012-09-20:21458The Do's & Don'ts of Purchasing a Home
<a href="https://www.sellsmhk.com/#findanagent">Finding an Agent</a>
<a href="https://www.sellsmhk.com/#preapproval">Pre-approval</a>
<a href="https://www.sellsmhk.com/#touringhomes">Touring Homes</a>
<a href="https://www.sellsmhk.com/#makeanoffer">Making an Offer</a>
<a href="https://www.sellsmhk.com/#inspections">Inspections</a>
<a href="https://www.sellsmhk.com/#Insurance">Insurance </a>
<a href="https://www.sellsmhk.com/#appraisal">Appraisal </a>
<a href="https://www.sellsmhk.com/#titlecommitment">Title Commitment</a>
<a href="https://www.sellsmhk.com/#walkthrough">Final Walk Through</a>
<a href="https://www.sellsmhk.com/#closingday">Closing Day</a>
<img src="https://assets.site-static.com/userfiles/1803/image/elsaspeicher/Video_Content_YouTube_Thumbnail.png" width="1280" height="720" />
Do interview your agent.
When choosing an agent to represent you in the purchase of a new home, it is important to consider their level of knowledge and expertise. You can accomplish this by interviewing more than one agent to compare how they communicate, educate you, and most importantly how many transactions they have executed. When interviewing a new agent, an important question to ask is: "How involved is the broker in assisting in each transaction?" As the broker will help ensure the agent is providing the best representation and options available in the current market environment.
Don't assume your agent is formally hired
Your agent is responsible for providing information regaurding agency relationships. Make sure they have established with you what agreement you are under.
<a href="https://www.sellsmhk.com/#preapproval"><img src="https://assets.site-static.com/userfiles/1803/image/elsaspeicher/Video_Content_YouTube_Thumbnail_1.png" width="1280" height="720" /></a>
<a id="preapproval"></a>Do create a realistic budget.
Make sure you seek pre-approval in the very beginning before you see your first house, because this will help you establish a realistic budget and will provide you comfort with the monthly payment. If you have been looking at homes online, understand that online payment calculators are inaccurate, because they don’t take into consideration things that a mortgage lender will. Nothing is worse than falling in love with a home that you find out you can’t afford or don’t want to afford in your monthly payment.
Don't change jobs or make any big purchases
After you get pre-approved, you won't want to make any big changes in your finances. Avoid changing jobs, or making any big purchaces to bypass any issues this may cause with your pre-approval amount.
<img src="https://assets.site-static.com/userfiles/1803/image/elsaspeicher/Video_Content_YouTube_Thumbnail_2.png" width="1280" height="720" />
<a id="touringhomes"></a>Do reasearch, take good notes, and consider resale value.
I think we can all agree that the fun part of the home search is touring the homes. Before you go into any homes you’ll want to do some research about each of the homes and eighborhoods to see if there are any deal breakers up front, such as, deferred maintenance, or unknown age of systems or roof. When you get to the homes be sure to take good notes to refer back to, and discuss the resale value with your agent.
Don't tour more than three homes at once
While it may seem fun to tour every home the market has to offer, that isn't beneficial to your search. Once you have done your research, try to narrow down your list to 3. This way you aren't overwhelming yourself with the different features of many homes. This will keep you from wearing yourself out durung the house hunting process.
<img src="https://assets.site-static.com/userfiles/1803/image/elsaspeicher/Video_Content_YouTube_Thumbnail_3.png" width="1280" height="720" />
<a id="makeanoffer"></a>Do consider more than just the purchase price.
When the time comes to make an offer on a property, talk with your agent about the terms of the contract. To establish what is most important to you as the buyer. While the purchase price is typically thought of as the most important part of the offer, it is easy to forget about other terms that can help make your offer more appealing and benefit you as the buyer.
Don't make an offer without doing your homework.
When you find the house you are ready to make an offer on, make sure your agent provides you with comps from the area to determine an offer that is comfortable to you, and makes sense to the seller.
<img src="https://assets.site-static.com/userfiles/1803/image/elsaspeicher/Video_Content_YouTube_Thumbnail_5.png" width="1280" height="720" />
<a id="inspections"></a>Do hire a professional inspector.
Once you're under contract on your new home, and you're deciding which home inspector to choose: Understand that not all home inspectors are created equal or have the knowledge to see past superficial or cosmetic items. While it may seem tempting to get a “deal” on your inspection by choosing the cheapest inspector, it will end up costing you in the end. A good home inspector will uncover not just superficial items but also deferred maintenance and issues that need additional inspection by a separate third party vendor. To ensure you have a good understanding of immediate and long term maintenance items to address. Besides, you don’t want any surprises after taking possession do you?
Don't always skip inspections
Buyers may be tempted to waive inspections when in a competitive market. Talk with your agent about the home and neighborhood to see if waiving inspections is a realistic option for you. Don't feel pressured to skip inspections, your offer can be strengthened in other ways.
<img src="https://assets.site-static.com/userfiles/1803/image/elsaspeicher/Video_Content_YouTube_Thumbnail_6.png" width="1280" height="720" />
<a id="Insurance"></a>Do get home insurance
Your new home will be your biggest financial asset so most definitely making sure it's protected is important. Getting home insurance, it is important to shop around to find the best quote by comparing not only the difference in price but also the coverage. Most homeowners find out they don’t have the proper coverage because something bad happens and it is too late. Make sure you are asking each agent what is covered and what is not covered.
Don't wait until last minute to get insurance quotes.
A good time to get insurance quotes is during the inspection period, when you first go under contract. With everything going on leading up to closing, you don't want to add on the stress of finding good home insurance.
<img src="https://assets.site-static.com/userfiles/1803/image/elsaspeicher/13_Video_Content_YouTube_Thumbnail.png" width="1280" height="720" />
<a id="appraisal"></a>Do address appraisal required repairs.
If you are getting a VA or FHA loan it is a good idea to address any potential repairs that may be required from the appraiser during inspection negotiations in order to avoid last minute delays.
Don't wait to pay for the appraisal.
Paying for the appraisal upfront will save you the headache of not getting it paid in time and having closing delayed.
<img src="https://assets.site-static.com/userfiles/1803/image/elsaspeicher/15_Video_Content_YouTube_Thumbnail.png" width="1280" height="720" />
<a id="titlecommitment"></a>Do review the title commitment.
The title commitment holds crucial information about the property you are purchasing, so don't overlook it.
Don't be afraid to ask questions.
The title commitment can be tricky to interpret so don't hesistate to ask your agent questions.
<img src="https://assets.site-static.com/userfiles/1803/image/elsaspeicher/Video_Content_YouTube_Thumbnail_7.png" width="1280" height="720" />
<a id="walkthrough"></a>Do make sure the property is in the conditon that you and the seller agreed upon
When doing a final walkthrough check high & low to ensure the property is clean. Do not overlook any damage done to the property that could have been caused by the seller when moving out. Make sure that the items that were conveyed with the property are still present & working properly.
<img src="https://assets.site-static.com/userfiles/1803/image/elsaspeicher/19_Video_Content_YouTube_Thumbnail.png" width="1280" height="720" />
<a id="closingday"></a>Do make sure you have your certifies funds, and a valid ID
Don't wait until the day of closing to acquire your funds
On the day of closing any funds needed at the closing table will need to be in the form of certified funds. Certified funds would be a cashiers check, money order or wire transfer. Make sure you have any necessary funds in advance, as banks will have limits on how much money you can get the same day. If you choose to wire in funds, make sure you do that in advance of closing to ensure it arrives on time. Make sure you also have a current, valid government issued ID. Lastly, everyone that is purchasing the property must be present.
2022-08-10T12:30:00-07:002022-12-09T10:27:40-07:00Broker Robertstag:sellsmhk.com,2012-09-20:21414 Buying a Home May Make More Financial Sense Than Renting OneBuying a Home May Make More Financial Sense Than Renting One
<img width="750" height="410" src="https://files.mykcm.com/2022/08/02130023/20220803-KCM-Share.jpg" class="attachment-entry size-entry wp-post-image" alt="Buying a Home May Make More Financial Sense Than Renting One | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2022/08/02130023/20220803-KCM-Share.jpg 750w, https://files.mykcm.com/2022/08/02130023/20220803-KCM-Share-600x328.jpg 600w, https://files.mykcm.com/2022/08/02130023/20220803-KCM-Share-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" /><br /><br />
If rising home prices leave you wondering if it makes more sense to <a href="https://www.simplifyingthemarket.com/2022/07/15/should-i-rent-or-should-i-buy-infographic/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="rent or buy" target="_blank" rel="noopener noreferrer">rent or buy</a> a home in today’s housing market, consider this. It’s not just <a href="https://www.simplifyingthemarket.com/2022/07/25/whats-causing-ongoing-home-price-appreciation/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="home prices" target="_blank" rel="noopener noreferrer">home prices</a> that have risen in recent years – rental prices have skyrocketed as well. As a recent article from realtor.com <a href="https://www.realtor.com/research/june-2022-rent/" title="says" target="_blank" rel="noopener noreferrer">says</a>:
“The median rent across the 50 largest US metropolitan areas reached $1,876 in June, a new record level for Realtor.com data for the 16th consecutive month.”
That means <a href="https://www.simplifyingthemarket.com/2022/07/21/think-home-prices-are-going-to-fall-think-again/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="rising prices" target="_blank" rel="noopener noreferrer">rising prices</a> will likely impact your housing plans either way. But there are a few key differences that could make <a href="https://www.simplifyingthemarket.com/2022/07/13/should-i-buy-a-home-right-now/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="buying a home" target="_blank" rel="noopener noreferrer">buying a home</a> a more worthwhile option for you.
If You Need More Space, Buying a Home May Be More Affordable
What you may not realize is that, according to the latest data from <a href="https://www.realtor.com/research/june-2022-rent/" title="realtor.com" target="_blank" rel="noopener noreferrer">realtor.com</a> and the <a href="https://cdn.nar.realtor/sites/default/files/documents/hai-05-2022-housing-affordability-index-2022-07-08.pdf" title="National Association of Realtors" target="_blank" rel="noopener noreferrer">National Association of Realtors</a> (NAR), it may actually be more affordable to buy than rent depending on how many bedrooms you need. The graph below uses the median rental payment and median mortgage payment across the country to show why.
<a href="https://files.mykcm.com/2022/08/02130018/20220803-MEM-Eng.png" target="_blank" rel="noopener noreferrer"><img class="aligncenter wp-image-103739" src="https://files.mykcm.com/2022/08/02130018/20220803-MEM-Eng.png" alt="Buying a Home May Make More Financial Sense Than Renting One | MyKCM" width="600" height="450" /></a>
As the graph conveys, if you need two or more bedrooms, it may actually be more affordable to buy a home even as prices rise. While this doesn’t take into consideration the interest deduction or other financial advantages that come with owning a home, it does help paint the picture that it may be more affordable to buy then rent for that unit size based on nationwide averages. So, if one of the factors motivating you to move is a desire for more space, this could be the added encouragement you need to consider homeownership.
Homeownership Also Provides Stability and a Chance To Grow Your Wealth
In addition to being more affordable depending on how many bedrooms you need, buying has two other key benefits: payment stability and equity.
When you <a href="https://www.simplifyingthemarket.com/2022/07/27/want-to-buy-a-home-now-may-be-the-time/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="buy a home" target="_blank" rel="noopener noreferrer">buy a home</a>, you lock in your monthly payment with your fixed-rate mortgage. And that’s especially important in today’s <a href="https://www.simplifyingthemarket.com/2022/07/20/should-you-buy-a-home-with-inflation-this-high/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="inflationary economy" target="_blank" rel="noopener noreferrer">inflationary economy</a>. With <a href="https://www.simplifyingthemarket.com/2022/06/23/homeownership-is-a-great-hedge-against-the-impact-of-rising-inflation/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="inflation" target="_blank" rel="noopener noreferrer">inflation</a>, prices rise across the board for things like gas, groceries, and more. Locking in your housing payment, which is likely your largest monthly expense, can provide greater long-term stability and help shield you from those rising expenses moving forward. Renting doesn’t provide that same predictability. A recent article from CNET <a href="https://www.cnet.com/personal-finance/mortgages/should-you-buy-a-home-in-2022-or-wait-3-factors-to-consider/" title="explains" target="_blank" rel="noopener noreferrer">explains</a> it like this:
“...if you buy a house and secure a fixed-rate mortgage, that means that no matter how much prices or interest rates go up, your fixed payment will stay the same every month. That's an advantage over renting since there's a good chance your landlord will raise your rent to counter inflationary pressures.”
Not to mention, when you buy, you have the chance to build <a href="https://www.simplifyingthemarket.com/2022/06/21/the-average-homeowner-gained-64k-in-equity-over-the-past-year/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="equity" target="_blank" rel="noopener noreferrer">equity</a>, which in turn grows your <a href="https://www.simplifyingthemarket.com/2022/03/28/a-key-to-building-wealth-is-homeownership/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="net worth" target="_blank" rel="noopener noreferrer">net worth</a>. It works like this. As you pay down your home loan over time and as home values continue to appreciate, so does your <a href="https://www.simplifyingthemarket.com/2022/07/06/how-your-equity-can-grow-over-time/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="equity" target="_blank" rel="noopener noreferrer">equity</a>. And that equity can make it easier to <a href="https://www.simplifyingthemarket.com/2022/07/08/why-growing-home-equity-is-great-news-if-you-plan-to-move-infographic/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="fuel a move" target="_blank" rel="noopener noreferrer">fuel a move</a> into a future home if you decide you need a bigger home later on. Again, the CNET article mentioned above helps explain:
“Homeownership is still considered one of the most reliable ways to build wealth. When you make monthly mortgage payments, you're building equity in your home that you can tap into later on. When you rent, you aren't investing in your financial future the same way you are when you're paying off a mortgage.”
Bottom Line
If you’re trying to decide whether to keep renting or buy a home, let’s connect to explore your options. With home equity and a shield against inflation on the line, it may make more sense to buy a home if you’re able to.
2022-08-08T11:46:00-07:002023-01-20T12:40:53-07:00Broker Robertstag:sellsmhk.com,2012-09-20:21341Want To Buy a Home? Now May Be the Time.Want To Buy a Home? Now May Be the Time.
<img width="750" height="410" src="https://files.mykcm.com/2022/07/26140447/20220727-KCM-Share.jpg" class="attachment-entry size-entry wp-post-image" alt="Want To Buy a Home? Now May Be the Time. | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2022/07/26140447/20220727-KCM-Share.jpg 750w, https://files.mykcm.com/2022/07/26140447/20220727-KCM-Share-600x328.jpg 600w, https://files.mykcm.com/2022/07/26140447/20220727-KCM-Share-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" /><br /><br />
There are <a href="https://www.simplifyingthemarket.com/2022/07/22/great-news-about-housing-inventory-infographic/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="more homes for sale" target="_blank" rel="noopener noreferrer">more homes for sale</a> today than at any time last year. So, if you tried to <a href="https://www.simplifyingthemarket.com/2022/07/13/should-i-buy-a-home-right-now/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="buy a home" target="_blank" rel="noopener noreferrer">buy a home</a> last year and were outbid or out priced, now may be your opportunity. The number of homes for sale in the U.S. has been growing over the past four months as rising <a href="https://www.simplifyingthemarket.com/2022/07/26/a-window-of-opportunity-for-homebuyers/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="mortgage rates" target="_blank" rel="noopener noreferrer">mortgage rates</a> help slow the frenzy the <a href="https://www.simplifyingthemarket.com/2022/07/14/housing-experts-say-this-isnt-a-bubble/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="housing market" target="_blank" rel="noopener noreferrer">housing market</a> saw during the pandemic.
Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), <a href="https://www.bloomberg.com/news/articles/2022-07-08/should-i-buy-a-house-with-rates-lower-experts-say-prices-may-fall-more" title="explains" target="_blank" rel="noopener noreferrer">explains</a> why the shifting market creates a window of opportunity for you:
“This is an opportunity for people with a secure job to jump into the market, when other people are a little hesitant because of a possible recession. . . They’ll have fewer buyers to compete with.”
Two Reasons There Are More Homes for Sale
The first reason the market is seeing more homes available for sale is the number of sales happening each month has decreased. This slowdown has been caused by rising mortgage rates and rising <a href="https://www.simplifyingthemarket.com/2022/07/25/whats-causing-ongoing-home-price-appreciation/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="home prices" target="_blank" rel="noopener noreferrer">home prices</a>, leading many to postpone or put off buying. The graph below uses data from realtor.com to show how <a href="https://www.realtor.com/research/data/" title="active real estate listings" target="_blank" rel="noopener noreferrer">active real estate listings</a> have risen over the past four months as a result.
<a href="https://files.mykcm.com/2022/07/26140440/20220727-MEM-Eng-1.png" target="_blank" rel="noopener noreferrer"><img class="aligncenter wp-image-103610" src="https://files.mykcm.com/2022/07/26140440/20220727-MEM-Eng-1.png" alt="Want To Buy a Home? Now May Be the Time. | MyKCM" width="600" height="450" /></a>
The second reason the market is seeing <a href="https://www.simplifyingthemarket.com/2022/06/28/a-key-opportunity-for-homebuyers/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="more homes available" target="_blank" rel="noopener noreferrer">more homes available</a> for sale is because the number of people selling their homes is also rising. The graph below outlines <a href="https://www.realtor.com/research/data/" title="new monthly listings" target="_blank" rel="noopener noreferrer">new monthly listings</a> coming onto the market compared to last year. As the graph shows, for the past three months, more people have put their homes on the market than the previous year.
<a href="https://files.mykcm.com/2022/07/26140443/20220727-MEM-Eng-2.png" target="_blank" rel="noopener noreferrer"><img class="aligncenter wp-image-103611" src="https://files.mykcm.com/2022/07/26140443/20220727-MEM-Eng-2.png" alt="Want To Buy a Home? Now May Be the Time. | MyKCM" width="600" height="450" /></a>
Bottom Line
The number of homes for sale across the country is growing, and that means more options for those thinking about buying a home. This is the opportunity many have been waiting for who were outbid or out priced last year.
2022-08-03T08:36:00-07:002023-01-20T12:41:22-07:00Broker Robertstag:sellsmhk.com,2012-09-20:21260A Window of Opportunity for HomebuyersA Window of Opportunity for Homebuyers
<img width="750" height="410" src="https://files.mykcm.com/2022/07/22141933/20220726-KCM-Share.jpg" class="attachment-entry size-entry wp-post-image" alt="A Window of Opportunity for Homebuyers | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2022/07/22141933/20220726-KCM-Share.jpg 750w, https://files.mykcm.com/2022/07/22141933/20220726-KCM-Share-600x328.jpg 600w, https://files.mykcm.com/2022/07/22141933/20220726-KCM-Share-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" /><br /><br />
Mortgage rates are much higher today than they were at the beginning of the year, and that’s had a clear impact on the <a href="https://www.simplifyingthemarket.com/2022/07/12/expert-housing-market-forecasts-for-the-second-half-of-the-year/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="housing market" target="_blank" rel="noopener noreferrer">housing market</a>. As a result, the market is seeing a shift back toward the range of pre-pandemic levels for buyer demand and home sales.
But the transition back toward pre-pandemic levels isn’t a bad thing. In fact, the years leading up to the pandemic were some of the best the housing market has seen. That’s why, as the market undergoes this shift, it’s important to compare today not to the abnormal pandemic years, but to the most recent normal years to show how the current <a href="https://www.simplifyingthemarket.com/2022/07/14/housing-experts-say-this-isnt-a-bubble/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="housing market" target="_blank" rel="noopener noreferrer">housing market</a> is still strong.
Higher Mortgage Rates Are Moderating the Housing Market
The <a href="https://www.showingtime.com/showingtime-showing-index/" title="ShowingTime Showing Index" target="_blank" rel="noopener noreferrer">ShowingTime Showing Index</a> tracks the traffic of home showings according to agents and brokers. It’s also a good indication of buyer demand over time. Here’s a look at their <a href="https://www.showingtime.com/blog/may-2022-showing-index-results/" title="data" target="_blank" rel="noopener noreferrer">data</a> going back to 2017 (see graph below):
<a href="https://files.mykcm.com/2022/07/22141930/20220726-MEM-Eng-1.png" target="_blank" rel="noopener noreferrer"><img class="aligncenter wp-image-103565" src="https://files.mykcm.com/2022/07/22141930/20220726-MEM-Eng-1.png" alt="A Window of Opportunity for Homebuyers | MyKCM" width="600" height="450" /></a>
Here’s a breakdown of the story this data tells:
The 2017 through early 2020 numbers (shown in gray) give a good baseline of pre-pandemic demand. The steady up and down trends seen in each of these years show typical seasonality in the market.
The blue on the graph represents the pandemic years. The height of those blue bars indicates home showings skyrocketed during the pandemic.
The most recent data (shown in green), indicates buyer demand is moderating back toward more pre-pandemic levels.
This shows that buyer demand is coming down from levels seen over the past two years, and the frenzy in real estate is easing because of higher mortgage rates. For you, that means buying your next home should be <a href="https://www.simplifyingthemarket.com/2022/06/28/a-key-opportunity-for-homebuyers/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="less challenging" target="_blank" rel="noopener noreferrer">less challenging</a> than it would’ve been during the pandemic because there is more inventory available.
Higher Mortgage Rates Slow the Once Frenzied Pace of Home Sales
As mortgage rates started to rise this year, other shifts began to occur too. One additional example is the slowing pace of home sales. Using <a href="https://www.nar.realtor/newsroom/existing-home-sales-slid-5-4-in-june" title="data" target="_blank" rel="noopener noreferrer">data</a> from the National Association of Realtors (NAR), here’s a look at <a href="https://www.nar.realtor/research-and-statistics/housing-statistics/existing-home-sales" title="existing home sales" target="_blank" rel="noopener noreferrer">existing home sales</a> going all the way back to 2017. Much like the previous graph, a similar trend emerges (see graph below):
<a href="https://files.mykcm.com/2022/07/22141936/20220726-MEM-Eng-2.png" target="_blank" rel="noopener noreferrer"><img class="aligncenter wp-image-103567" src="https://files.mykcm.com/2022/07/22141936/20220726-MEM-Eng-2.png" alt="A Window of Opportunity for Homebuyers | MyKCM" width="600" height="450" /></a>
Again, the data paints a picture of the shift:
The pre-pandemic years (shown in gray) establish a baseline of the number of existing home sales in more typical years.
The pandemic years (shown in blue) exceeded the level of sales seen in previous years. That’s largely because low mortgage rates during that time spurred buyer demand and home sales to new heights.
This year (shown in green), the market is feeling the impact of higher mortgage rates and that’s moderating buyer demand (and by extension home sales). That’s why the expectation for home sales this year is closer to what the market saw in 2018-2019.
Why Is All of This Good News for You?
Both of those factors have opened up a window of opportunity for homeowners <a href="https://www.simplifyingthemarket.com/2022/07/18/wondering-where-youll-move-if-you-sell-your-house-today/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="looking to move" target="_blank" rel="noopener noreferrer">looking to move</a> and for <a href="https://www.simplifyingthemarket.com/2022/07/13/should-i-buy-a-home-right-now/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="buyers" target="_blank" rel="noopener noreferrer">buyers</a> looking to purchase a home. As demand moderates and the pace of home sales slows, housing inventory is able to grow – and that gives you <a href="https://www.simplifyingthemarket.com/2022/06/17/more-listings-are-coming-onto-the-market-infographic/?a=211283-c10bc32a9dbaffd3599441e9b7b62d53" title="more options" target="_blank" rel="noopener noreferrer">more options</a> for your home search.
So don’t let the headlines about the market cooling or moderating scare you. The housing market is still strong; it’s just easing off from the unsustainable frenzy it saw during the height of the pandemic – and that’s a good thing. It opens up new opportunities for you to find a home that meets your needs.
Bottom Line
The housing market is undergoing a shift because of higher mortgage rates, but the market is still strong. If you’ve been looking to buy a home over the last couple of years and it felt impossible to do, now may be your opportunity. Buying a home right now isn’t easy, but there is more opportunity for those who are looking.
2022-07-27T14:12:00-07:002023-01-20T12:41:38-07:00Broker Robertstag:sellsmhk.com,2012-09-20:2096510 Steps to Home BuyingHow to Buy a Home in Manhattan- In Ten Simple Steps
<img src="https://assets.site-static.com/userfiles/1803/image/elsaspeicher/1.png" width="1280" height="720" />
Not all real estate agents are created equal. Each agent has a different area of expertise and level of knowledge. When searching for an agent, you want an agent who puts your interests first. Another good quality to look for in an agent is someone who is knowledgeable about the neighborhoods and has technology in place to streamline the search process.
<img src="https://assets.site-static.com/userfiles/1803/image/elsaspeicher/2.png" width="1280" height="720" />
A loan officer will help you understand the financial responsibility of your monthly mortgage payment and the loan process. Based on your income and credit worthiness, the loan officer will help you determine how much the bank will lend you, which helps you establish a realistic price range. In a fast paced market, it is extremely important to obtain a pre-approval letter for your mortgage loan (unless you are paying for the home with all cash).
<img src="https://assets.site-static.com/userfiles/1803/image/elsaspeicher/3.png" width="1280" height="720" />
Once you have a trusted agent and loan officer, it is time to start touring homes that match your price range and criteria. We work with the sellers and your schedule to identify the best time to tour the home and get you inside as quickly as possible.
<img src="https://assets.site-static.com/userfiles/1803/image/elsaspeicher/4.png" width="1280" height="720" />
Once you identify a home that meets your needs, its time to write an offer. Your offer is more than just the price, it's about the terms as well. We will help you understand the current market conditions and structure your offer to get it accepted in today's market. Once the offer is submitted comes the hardest part... waiting.
<img src="https://assets.site-static.com/userfiles/1803/image/elsaspeicher/5.png" width="1280" height="720" />
After your offer is accepted, you open a window of time to perform any inspections to find out any unacceptable conditions about the property. We work with you to establish which inspections you want to perform, schedule the inspections then review the reports with you to establish a strategy on moving forward.
<img src="https://assets.site-static.com/userfiles/1803/image/elsaspeicher/6.png" width="1280" height="720" />
A home insurance policy can protect you from many disasters such as fire or theft, plus other types of financial losses. This is something you want to have in place to protect your largest financial asset. If you are obtaining a loan, lenders will require you to have homeowner's insurance in place.
<img src="https://assets.site-static.com/userfiles/1803/image/elsaspeicher/7.png" width="1280" height="720" style="font-size: 17px;" />
The appraiser is an independent third party who visits the property to determine if you are paying a fair price for the home. If you are getting a home loan, your loan officer will arrange for an appraiser to asses the value. If you are paying with all cash, you will decide at the time of the offer if you want the opportunity to have an appraisal performed.
<img src="https://assets.site-static.com/userfiles/1803/image/elsaspeicher/8.png" width="1280" height="720" />
A title company will perform a search to make sure that the seller can convey clear title and transfer the deed to you as the new owner on closing day.
<img src="https://assets.site-static.com/userfiles/1803/image/elsaspeicher/9.png" width="1280" height="720" />
You will want to perform a final walk through with your agent to ensure the home is in the same condition it was at the time you wrote the offer.
<img src="https://assets.site-static.com/userfiles/1803/image/elsaspeicher/10.png" width="1280" height="720" />
The day you sign paperwork, acquire the new debt and get the keys to start moving in.
<br /><br />
2022-07-07T12:04:00-07:002022-12-09T10:47:43-07:00Broker Robertstag:sellsmhk.com,2012-09-20:20735Things To Avoid After Applying for a Home Loan
<img width="750" height="410" src="https://files.mykcm.com/2022/06/17141322/20220622-KCM-Share.jpg" class="attachment-entry size-entry wp-post-image" alt="Things To Avoid After Applying for a Home Loan | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2022/06/17141322/20220622-KCM-Share.jpg 750w, https://files.mykcm.com/2022/06/17141322/20220622-KCM-Share-600x328.jpg 600w, https://files.mykcm.com/2022/06/17141322/20220622-KCM-Share-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" />
Once you’ve applied for a mortgage to <a href="https://www.mykcm.com/2022/06/08/what-are-the-best-options-for-todays-first-time-homebuyers/" title="buy a home">buy a home</a>, there are some key things to keep in mind. While it’s exciting to start thinking about moving in and decorating, be careful when it comes to making any big purchases. Here are a few things you may not realize you need to avoid after applying for your home loan.
Don’t Deposit Large Sums of Cash
Lenders need to source your money, and cash isn’t easily traceable. Before you deposit any amount of cash into your accounts, discuss the proper way to document your transactions with your loan officer.
Don’t Make Any Large Purchases
It’s not just home-related purchases that could disqualify you from your loan. Any large purchases can be red flags for lenders. People with new debt have higher debt-to-income ratios (how much debt you have compared to your monthly income). Since higher ratios make for riskier loans, borrowers may no longer qualify for their mortgage. Resist the temptation to make any large purchases, even for furniture or appliances.
Don’t Co-Sign Loans for Anyone
When you co-sign for a loan, you’re making yourself accountable for that loan’s success and repayment. With that obligation comes higher debt-to-income ratios as well. Even if you promise you won’t be the one making the payments, your lender will have to count the payments against you.
Don’t Switch Bank Accounts
Lenders need to source and track your assets. That task is much easier when there’s consistency among your accounts. Before you transfer any money, speak with your loan officer.
Don’t Apply for New Credit
It doesn’t matter whether it’s a new credit card or a new car. When you have your credit report run by organizations in multiple financial channels (mortgage, credit card, auto, etc.), it will have an impact on your FICO® score. Lower credit scores can determine your mortgage interest rate and possibly even your eligibility for approval.
Don’t Close Any Accounts
Many buyers believe having less available credit makes them less risky and more likely to be approved. This isn’t true. A major component of your score is your length and depth of credit history (as opposed to just your payment history) and your total usage of credit as a percentage of available credit. Closing accounts has a negative impact on both of those aspects of your score.
In Short, Consult an Expert
To sum it up, be upfront about any changes when talking with your lender. Blips in income, assets, or credit should be reviewed and executed in a way that ensures your <a href="https://www.mykcm.com/2022/06/01/why-home-loans-today-arent-what-they-were-in-the-past/" title="home loan">home loan</a> can still be approved. If your job or employment status has changed recently, share that with your lender as well. Ultimately, it’s best to fully disclose and discuss your intentions with your loan officer before you do anything financial in nature.
Bottom Line
You want your <a href="https://www.mykcm.com/2022/06/02/how-homeownership-impacts-you/" title="home purchase">home purchase</a> to go as smoothly as possible. Remember, before you make any large purchases, move your money around, or make any major life changes, be sure to consult your lender – someone who’s qualified to explain how your financial decisions may impact your home loan.
2022-06-22T09:31:00-07:002022-12-09T11:03:16-07:00Broker Robertstag:sellsmhk.com,2012-09-20:20432Why Home Loans Today Aren’t What They Were in the Past
<img width="750" height="410" src="https://files.mykcm.com/2022/05/31133557/20220601-KCM-Share.jpg" class="attachment-entry size-entry wp-post-image" alt="Why Home Loans Today Aren’t What They Were in the Past | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2022/05/31133557/20220601-KCM-Share.jpg 750w, https://files.mykcm.com/2022/05/31133557/20220601-KCM-Share-600x328.jpg 600w, https://files.mykcm.com/2022/05/31133557/20220601-KCM-Share-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" />
In today’s housing market, many are beginning to wonder if we’re returning to the riskier lending habits and borrowing options that led to the <a href="https://www.mykcm.com/2022/04/21/why-this-housing-market-is-not-a-bubble-ready-to-pop/" title="housing crash">housing crash</a> 15 years ago. Let’s ease those concerns.
Several times a year, the Mortgage Bankers Association (MBA) releases an index titled the <a href="https://www.mba.org/news-and-research/newsroom/news/2022/05/10/mortgage-credit-availability-decreased-in-april" title="Mortgage Credit Availability Index" target="_blank" rel="noopener noreferrer">Mortgage Credit Availability Index</a> (MCAI). According to their website:
“The MCAI provides the only standardized quantitative index that is solely focused on mortgage credit. The MCAI is . . . a summary measure which indicates the availability of mortgage credit at a point in time.”
Basically, the index determines how easy it is to get a mortgage. The higher the index, the more available mortgage credit becomes. Here’s a graph of the MCAI dating back to 2004, when the data first became available:
<a href="https://files.mykcm.com/2022/06/31151253/20220601-MEM-Eng-1-.png" rel="noopener noreferrer" class="use_kcm_lightbox" target="_blank"><img loading="lazy" class="aligncenter wp-image-102749" src="https://files.mykcm.com/2022/06/31151253/20220601-MEM-Eng-1-.png" alt="Why Home Loans Today Aren’t What They Were in the Past | MyKCM" width="600" height="450" srcset="https://files.mykcm.com/2022/06/31151253/20220601-MEM-Eng-1-.png 960w, https://files.mykcm.com/2022/06/31151253/20220601-MEM-Eng-1--600x450.png 600w, https://files.mykcm.com/2022/06/31151253/20220601-MEM-Eng-1--768x576.png 768w, https://files.mykcm.com/2022/06/31151253/20220601-MEM-Eng-1--100x75.png 100w" sizes="(max-width: 600px) 100vw, 600px" /></a>As the graph shows, the index stood at about 400 in 2004. Mortgage credit became more available as the housing market heated up, and then the index passed 850 in 2006. When the real estate market crashed, so did the MCAI as mortgage money became almost impossible to secure. Thankfully, lending standards have eased somewhat since then, but the index is still low. In April, the index was at 121, which is about one-seventh of what it was in 2006.
Why Did the Index Get out of Control During the Housing Bubble?
The main reason was the availability of loans with extremely weak lending standards. To keep up with demand in 2006, many mortgage lenders offered loans that put little emphasis on the eligibility of the borrower. Lenders were approving loans without always going through a verification process to confirm if the borrower would likely be able to repay the loan.
An example of the relaxed lending standards leading up to the housing crash is the FICO® credit score associated with a loan. What’s a FICO® score? The website myFICO <a href="https://www.myfico.com/credit-education/credit-scores" title="explains" target="_blank" rel="noopener noreferrer">explains</a>:
“A credit score tells lenders about your creditworthiness (how likely you are to pay back a loan based on your credit history). It is calculated using the information in your credit reports. FICO® Scores are the standard for credit scores—used by 90% of top lenders.”<br />
During the housing boom, many mortgages were written for borrowers with a FICO score under 620. While there are still some loan programs that allow for a 620 score, today’s lending standards are much tighter. Lending institutions overall are much more attentive about measuring risk when approving loans. According to the latest <a href="https://www.newyorkfed.org/microeconomics/hhdc" title="Household Debt and Credit Report" target="_blank" rel="noopener noreferrer">Household Debt and Credit Report</a> from the New York Federal Reserve, the median credit score on all mortgage loans originated in the first quarter of 2022 was 776.
The graph below shows the billions of dollars in mortgage money given annually to borrowers with a credit score under 620.
<a href="https://files.mykcm.com/2022/06/31151320/20220601-MEM-Eng-2-.png" rel="noopener noreferrer" class="use_kcm_lightbox" target="_blank"><img loading="lazy" class="aligncenter wp-image-102750" src="https://files.mykcm.com/2022/06/31151320/20220601-MEM-Eng-2-.png" alt="Why Home Loans Today Aren’t What They Were in the Past | MyKCM" width="600" height="450" srcset="https://files.mykcm.com/2022/06/31151320/20220601-MEM-Eng-2-.png 960w, https://files.mykcm.com/2022/06/31151320/20220601-MEM-Eng-2--600x450.png 600w, https://files.mykcm.com/2022/06/31151320/20220601-MEM-Eng-2--768x576.png 768w, https://files.mykcm.com/2022/06/31151320/20220601-MEM-Eng-2--100x75.png 100w" sizes="(max-width: 600px) 100vw, 600px" /></a>In 2006, buyers with a score under 620 received $376 billion dollars in loans. In 2021, that number was only $80 billion, and it’s only $20 billion in the first quarter of 2022.
Bottom Line
In 2006, lending standards were much more relaxed with little evaluation done to measure a borrower’s potential to repay their loan. Today, standards are tighter, and the risk is reduced for both lenders and borrowers. These are two very different housing markets, and today is nothing like the last time.
2022-06-07T09:45:00-07:002022-12-09T11:33:54-07:00Broker Robertstag:sellsmhk.com,2012-09-20:20196Why Rising Mortgage Rates Push Buyers off the Fence
<img width="750" height="410" src="https://files.mykcm.com/2022/05/13142733/20220517-KCM-Share.jpg" class="attachment-entry size-entry wp-post-image" alt="Why Rising Mortgage Rates Push Buyers off the Fence | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2022/05/13142733/20220517-KCM-Share.jpg 750w, https://files.mykcm.com/2022/05/13142733/20220517-KCM-Share-600x328.jpg 600w, https://files.mykcm.com/2022/05/13142733/20220517-KCM-Share-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" />
If you’re thinking about <a href="https://www.mykcm.com/2022/05/05/three-tips-for-first-time-homebuyers/" title="buying a home">buying a home</a>, you’ve probably heard <a href="https://www.mykcm.com/2022/04/20/how-to-approach-rising-mortgage-rates-as-a-buyer/" title="mortgage rates">mortgage rates</a> are rising and have wondered what that means for you. Since mortgage rates have increased over <a href="https://www.freddiemac.com/pmms/archive" title="two percentage points" target="_blank" rel="noopener noreferrer">two percentage points</a> this year, it’s natural to think about how this will impact your homeownership plans.
Today, buyers are reacting in one of two ways: they’re either making the decision to buy now before rates climb higher or they’re waiting it out in hopes rates will fall. Let’s look at some context that can help you understand why so many buyers are jumping off the fence and into action rather than waiting to buy.
A Look Back: How the Current Mortgage Rate Compares to Historical Data
One factor that could help you make your decision to buy now is how today’s mortgage rates compare to historical data. While higher than the average 30-year fixed rate in recent years, the latest rates are still comparatively low when you look at the bigger picture of where rates have been since 1971 (see graph below):
<a href="https://files.mykcm.com/2022/05/13142736/20220517-MEM-Eng-1.png" rel="noopener noreferrer" class="use_kcm_lightbox" target="_blank"><img loading="lazy" class="aligncenter wp-image-102349" src="https://files.mykcm.com/2022/05/13142736/20220517-MEM-Eng-1.png" alt="Why Rising Mortgage Rates Push Buyers off the Fence | MyKCM" width="600" height="450" srcset="https://files.mykcm.com/2022/05/13142736/20220517-MEM-Eng-1.png 1000w, https://files.mykcm.com/2022/05/13142736/20220517-MEM-Eng-1-600x450.png 600w, https://files.mykcm.com/2022/05/13142736/20220517-MEM-Eng-1-768x576.png 768w, https://files.mykcm.com/2022/05/13142736/20220517-MEM-Eng-1-100x75.png 100w" sizes="(max-width: 600px) 100vw, 600px" /></a>
Mark Fleming, Chief Economist at First American, <a href="https://blog.firstam.com/economics/how-do-rapidly-rising-mortgage-rates-impact-affordability" title="explains" target="_blank" rel="noopener noreferrer">explains</a> it like this:
“. . . historical context is important. An average 30-year, fixed mortgage rate of 5.5 percent is still well below the historical average of nearly 8 percent.”
If you’re deciding whether to buy now or wait, this is important context to have. Today’s mortgage rate still gives you a window of opportunity to lock in a rate that’s comparatively lower than decades past.
A Look Ahead: What Happens if Rates Climb Further
The <a href="https://www.mykcm.com/2022/05/10/will-home-prices-fall-this-year-heres-what-experts-say/" title="buyers">buyers</a> who are springing into action now are also motivated to make their move because they know rates have risen steadily this year, and they’re eager to get ahead of any further increases.
Why? When mortgage rates climb, they impact the <a href="https://www.mykcm.com/2022/05/09/how-todays-mortgage-rates-impact-your-home-purchase/" title="monthly mortgage payment">monthly mortgage payment</a> you’ll have on the home you’re buying. Basically, it’ll likely cost you more to buy a home if you wait. Experts say mortgage rates will rise (although more moderately) in the months ahead. Odeta Kushi, Deputy Chief Economist at First American, <a href="https://www.marketwatch.com/story/the-pandemic-boom-in-home-sales-is-over-mortgage-rates-soar-to-highest-level-since-2009-as-the-fed-pressures-the-housing-market-11651760108" title="explains" target="_blank" rel="noopener noreferrer">explains</a>:
“. . . ongoing inflationary pressure remains likely to push mortgage rates even higher in the months to come.”
So, if you’re ready and financially able to buy now, it may make more sense to get off the fence and make your purchase sooner rather than later. As Nadia Evangelou, Senior Economist at the National Association of Realtors (NAR), <a href="https://themortgagereports.com/90320/home-prices-not-dropping-in-2022-experts-say" title="says" target="_blank" rel="noopener noreferrer">says</a>:
“With even higher interest rates on the horizon, I don’t see any reason to hold off from purchasing a home right now. If you feel financially secure, you should start looking for a home.”
At the end of the day, there is no perfect advice on when to buy a home. What you should do depends on your goals, your <a href="https://www.mykcm.com/2022/04/05/what-you-need-to-budget-for-when-buying-a-home/" title="finances">finances</a>, and your personal situation. Use this information with the help of local real estate professionals to make an informed decision on what’s best for you. The Mortgage Reports <a href="https://themortgagereports.com/90320/home-prices-not-dropping-in-2022-experts-say" title="sums it up" target="_blank" rel="noopener noreferrer">sums it up</a> best:
“. . . if you’re on the fence about whether to buy now or wait for a better deal, buying sooner rather than later might be wise. That said, home buying is always a personal decision. Whether you should buy in 2022 depends on your financial situation and the local housing market where you live.”
Bottom Line
For many buyers, rising mortgage rates are motivating them to act now and make a purchase before rates rise higher. To decide what move is best for you, let’s connect so you have expert advice on your side.
2022-05-18T10:45:00-07:002022-12-09T11:51:36-07:00Broker Robertstag:sellsmhk.com,2012-09-20:19998Three Tips for First-Time Homebuyers
<img width="750" height="410" src="https://files.mykcm.com/2022/05/04112921/20220505-KCM-Share.jpg" class="attachment-entry size-entry wp-post-image" alt="Three Tips for First-Time Homebuyers | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2022/05/04112921/20220505-KCM-Share.jpg 750w, https://files.mykcm.com/2022/05/04112921/20220505-KCM-Share-600x328.jpg 600w, https://files.mykcm.com/2022/05/04112921/20220505-KCM-Share-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" />
Buying your first home is a major decision and an exciting milestone. Even though it can feel daunting at times, it has the power to change your life for the better. If you’re looking to purchase your first home, you may be wondering what’s happening in the <a href="https://www.mykcm.com/2022/04/22/myths-about-todays-housing-market-infographic/" title="housing market">housing market</a> today, how much you <a href="https://www.mykcm.com/2022/04/05/what-you-need-to-budget-for-when-buying-a-home/" title="need to save">need to save</a>, and <a href="https://www.mykcm.com/2021/11/19/your-journey-to-homeownership-infographic/" title="where to start">where to start</a>.
Here are three things that can help give you the information you need to confidently pursue your dream of <a href="https://www.mykcm.com/2022/04/27/the-dream-of-homeownership-is-worth-the-effort/" title="homeownership">homeownership</a>.
1. Consider All Options When the Number of Homes for Sale Is Low
Today, there are far <a href="https://www.mykcm.com/2022/03/04/supply-and-demand-in-todays-market-infographic/" title="more buyers">more buyers</a> in the market than there are homes available for sale. When that happens, it’s a good idea to do what you can to increase your pool of options. That could mean expanding your search to include additional housing types. For first-time buyers, considering <a href="https://www.mykcm.com/2022/03/31/there-are-several-great-reasons-to-consider-buying-a-condo-today/" title="condominiums">condominiums</a> (condos) and townhomes can be an excellent way to increase your choices. According to <a href="https://www.bankrate.com/real-estate/buying-a-townhouse/" title="Bankrate" target="_blank" rel="noopener noreferrer">Bankrate</a>:
“Townhomes often cost less than single-family homes of a similar size in the same location.”
In another article, Bankrate also <a href="https://www.bankrate.com/real-estate/buying-a-condo/" title="says" target="_blank" rel="noopener noreferrer">says</a>:
“Buying a condo can be a great way to dive into homeownership without worrying about the upkeep that comes with single-family homes and townhouses.”
Condos and townhomes are both great entryways into homeownership. When you buy either one, you can start building <a href="https://www.mykcm.com/2022/04/08/do-you-know-how-much-equity-you-have-in-your-home-infographic/" title="equity">equity</a> which increases your <a href="https://www.mykcm.com/2022/03/28/a-key-to-building-wealth-is-homeownership/" title="net worth">net worth</a> and can fuel a future move.
2. Know Your Down Payment Could Be More Within Reach Than You Think
Saving for a down payment can feel like one of the biggest obstacles for homebuyers, but that doesn’t have to be the case. As the National Association of Realtors (NAR) <a href="https://www.nar.realtor/blogs/economists-outlook/tackling-home-financing-and-down-payment-misconceptions" title="says" target="_blank" rel="noopener noreferrer">says</a>:
“One of the biggest misconceptions among housing consumers is what the typical down payment is and what amount is needed to enter homeownership.”
<a href="https://www.nar.realtor/research-and-statistics/research-reports/highlights-from-the-profile-of-home-buyers-and-sellers" title="Data" target="_blank" rel="noopener noreferrer">Data</a> from NAR shows the median <a href="https://www.mykcm.com/2022/01/03/how-much-do-you-need-for-your-down-payment/" title="down payment">down payment</a> hasn’t been over 20% since 2005. The graph below breaks down the median down payment by age group for recent homebuyers according to the <a href="https://cdn.nar.realtor/sites/default/files/documents/2022-home-buyers-and-sellers-generational-trends-03-23-2022.pdf" title="2022 Home Buyers and Sellers Generational Trends Report" target="_blank" rel="noopener noreferrer">2022 Home Buyers and Sellers Generational Trends Report</a> from NAR (see graph below):
<a href="https://files.mykcm.com/2022/05/04165425/20220505-MEM-Eng-2.png" rel="noopener noreferrer" class="use_kcm_lightbox" target="_blank"><img loading="lazy" class="aligncenter wp-image-102031" src="https://files.mykcm.com/2022/05/04165425/20220505-MEM-Eng-2.png" alt="Three Tips for First-Time Homebuyers | MyKCM" width="600" height="450" srcset="https://files.mykcm.com/2022/05/04165425/20220505-MEM-Eng-2.png 960w, https://files.mykcm.com/2022/05/04165425/20220505-MEM-Eng-2-600x450.png 600w, https://files.mykcm.com/2022/05/04165425/20220505-MEM-Eng-2-768x576.png 768w, https://files.mykcm.com/2022/05/04165425/20220505-MEM-Eng-2-100x75.png 100w" sizes="(max-width: 600px) 100vw, 600px" /></a>
Based on the data above, the median down payment for all homebuyers is only 13%. That’s well below the common misconception of 20%, and it’s even lower for younger buyers. This could mean you may not need to save as much for a down payment as you initially thought.
There are also down payment <a href="https://www.mykcm.com/2022/03/02/down-payment-assistance-programs-can-help-you-achieve-homeownership/" title="assistance programs">assistance programs</a> available for many buyers. Not to mention, some loan options require as little as 3.5% (or <a href="https://downpaymentresource.com/" title="even 0%" target="_blank" rel="noopener noreferrer">even 0%</a>) down for buyers who qualify. While there are advantages to putting <a href="https://www.mykcm.com/2021/12/22/the-perks-of-putting-20-down-on-a-home/" title="20% down">20% down</a>, especially in today’s competitive market, know that you have options. To get more information on how much you may need to save and the help that’s available, talk with a professional.
3. Work with a Trusted Real Estate Advisor Throughout the Process
Finally, no matter where you’re at in your homeownership journey, the best way to make sure you’re set up for success is to work with a real estate professional.
If you’re just starting out, they can help you with the initial steps, like <a href="https://www.mykcm.com/2022/04/22/myths-about-todays-housing-market-infographic/" title="educating">educating</a> you on the process and connecting you with a trusted lender to get <a href="https://www.mykcm.com/2022/04/19/why-pre-approval-is-an-important-step-for-todays-homebuyers/" title="pre-approved">pre-approved</a>. Once you’re ready to begin your search, a real estate professional can help you understand your local market and search for available homes. And when it’s time to <a href="https://www.mykcm.com/2022/04/25/is-it-enough-to-offer-asking-price-in-todays-housing-market/" title="make an offer">make an offer</a>, they’ll be an expert advisor and negotiator to help your offer stand out above the rest.
Bottom Line
Knowledge is key to succeeding on your homebuying journey. Knowing market trends, what you need for a down payment, and what options you have as a buyer today can give you the confidence you need to buy a home. Let’s connect so you have an expert on your side who can help you navigate the homebuying process.
2022-05-05T09:47:00-07:002022-12-09T11:52:52-07:00Broker Robertstag:sellsmhk.com,2012-09-20:19895The Dream of Homeownership Is Worth the Effort
<img width="750" height="410" src="https://files.mykcm.com/2022/04/25135235/20220427-KCM-Share.jpg" class="attachment-entry size-entry wp-post-image" alt="The Dream of Homeownership Is Worth the Effort | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2022/04/25135235/20220427-KCM-Share.jpg 750w, https://files.mykcm.com/2022/04/25135235/20220427-KCM-Share-600x328.jpg 600w, https://files.mykcm.com/2022/04/25135235/20220427-KCM-Share-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" />
If you’re in the market to buy a home this season, stick with it. Homebuyers face challenges in any market, and today’s is no exception. But if you persevere, your decision to purchase a home will be worth the effort in the end. In fact, a <a href="https://www.bankrate.com/mortgages/homeownership-remains-centerpiece-of-american-dream/#homeownership" title="recent survey" target="_blank" rel="noopener noreferrer">recent survey</a> from Bankrate shows homeownership is so powerful that:
“Nearly three in four homeowners say they would still buy their current home if they had it to do [sic] all over again.”
That means the results – owning a home and the <a href="https://www.mykcm.com/2022/03/22/the-many-benefits-of-homeownership/" title="benefits">benefits</a> that come with it – outweigh the effort needed to achieve their goal. If you’re a homebuyer, let that provide you with the confidence to know the work you’re putting in today will pay off for years to come. Here are a few reasons to stick with your search and focus on the outcome.
Homeownership Contributes Significantly to Your Financial Well-Being
The <a href="https://magazine.realtor/sales-and-marketing/handouts-for-customers/for-buyers/7-reasons-to-own-a-home" title="National Association of Realtors" target="_blank" rel="noopener noreferrer">National Association of Realtors</a> (NAR) lists several motivations to consider if you’re thinking about <a href="https://www.mykcm.com/2022/03/16/are-you-wondering-if-this-is-the-year-to-buy-a-home/" title="buying a home">buying a home</a>. One of the top financial reasons is the <a href="https://www.mykcm.com/2022/03/21/the-average-homeowner-gained-more-than-55k-in-equity-over-the-past-year/" title="equity">equity</a> you build. As NAR says:
“Money paid for rent is money that you’ll never see again, but mortgage payments let you build equity . . . Building equity in your home is a ready-made savings plan.”
Your equity is a powerful tool you can <a href="https://www.mykcm.com/2021/11/22/4-ways-homeowners-can-use-their-equity/" title="leverage">leverage</a> in a number of ways. And with recent home <a href="https://www.mykcm.com/2022/04/07/the-future-of-home-price-appreciation-and-what-it-means-for-you/" title="price appreciation">price appreciation</a>, homeowners are seeing record levels of equity today. That may be one reason why so many people view owning a home as a <a href="https://www.mykcm.com/2022/02/21/real-estate-voted-the-best-investment-eight-years-in-a-row/" title="great investment">great investment</a> and a top indicator of <a href="https://www.mykcm.com/2022/03/28/a-key-to-building-wealth-is-homeownership/" title="financial well-being">financial well-being</a>. As the survey from Bankrate mentioned above shows:
“. . . Americans place a higher value on homeownership than on any other indicator of economic stability, . . .”
Owning a home ranks above other major accomplishments like retirement, having a successful career, and getting a college degree. That indicates just how impactful the financial benefits of homeownership truly are.
The Emotional Benefits of Owning a Home Are Powerful
Of course, <a href="https://www.mykcm.com/2022/02/14/are-you-ready-to-fall-in-love-with-homeownership/" title="homeownership">homeownership</a> is more than an investment. In their list of top reasons to buy a home, NAR also highlights some of the powerful, <a href="https://www.mykcm.com/2022/02/01/why-a-move-could-bring-you-more-happiness-this-year/" title="non-financial">non-financial</a> aspects of homeownership. Among them is the opportunity to customize your home to reflect your personality and needs. As they say:
“The home is yours. You can decorate any way you want and choose the types of upgrades and new amenities that appeal to your lifestyle.”
Another benefit homeowners enjoy is the stability it provides. Homeowners typically stay put longer than renters. According to NAR, when you remain in one place longer than a few years, you can grow closer to your community. And that can enhance your sense of pride and lead to better relationships.
What Does That Mean for You?
The benefits of homeownership are powerful, as Leslie Rouda Smith, President of NAR, <a href="https://www.nar.realtor/newsroom/nar-report-shows-share-of-millennial-home-buyers-continues-to-rise" title="says" target="_blank" rel="noopener noreferrer">says</a>:
“From building personal wealth and fostering communities, to strengthening social stability and driving the national economy, the value of homeownership is indisputable.”
Even if you face challenges in today’s market, the payoff when you succeed and purchase a home will be worth it.
Bottom Line
If you’re planning to buy a home this year, there are incredible benefits waiting for you at the end of your journey. Let’s connect to discuss everything homeownership has to offer.
2022-04-27T10:17:00-07:002022-12-09T12:44:58-07:00Broker Robertstag:sellsmhk.com,2012-09-20:19853Is It Enough To Offer Asking Price in Today’s Housing Market?
<img width="750" height="410" src="https://files.mykcm.com/2022/04/21151056/20220425-KCM-Share-3.jpg" class="attachment-entry size-entry wp-post-image" alt="Is It Enough To Offer Asking Price in Today’s Housing Market? | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2022/04/21151056/20220425-KCM-Share-3.jpg 750w, https://files.mykcm.com/2022/04/21151056/20220425-KCM-Share-3-600x328.jpg 600w, https://files.mykcm.com/2022/04/21151056/20220425-KCM-Share-3-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" />
If you’re planning to <a href="https://www.mykcm.com/2022/03/16/are-you-wondering-if-this-is-the-year-to-buy-a-home/" title="buy a home">buy a home</a> this season, you’re probably thinking about what you’ll need to do to get your offer accepted. In previous years, it was common for buyers to try and determine how much less than the asking price they could offer to still get the home. The buyer and seller would then negotiate and typically agree on a revised price that was somewhere between the buyer’s bid and the home’s initial asking price.
In today’s real estate market, buyers shouldn’t shop for a home with the same expectations.
Things Are Different Today
Today’s housing market is anything but normal. According to the <a href="https://cdn.nar.realtor/sites/default/files/documents/2022-03-realtors-confidence-index-04-20-2022.pdf" title="National Association of Realtors" target="_blank" rel="noopener noreferrer">National Association of Realtors</a> (NAR), the average home that’s sold today:
Receives 4.8 offers
Sells in just 17 days
Homes selling quickly and receiving <a href="https://www.mykcm.com/2022/03/10/how-to-navigate-a-market-where-multiple-offers-is-the-new-normal/" title="multiple offers">multiple offers</a> shows how competitive the <a href="https://www.mykcm.com/2022/03/24/what-you-can-expect-from-the-spring-housing-market/" title="housing market">housing market</a> is for buyers right now. This is because there are more buyers on the market than homes for sale. When the <a href="https://www.mykcm.com/2022/03/04/supply-and-demand-in-todays-market-infographic/" title="number of homes">number of homes</a> available can’t keep up with demand, homes often sell for more than the asking price.
How Does This Impact You When It’s Time To Submit an Offer?
Market conditions should help guide your decisions throughout the process. Today, the asking price of a home is often the floor of the negotiation rather than the ceiling. Knowing this is important when it’s time to <a href="https://www.mykcm.com/2021/12/28/5-tips-for-making-your-best-offer-on-a-home/" title="submit an offer">submit an offer</a>, but you should also use that information as you’re searching for homes too. After all, you don’t want to fall in love with a home that ultimately sells for a price higher than what you’ve <a href="https://www.mykcm.com/2022/04/05/what-you-need-to-budget-for-when-buying-a-home/" title="budgeted">budgeted</a> for.
The Mortgage Reports has <a href="https://themortgagereports.com/70484/how-much-over-asking-price-should-you-offer-on-a-house" title="advice" target="_blank" rel="noopener noreferrer">advice</a> if you’re looking to purchase a home in a competitive market. The article encourages you to be realistic with your <a href="https://www.mykcm.com/2022/04/04/balancing-your-wants-and-needs-as-a-homebuyer-today/" title="housing search">housing search</a>, saying:
“The best thing to do is set your budget and expectations ahead of time so you know how much you can afford to offer — and when to walk away. This will make negotiations a lot easier.”
Of course, when you’ve found your dream home, you’ll want to do everything you can to submit your best offer up front and win a potential bidding war. Knowing the current market is key to crafting a winning offer. That’s where working with an expert <a href="https://www.mykcm.com/2022/03/01/an-expert-advisor-will-give-you-the-best-advice-in-todays-market/" title="real estate advisor">real estate advisor</a> becomes critical.
A real estate professional will draw from their experience and expert-level knowledge of today’s housing market throughout the process. They’ll also balance conditions in your area to make sure your offer stands out above the rest.
Bottom Line
Understanding how to approach the asking price of a home and what’s happening in today’s real estate market are critical for buyers. Let’s connect so we can work together to create a winning plan for you.
2022-04-25T14:01:00-07:002022-12-09T12:47:05-07:00Broker Robertstag:sellsmhk.com,2012-09-20:19796Why 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 <a href="https://www.mykcm.com/2022/03/16/are-you-wondering-if-this-is-the-year-to-buy-a-home/" title="buying a home">buying a home</a> 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, <a href="https://themortgagereports.com/88315/how-to-start-the-process-of-buying-a-house" title="explains" target="_blank" rel="noopener noreferrer">explains</a>:
“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 <a href="https://www.mykcm.com/2022/03/04/supply-and-demand-in-todays-market-infographic/" title="competition">competition</a>. According to the National Association of Realtors (NAR), the average home is getting <a href="https://cdn.nar.realtor/sites/default/files/documents/2022-02-realtors-confidence-index-03-18-2022.pdf" title="4.8 offers" target="_blank" rel="noopener noreferrer">4.8 offers</a> per sale. As a result, <a href="https://www.mykcm.com/2022/03/10/how-to-navigate-a-market-where-multiple-offers-is-the-new-normal/" title="bidding wars">bidding wars</a> 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. <a href="https://www.mykcm.com/2022/03/30/whats-happening-with-mortgage-rates-and-where-will-they-go-from-here/" title="Mortgage rates">Mortgage rates</a> are rising, <a href="https://www.mykcm.com/2022/03/03/are-home-prices-continuing-to-rise/" title="home prices">home prices</a> are going up, and lending institutions are regularly updating their standards. You’re going to need <a href="https://www.mykcm.com/2022/03/01/an-expert-advisor-will-give-you-the-best-advice-in-todays-market/" title="guidance">guidance</a> 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.
2022-04-20T09:11:00-07:002022-12-09T12:51:45-07:00Broker Robertstag:sellsmhk.com,2012-09-20:196583 Reasons to Buy a New Construction Home3 Reasons to Choose New Home Construction
1. Peace of Mind
When purchasing a resale, there is uncertainty as to what the inspection may uncover, causing added stress up to settlement and beyond. When buying a new construction home, it can offer increased peace of mind because it is built with all new materials.
2. Less Maintenance
One of the most appealing aspects of buying a new construction home is EVERYTHING is new. From the windows, the roof, heating and cooling system, and the appliances everything in the home is new and less likely to need repairs. Home repairs are a hassel and can be costly. New homes offer a low maintenance lifestyle that allows you to spend more time doing the things you love.
3. Increased Energy Efficiency
No only do energy efficient homes offer benefits to the homeowner but they also benefit the environment. Homes built today are subject to energy efficiency standards. Energy efficient features, such as properly installed insulation and windows, can help improve comfort in the home and significantly reduce your utility bills as well minimize the impact on the environment.
Check out our new contruction listing located at 3021 Fieldhouse Cir, Manhattan, KS 66503. Click <a href="https://www.sellsmhk.com/property-search/detail/290/20220892/3021-fieldhouse-cir-manhattan-ks-66503/">here</a> for more information.
<img src="https://assets.site-static.com/userfiles/1803/image/kendallcottrell/Listing_Specs_-_3021_Fieldhouse_Cir.png" width="1080" height="1080" />2022-04-11T12:31:00-07:002023-01-20T15:50:41-07:00Broker Robertstag:sellsmhk.com,2012-09-20:19648 What You Need To Budget for When Buying a Home
<img width="750" height="410" src="https://files.mykcm.com/2022/04/01124041/20220405-KCM-Share.jpg" class="attachment-entry size-entry wp-post-image" alt="What You Need To Budget for When Buying a Home | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2022/04/01124041/20220405-KCM-Share.jpg 750w, https://files.mykcm.com/2022/04/01124041/20220405-KCM-Share-600x328.jpg 600w, https://files.mykcm.com/2022/04/01124041/20220405-KCM-Share-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" />
When it comes to <a href="https://www.mykcm.com/2022/03/16/are-you-wondering-if-this-is-the-year-to-buy-a-home/" title="buying a home">buying a home</a>, it can feel a bit intimidating to know how much you need to save and where to find that information. But you should know, you’re not expected to have all the answers yourself. There are many trusted professionals who can help you understand your finances and what you’ll need to budget for throughout the process.
To get you started, here are a few things experts say you should plan for along the way.
1. Down Payment
As you set your savings goal for your purchase, your <a href="https://www.mykcm.com/2022/01/03/how-much-do-you-need-for-your-down-payment/" title="down payment">down payment</a> is likely already top of mind. And, like many other people, you may believe you need to set aside <a href="https://www.mykcm.com/2021/12/22/the-perks-of-putting-20-down-on-a-home/" title="20%">20%</a> of the home’s purchase price for that down payment – but that’s not always the case. The National Association of Realtors (NAR) <a href="https://www.nar.realtor/blogs/economists-outlook/tackling-home-financing-and-down-payment-misconceptions" title="says" target="_blank" rel="noopener noreferrer">says</a>:
“One of the biggest misconceptions among housing consumers is what the typical down payment is and what amount is needed to enter homeownership. Having this knowledge is critical to know what to save . . .”
The good news is, you may be able to put as little as 3.5% (or even 0%) down in some situations. To understand your options, partner with a trusted professional who can go over the various loan types, down payment <a href="https://www.mykcm.com/2022/03/02/down-payment-assistance-programs-can-help-you-achieve-homeownership/" title="assistance programs">assistance programs</a>, and what each one requires.
2. Earnest Money Deposit
Another item you may want to plan for is an earnest money deposit. While it isn’t required, it’s common in today’s <a href="https://www.mykcm.com/2022/03/10/how-to-navigate-a-market-where-multiple-offers-is-the-new-normal/" title="highly competitive">highly competitive</a> market because it can help your offer stand out in a bidding war.
So, what is it? It’s money you pay as a show of good faith when you make an offer on a house. This deposit works like a credit. You’re using some of the money you already saved for your purchase to show the seller you’re committed and serious about their house. It’s not an added expense, it’s just paying some of that up front. First American <a href="https://blog.firstam.com/15-real-estate-terms-you-should-know" title="explains" target="_blank" rel="noopener noreferrer">explains</a> what it is and how it works:
“The deposit made from the buyer to the seller when submitting an offer. This deposit is typically held in trust by a third party and is intended to show the seller you are serious about purchasing their home. Upon closing the money will generally be applied to your down payment or closing costs.”
In other words, an earnest money deposit could be the very first check you’ll write toward your purchase. The amount varies by state and situation. Realtor.com <a href="https://www.realtor.com/advice/finance/understanding-the-earnest-money-deposit-2/" title="elaborates" target="_blank" rel="noopener noreferrer">elaborates</a>:
“The amount you’ll deposit as earnest money will depend on factors such as policies and limitations in your state, the current market, what your real estate agent recommends, and what the seller requires. On average, however, you can expect to hand over 1% to 2% of the total home purchase price.”
Work with a real estate advisor to understand any requirements in your local area and what they’ve recommended for other buyers in your market. They’ll help you determine if it’s something that could be a useful option for you.
3. Closing Costs
The next thing to plan for is your <a href="https://www.mykcm.com/2022/03/15/dont-get-caught-off-guard-by-closing-costs/" title="closing costs">closing costs</a>. The Federal Trade Commission (FTC) <a href="https://www.ftc.gov/sites/default/files/documents/one-stops/real-estate-competition/realestateglossary.pdf" title="defines" target="_blank" rel="noopener noreferrer">defines</a> closing costs as:
“The upfront fees charged in connection with a mortgage loan transaction. …generally including, but not limited to a loan origination fee, title examination and insurance, survey, attorney’s fee, and prepaid items, such as escrow deposits for taxes and insurance.”
Basically, your closing costs cover the fees for various people and services involved in your transaction. NAR has this to <a href="https://magazine.realtor/daily-news/2020/01/17/what-exactly-do-closing-costs-cover" title="say" target="_blank" rel="noopener noreferrer">say</a> about how much to budget for:
“A home costs more than just the sale price. For example, closing costs—which make up about 2% to 5% of the home’s purchase price—are a major added expense…Lenders provide a Closing Disclosure at least three business days prior to closing on a mortgage. But buyers will need to budget for these added costs ahead of time to avoid sticker shock days before closing.”
The key takeaway is savvy buyers plan ahead for these expenses so they can come into the process prepared. Freddie Mac <a href="https://myhome.freddiemac.com/buying/understanding-costs" title="sums it up" target="_blank" rel="noopener noreferrer">sums it up</a> like this:
“If you’re in the market to buy a home, your down payment is probably top of mind. And rightly so – it’s likely the biggest cost of homebuying. However, it is not the only cost and it’s critical you understand all your expenses before diving in. The more prepared you are for your down payment, closing and other costs, the smoother your homebuying journey will be.”
Bottom Line
Knowing what to budget for in the homebuying process is essential. To make sure you understand these and any other expenses that may come up, let’s connect so you have reliable expertise on what to expect when you buy a home.
2022-04-11T09:03:00-07:002022-12-09T13:08:19-07:00Broker Robertstag:sellsmhk.com,2012-09-20:19634 The Future of Home Price Appreciation and What It Means for You
<img width="750" height="410" src="https://files.mykcm.com/2022/04/05111836/20220407-KCM-Share.jpg" class="attachment-entry size-entry wp-post-image" alt="The Future of Home Price Appreciation and What It Means for You | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2022/04/05111836/20220407-KCM-Share.jpg 750w, https://files.mykcm.com/2022/04/05111836/20220407-KCM-Share-600x328.jpg 600w, https://files.mykcm.com/2022/04/05111836/20220407-KCM-Share-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" />
Many consumers are wondering what will happen with home values over the next few years. Some are concerned that the recent run-up in home prices will lead to a situation similar to the <a href="https://www.mykcm.com/2022/02/17/4-simple-graphs-showing-why-this-is-not-a-housing-bubble/" title="housing crash">housing crash</a> 15 years ago.
However, experts say the market is totally different today. For example, Odeta Kushi, Deputy Chief Economist at First American, <a href="https://twitter.com/odetakushi/status/1509948951918788608" title="tweeted" target="_blank" rel="noopener noreferrer">tweeted</a> just last week on this issue:
“. . . We do need price appreciation to slow today (it’s not sustainable over the long run) but high price growth today is supported by fundamentals- short supply, lower rates & demographic demand. And we are in a much different & safer space: better credit quality, low DTI [Debt-To-Income] & tons of equity. Hence, a crash in prices is very unlikely.”
Price appreciation will slow from the double-digit levels the market has seen over the last two years. However, experts believe home values will not depreciate (where a home would lose value).
To this point, Pulsenomics just released the latest <a href="https://pulsenomics.com/surveys/#home-price-expectations" title="Home Price Expectation Survey" target="_blank" rel="noopener noreferrer">Home Price Expectation Survey</a> – a survey of a national panel of over 100 economists, real estate experts, and investment and market strategists. It forecasts home prices will continue appreciating over the next five years. Below are the expected year-over-year rates of home price appreciation based on the average of all 100+ projections:
2022: 9%
2023: 4.74%
2024: 3.67%
2025: 3.41%
2026: 3.57%
Those responding to the survey believe home price appreciation will still be relatively high this year (though half of what it was last year), and then return to more normal levels over the next four years.
What Does This Mean for You as a Buyer?
With a limited supply of homes available for sale and both prices and mortgage rates increasing, it can be a challenging market to navigate as a buyer. But buying a home sooner rather than later does have its benefits. If you wait to buy, you’ll pay more in the future. However, if you buy now, you’ll actually be in the position to make future price increases work for you. Once you buy, those rising home prices will help you build your home’s value, and by extension, your own household wealth through home equity.
As an example, let’s assume you purchased a $360,000 home in January of this year (the <a href="https://www.nar.realtor/research-and-statistics" title="median price" target="_blank" rel="noopener noreferrer">median price</a> according to the National Association of Realtors rounded up to the nearest $10K). If you factor in the forecast for appreciation from the Home Price Expectation Survey, you could accumulate over $96,000 in household wealth over the next five years (see graph below):
<a href="https://files.mykcm.com/2022/04/05111838/20220407-MEM-Eng-1.png" rel="noopener noreferrer" class="use_kcm_lightbox" target="_blank"><img loading="lazy" class="aligncenter wp-image-101724" src="https://files.mykcm.com/2022/04/05111838/20220407-MEM-Eng-1.png" alt="The Future of Home Price Appreciation and What It Means for You | MyKCM" width="600" height="450" srcset="https://files.mykcm.com/2022/04/05111838/20220407-MEM-Eng-1.png 1000w, https://files.mykcm.com/2022/04/05111838/20220407-MEM-Eng-1-600x450.png 600w, https://files.mykcm.com/2022/04/05111838/20220407-MEM-Eng-1-768x576.png 768w, https://files.mykcm.com/2022/04/05111838/20220407-MEM-Eng-1-100x75.png 100w" sizes="(max-width: 600px) 100vw, 600px" /></a>
Bottom Line
If you’re trying to decide whether to buy now or wait, the key is knowing what’s expected to happen with home prices. Experts say prices will continue to climb in the years ahead, just at a slower pace. So, if you’re ready to buy, doing so now may be your best bet for your wallet. It’ll also give you the chance to use the future home price appreciation to build your own net worth through rising equity. If you want to get started, let’s connect today.
2022-04-08T14:58:00-07:002022-12-09T13:09:28-07:00Broker Robertstag:sellsmhk.com,2012-09-20:19550 Balancing Your Wants and Needs as a Homebuyer Today
<img width="750" height="410" src="https://files.mykcm.com/2022/04/01125715/20220404-KCM-Share.jpg" class="attachment-entry size-entry wp-post-image" alt="Balancing Your Wants and Needs as a Homebuyer Today | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2022/04/01125715/20220404-KCM-Share.jpg 750w, https://files.mykcm.com/2022/04/01125715/20220404-KCM-Share-600x328.jpg 600w, https://files.mykcm.com/2022/04/01125715/20220404-KCM-Share-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" />
Since the <a href="https://www.mykcm.com/2022/03/04/supply-and-demand-in-todays-market-infographic/" title="number of homes">number of homes</a> for sale is low today, it can feel challenging to find one that checks all your boxes. But if you know which features are absolutely essential in your next home and which ones are just nice bonuses, you can land a <a href="https://www.mykcm.com/2022/03/16/are-you-wondering-if-this-is-the-year-to-buy-a-home/" title="home">home</a> that fits your needs.
Danielle Hale, Chief Economist for realtor.com, explains it like <a href="https://www-cnbc-com.cdn.ampproject.org/c/s/www.cnbc.com/amp/2022/02/26/what-to-do-before-you-buy-a-home.html" title="this" target="_blank" rel="noopener noreferrer">this</a>:
“Focus on the goal you set out for yourself, like your list of must-haves and nice-to-haves and your budget, . . . Stick to that. Be persistent.”
So how do you go about creating your list of desired features? The first step is to get <a href="https://www.mykcm.com/2022/01/24/why-pre-approval-is-key-for-homebuyers-in-2022/" title="pre-approved">pre-approved</a> for your mortgage. Pre-approval helps you better understand your budget, and that plays an important role in how you’ll craft your list. After all, you don’t want to fall in love with a home that’s too far out of reach.
Once you have a good grasp of your budget, you can begin to list all the features of a home you would like. Here’s a great way to think about them before you begin:
Must-Haves – If a house doesn’t have these features, it won’t work for you and your lifestyle (examples: distance from work or loved ones, number of bedrooms/bathrooms, etc.).
Nice-To-Haves – These are features that you’d love to have but can live without. Nice-To-Haves aren’t dealbreakers, but if you find a home that hits all the must-haves and some of the these, it’s a contender (examples: a second home office, garage, etc.).
Dream State– This is where you can really think big. Again, these aren’t features you’ll need, but if you find a home in your budget that has all the must-haves, most of the nice-to-haves, and any of these, it’s a clear winner (examples: farmhouse sink, multiple walk-in closets, etc.).
Finally, once you’ve created your list and categorized it in a way that works for you, discuss it with your <a href="https://www.mykcm.com/2022/03/01/an-expert-advisor-will-give-you-the-best-advice-in-todays-market/" title="real estate advisor">real estate advisor</a>. They’ll be able to help you refine the list further, coach you through the best way to stick to it, and find a home in your area that meets <a href="https://www.mykcm.com/2022/03/22/the-many-benefits-of-homeownership/" title="your needs">your needs</a>.
Bottom Line
Crafting your home search checklist may seem like a small task, but it can save you time and money. It’s also one of the keys to being successful in today’s competitive market. Let’s connect so we can work together to find a home that fits your wants and needs.
2022-04-04T10:33:00-07:002022-12-09T13:15:26-07:00Broker Robertstag:sellsmhk.com,2012-09-20:19467 What’s Happening with Mortgage Rates, and Where Will They Go from Here?
<img width="750" height="410" src="https://files.mykcm.com/2022/03/29163529/20220330-KCM-Share.jpg" class="attachment-entry size-entry wp-post-image" alt="What’s Happening with Mortgage Rates, and Where Will They Go from Here? | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2022/03/29163529/20220330-KCM-Share.jpg 750w, https://files.mykcm.com/2022/03/29163529/20220330-KCM-Share-600x328.jpg 600w, https://files.mykcm.com/2022/03/29163529/20220330-KCM-Share-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" />
Based on the <a href="https://www.freddiemac.com/pmms/archive" title="Primary Mortgage Market Survey" target="_blank" rel="noopener noreferrer">Primary Mortgage Market Survey</a> from Freddie Mac, the average 30-year fixed-rate mortgage has increased by 1.2% (3.22% to 4.42%) since January of this year. The rate jumped by more than a quarter of a point from just a week ago. Here’s a visual to show how mortgage rate movement throughout 2021 was steady compared to the rapid increase in mortgage rates this year:
<a href="https://files.mykcm.com/2022/03/29163526/20220330-MEM-Eng-1.png" target="_blank" rel="" class="use_kcm_lightbox"><img loading="lazy" class="aligncenter wp-image-101659" src="https://files.mykcm.com/2022/03/29163526/20220330-MEM-Eng-1.png" alt="What’s Happening with Mortgage Rates, and Where Will They Go from Here? | MyKCM" width="600" height="450" srcset="https://files.mykcm.com/2022/03/29163526/20220330-MEM-Eng-1.png 1000w, https://files.mykcm.com/2022/03/29163526/20220330-MEM-Eng-1-600x450.png 600w, https://files.mykcm.com/2022/03/29163526/20220330-MEM-Eng-1-768x576.png 768w, https://files.mykcm.com/2022/03/29163526/20220330-MEM-Eng-1-100x75.png 100w" sizes="(max-width: 600px) 100vw, 600px" /></a>
Just a few months ago, Freddie Mac <a href="https://www.freddiemac.com/research/forecast/20220121-quarterly-economic-forecast" title="projected" target="_blank" rel="noopener noreferrer">projected</a> mortgage rates would average 3.6% in 2022. Earlier this month, Fannie Mae <a href="https://www.fanniemae.com/media/43141/display" title="forecast" target="_blank" rel="noopener noreferrer">forecast</a> mortgage rates would average 3.8% in 2022. As the chart above shows, rates have already surpassed those projections.
Sam Khater, Chief Economist at Freddie Mac, explained in a <a href="https://freddiemac.gcs-web.com/news-releases/news-release-details/mortgage-rates-continue-move-0?_ga=2.217383318.1602794866.1648323840-1529566666.1576528603" title="press release" target="_blank" rel="noopener noreferrer">press release</a> last week:
“This week, the 30-year fixed-rate mortgage increased by more than a quarter of a percent as mortgage rates across all loan types continued to move up. Rising inflation, escalating geopolitical uncertainty and the Federal Reserve’s actions are driving rates higher and weakening consumers’ purchasing power.”
Where Are Mortgage Rates Going from Here?
In a <a href="https://www.bankrate.com/mortgages/march-2022-mortgage-rate-outlook/" title="recent article" target="_blank" rel="noopener noreferrer">recent article</a> by Bankrate, several industry experts weighed in on where rates might be headed going forward. Here are some of their forecasts:
Greg McBride, Chief Financial Analyst, Bankrate:
“With inflation figures continuing to surprise to the upside, mortgage rates will remain above 4.0% on the 30-year fixed.”
Nadia Evangelou, Senior Economist and Director of Forecasting, National Association of Realtors (NAR):
“While higher short-term interest rates will push up mortgage rates, I expect some of this impact to be mitigated eventually through lower inflation. Thus, I expect the 30-year fixed mortgage rate to continue to rise, although we aren’t likely to see the big jumps that occurred over the past few weeks.”
Len Kiefer, Deputy Chief Economist, Freddie Mac:
“Mortgage rates are likely to continue to move higher throughout the balance of 2022, although the pace of rate increases is likely to moderate.”
In a recent realtor.com <a href="https://www.realtor.com/research/federal-reserve-mar-2022-meeting/" title="article" target="_blank" rel="noopener noreferrer">article</a>, another expert adds to the conversation:
Danielle Hale, Chief Economist, realtor.com:
“. . . As markets digest the Fed’s updated economic projections, I anticipate a continued increase in mortgage rates over the next several months. . . .”
What Does This Mean for You if You’re Looking To Buy a Home?
With both mortgage rates and <a href="https://www.mykcm.com/2022/03/03/are-home-prices-continuing-to-rise/" title="home values">home values</a> expected to increase throughout the year, it would be better to buy sooner rather than later if you’re able. That’s because it’ll cost you more the longer you wait. But, there is a possible silver lining to buying a home right now. While you’ll be paying a higher price and a higher mortgage rate than you would have last year, rising prices do have a long-term benefit once you buy.
If you purchase a home today valued at $400,000 and put 10% down, you would be taking out a $360,000 mortgage. According to <a href="https://www.mortgagecalculator.net/" title="mortgagecalculator.net" target="_blank" rel="noopener noreferrer">mortgagecalculator.net</a>, at a 4.42% fixed mortgage rate, your mortgage payment would be $1,807 a month (this does not include insurance, taxes, and other fees because those vary by location).
Now, let’s put that mortgage payment into a new perspective based on the substantial growth in <a href="https://www.mykcm.com/2022/03/21/the-average-homeowner-gained-more-than-55k-in-equity-over-the-past-year/" title="equity">equity</a> that comes with the escalation in home prices. Every quarter, Pulsenomics surveys a panel of over 100 economists, investment strategists, and housing market analysts about their expectations for future home prices in the United States. Last week, Pulsenomics released their latest <a href="https://pulsenomics.com/surveys/#home-price-expectations" title="Home Price Expectation Survey" target="_blank" rel="noopener noreferrer">Home Price Expectation Survey</a>. The survey reveals that the average of the experts’ forecasts calls for a 9% increase in home values in 2022.
Based on those projections, a $400,000 house you buy today could be valued at $436,000 by this time next year. If you break that down, that means the equity in your home would increase by $3,000 a month over that period. That’s greater than the estimated monthly payment above. Granted, the increase in your <a href="https://www.mykcm.com/2022/03/28/a-key-to-building-wealth-is-homeownership/" title="net worth">net worth</a> is tied to the home, but it is one way to put the home price appreciation to use in a way that benefits you.
Bottom Line
Paying a higher price for a home and a higher mortgage rate can be a difficult pill to swallow. However, waiting will just cost you more. If you’re ready, willing, and able to buy a home, now will be a better time than a year, or even six months from now. Let’s connect to begin the process today.
2022-03-30T09:04:00-07:002022-12-09T13:19:55-07:00Broker Robertstag:sellsmhk.com,2012-09-20:19426 Did Your Dream Home Just Come on the Market?
<img width="750" height="410" src="https://files.mykcm.com/2022/03/16093503/20220317-KCM-Share.jpg" class="attachment-entry size-entry wp-post-image" alt="Did Your Dream Home Just Come on the Market? | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2022/03/16093503/20220317-KCM-Share.jpg 750w, https://files.mykcm.com/2022/03/16093503/20220317-KCM-Share-600x328.jpg 600w, https://files.mykcm.com/2022/03/16093503/20220317-KCM-Share-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" />
For the first time in a long time, the number of newly listed homes is beginning to rise. In their latest <a href="https://www.realtor.com/research/data/" title="monthly release" target="_blank" rel="noopener noreferrer">monthly release</a>, realtor.com reveals the number of existing homes entering the market has increased for two months in a row (this comes after six months of declines). Here’s a graph showing the monthly new listings going back to January of last year. The green bars indicate the first gains since June.
<a href="https://files.mykcm.com/2022/03/16093505/20220317-MEM-Eng-1.png" target="_blank" rel="" class="use_kcm_lightbox"><img loading="lazy" class="aligncenter wp-image-101517" src="https://files.mykcm.com/2022/03/16093505/20220317-MEM-Eng-1.png" alt="Did Your Dream Home Just Come on the Market? | MyKCM" width="600" height="450" srcset="https://files.mykcm.com/2022/03/16093505/20220317-MEM-Eng-1.png 1000w, https://files.mykcm.com/2022/03/16093505/20220317-MEM-Eng-1-600x450.png 600w, https://files.mykcm.com/2022/03/16093505/20220317-MEM-Eng-1-768x576.png 768w, https://files.mykcm.com/2022/03/16093505/20220317-MEM-Eng-1-100x75.png 100w" sizes="(max-width: 600px) 100vw, 600px" /></a>
However, buying demand is still outpacing housing supply.
Though the increase in homes coming to the market is great news for prospective homebuyers, the number of buyers is still outpacing the number of homes available for sale. As realtor.com explains in their <a href="https://news.move.com/2022-03-03-Realtor-com-R-February-Housing-Report-Home-Prices-Hit-All-Time-High-Ahead-of-Spring-Buying-Season" title="latest report" target="_blank" rel="noopener noreferrer">latest report</a>:
“During the final two weeks of the month, more new sellers entered the market than during the same time last year. . . . However, with 5.8 million new homes missing from the market and millions of millennials at first-time buying ages, housing supply faces a long road to catching up with demand.”
In fact, according to the latest <a href="https://www.showingtime.com/blog/january-2022-showing-index-results" title="ShowingTime Showing Index" target="_blank" rel="noopener noreferrer">ShowingTime Showing Index</a>, which tracks the average number of appointments received on active listings during the month, buyer demand was greater this January than any other January in the last five years (see graph below):
<a href="https://files.mykcm.com/2022/03/16093508/20220317-MEM-Eng-2.png" target="_blank" rel="" class="use_kcm_lightbox"><img loading="lazy" class="aligncenter wp-image-101518" src="https://files.mykcm.com/2022/03/16093508/20220317-MEM-Eng-2.png" alt="Did Your Dream Home Just Come on the Market? | MyKCM" width="600" height="450" srcset="https://files.mykcm.com/2022/03/16093508/20220317-MEM-Eng-2.png 1000w, https://files.mykcm.com/2022/03/16093508/20220317-MEM-Eng-2-600x450.png 600w, https://files.mykcm.com/2022/03/16093508/20220317-MEM-Eng-2-768x576.png 768w, https://files.mykcm.com/2022/03/16093508/20220317-MEM-Eng-2-100x75.png 100w" sizes="(max-width: 600px) 100vw, 600px" /></a>
This prompted ShowingTime to say:
“The latest data from ShowingTime . . . shows a surge in home buyer demand in January. . . . This enormous activity occurred in a month when buyer activity typically slows and followed a historic 2021, where buyer demand across the country was extraordinarily strong.”
What does that mean for you?
Basically, as homes come to the market, they are quickly being purchased by eagerly awaiting buyers. So even though the number of newly listed homes is increasing, the number of active listings is still shrinking every month because buyers are purchasing homes almost as soon as they come up for sale. That means listings are coming on and off the market so fast that they don’t carry over to be counted in the active listing numbers the following month. Here’s a graph showing the number of active listings each month since last January using <a href="https://www.realtor.com/research/data/" title="data released" target="_blank" rel="noopener noreferrer">data released</a> by realtor.com:
<a href="https://files.mykcm.com/2022/03/16093511/20220317-MEM-Eng-3.png" target="_blank" rel="" class="use_kcm_lightbox"><img loading="lazy" class="aligncenter wp-image-101519" src="https://files.mykcm.com/2022/03/16093511/20220317-MEM-Eng-3.png" alt="Did Your Dream Home Just Come on the Market? | MyKCM" width="600" height="450" srcset="https://files.mykcm.com/2022/03/16093511/20220317-MEM-Eng-3.png 1000w, https://files.mykcm.com/2022/03/16093511/20220317-MEM-Eng-3-600x450.png 600w, https://files.mykcm.com/2022/03/16093511/20220317-MEM-Eng-3-768x576.png 768w, https://files.mykcm.com/2022/03/16093511/20220317-MEM-Eng-3-100x75.png 100w" sizes="(max-width: 600px) 100vw, 600px" /></a>
This graph shows that the number of active listings has decreased for each of the last five months even though the number of newly listed homes has increased over the last two months.
Bottom Line
Whether you’re looking to upgrade to a home that will better suit your lifestyle or looking to purchase your first house, let’s connect so you can stay updated on what’s happening in your area. And <a href="https://www.mykcm.com/2022/03/10/how-to-navigate-a-market-where-multiple-offers-is-the-new-normal/" title="be prepared">be prepared</a> to move immediately if a home fitting your needs hits the market. Your dream home may be one of those new listings that just became available, but if you don’t act quickly, it could be gone tomorrow.
2022-03-28T09:23:00-07:002022-12-09T13:21:02-07:00Broker Roberts