Whether or not you’ve ever seen an episode of Modern Family, or know who Phil Dunphy’s character is, the concept of knowing that you have someone in your corner who is looking out for your best interests is something we all want. When it comes to buying a home, whether you are a rookie homebuyer or have gone through the process many times, having a local real estate expert who is well versed in the neighborhood you are looking to move into, and the trends of the area, should be your goal. For those who aren’t familiar, the character Phil Dunphy is a Realtor with a huge heart who always strives to do the best for his family and his clients. In one recent episode, Phil even shared the oath that he created and holds himself to:
“On my honor, I promise to aid in man’s quest for shelter, to recognize I’m not just in the business of houses — I’m in the business of dreams in the shape of houses. To disclose all illegal additions, shoddy construction, murders, and ghosts. And to put my clients’ needs before my own.”
While this might seem silly, and it was definitely written with humor in mind, the themes of helping someone achieve the American Dream and putting a clients’ needs above your own are not to be taken lightly.
When you make the decision to enter the housing market, as either a buyer or a seller, make sure you look for an agent who exemplifies these values and will help you through every step of the process.
According to the latestBeracha, Hardin & Johnson Buy vs. Rent (BH&J) Index, the U.S. housing market has continued to move deeper into buy territory, supporting the belief that housing markets across the country remain a sound investment. The BH&J Index is a quarterly report that attempts to answer the question:
In today’s housing market, is it better to rent or buy a home?
The index examines the entire US housing market and then isolates 23 major cities for comparison. The researchers “measure the relationship between purchasing property and building wealth through a buildup in equity versus renting a comparable property and investing in a portfolio of stocks and bonds.” Ken Johnson, Ph.D., Real Estate Economist & Professor at Florida Atlantic University, and one of the index’s authors explains that:
“Housing prices, in general, continue to slow and when considered in light of the recent trends in the Buy vs. Rent Index signal that ownership remains an excellent investment for the majority of Americans.”
While 15 of the 23 metropolitan markets examined moved further into buy territory since last quarter, Dallas, Denver, and Houston are three of the major cities that are currently deep into rent territory. In these three markets, it is estimated that renting will top homeownership 7 out of 10 times. Eli Beracha, Ph.D., Assistant Professor in the T&S Hollo School of Real Estate at FIU, believes that, in these three markets, the “strong odds in favor of renting to create more wealth should begin to have an impact on the demand for home ownership and from that, impact property prices in these areas.” Simply put, home prices in these areas will begin to return to more normal levels once residents realize that renting may be a better choice, therefore bringing home affordability back as well.
The majority of the country is strongly in buy territory. Buying a home makes sense socially and financially. Rents are predicted to increase substantially in the next year. Protect yourself from rising rents by locking in your housing cost with a mortgage payment now. To Find Out More About the Study: The BH&J Index and other FAU real estate activities are sponsored by Investments Limited of Boca Raton. The BH&J Index is published quarterly and is available online at http://business.fau.edu/buyvsrent.
It’s that time of year; the seasons are changing and with them come thoughts of the upcoming holidays, family get-togethers, and planning for a new year. Those who are on the fence about whether or not now is the right time to buy don’t have to look much further to find four great reasons to consider buying a home now, instead of waiting.
1. Prices Will Continue to Rise
CoreLogic’s latest Home Price Index reports that home prices have appreciated by 6% over the last 12 months. The same report predicts that prices will continue to increase at a rate of 5.4% over the next year. The Home Price Expectation Survey polls a distinguished panel of over 100 economists, investment strategists, and housing market analysts. Their most recent report projects home values to appreciate by more than 3.5% a year for the next 5 years. The bottom in home prices has come and gone. Home values will continue to appreciate for years. Waiting no longer makes sense.
2. Mortgage Interest Rates Remain at Historic Lows
Freddie Mac’s Primary Mortgage Market Survey shows that interest rates for a 30-year mortgage have remained at or below 3.5% for 13 consecutive weeks. The Mortgage Bankers Association, Freddie Mac & the National Association of Realtors are in unison, projecting that rates will increase by this time next year. Any increase in rates will impact YOUR monthly mortgage payment. A year from now, the percentage of your income that you spend on housing will increase substantially if you choose to wait.
3. Either Way You Are Paying a Mortgage
Everyone should realize that, unless you are living with your parents rent-free, you are paying a mortgage – either your mortgage or your landlord’s. As a paper from the Joint Center for Housing Studies at Harvard University explains: “Households must consume housing whether they own or rent. Not even accounting for more favorable tax treatment of owning, homeowners pay debt service to pay down their own principal while households that rent pay down the principal of a landlord plus a rate of return. That’s yet another reason owning often does–as Americans intuit–end up making more financial sense than renting.”
4. It’s Time to Move on with Your Life
The ‘cost’ of a home is determined by two major components: the price of the home and the current mortgage rate. It appears that both are on the rise. But what if they weren’t? Would you wait? Look at the actual reason you are buying and decide whether it is worth waiting. Whether you want to have a great place for your children to grow up, you want your family to be safer or you just want to have control over renovations, maybe now is the time to buy.
If the right thing for you and your family is to purchase a home this year, buying sooner rather than later could lead to substantial savings.
Whenever there is talk about an improving housing market, some begin to show concern that we may be headed toward another housing bubble that will be followed by a crash similar to the one we saw last decade. Here are five data points that show the housing market will continue to recover, and that a new housing crisis is not about to take shape. 1) Mortgage availability is increasing, but is nowhere near the levels we saw in 2004-2006. A buyer’s chances of being approved for a mortgage have increased over the last three years; That’s good news for the market. This is not a precursor to another challenge, as many experts maintain that it is still too difficult for many buyers to attain house financing. As Jonathan Smoke, the Chief Economist of realtor.com, recently explained:
“The havoc during the last cycle was the result…of speculation fueled by loose credit. That’s the exact opposite of what we have today.”
2) The Housing Affordability Index, which measures whether or not a typical family earns enough income to qualify for a mortgage loan on a typical home, based on the most recent price and income data. The current index shows that it is more affordable to buy a home today than at any other time between 1990 and 2008. With median incomes finally beginning to rise, houses should continue to remain affordable and housing demand should remain strong. 3) Home prices are well within historic norms. Prices have increased substantially over the last several years; However, those increases followed the housing crash of 2008 and national prices are still not back to 2006 levels. If there were no bubble (and subsequent bust), today’s prices would actually be lower than if they were measured by historic appreciation levels from 1987-1999. 4) Demand for housing, as measured by new household formations, is growing. The Urban Land Institute projects that 5.95 million new households will be formed over the next three years. Even if the homeownership rate drops to 60%, that would be over 3.5 million new homeowners entering the market. 5) New home starts are finally beginning to increase. This helps eliminate the number one challenge in the industry – lack of inventory. And it does so in two ways:
Some first time buyers will, in fact, purchase a newly constructed home.
Many current homeowners will move-up (or move-down) to a new construction and then put their current home on the market.
This means that there will be an increase in both new construction and existing home inventories. Agents: Join us later on today for our free webinar at 2PM ET/1PM CT as we give you the tools and understanding you’ll need to calm your clients’ doubts and position yourself as a market expert. Reserve your seat today for “5 Graphs that Prove the Housing Market is Strong and Will Continue to Surge.”
So you’ve been searching for that perfect house to call a ‘home’ and you finally found one! The price is right, and in such a competitive market you want to make sure you make a good offer so that you can guarantee your dream of making this house yours comes true!Freddie Mac covered “4 Tips for Making an Offer” in their latest Executive Perspective. Here are the 4 Tips they covered along with some additional information for your consideration:
1. Understand How Much You Can Afford
“While it’s not nearly as fun as house hunting, fully understanding your finances is critical in making an offer.”
This ‘tip’ or ‘step’ really should take place before you start your home search process. As we’ve mentioned before, getting pre-approved is one of many steps that will show home sellers that you are serious about buying, and will allow you to make your offer with the confidence of knowing that you have already been approved for a mortgage for that amount. You will also need to know if you are prepared to make any repairs that may need to be made to the house (ex: new roof, new furnace).
2. Act Fast
“Even though there are fewer investors, the inventory of homes for sale is also low and competition for housing continues to heat up in many parts of the country.”
According to the latest Existing Home Sales Report, the inventory of homes for sale is currently at a 4.7-month supply. This is well below the 6-month supply that is needed for a‘normal’ market. Buyer demand has continued to outpace the supply of homes for sale, causing buyers to compete with each other for their dream home. Make sure that as soon as you decide that you want to make an offer, you work with your agent to present it as soon as possible.
3. Make a Solid Offer
Freddie Mac offers this advice to help make your offer the strongest it can be:
“Your strongest offer will be comparable with other sales and listings in the neighborhood. A licensed real estate agent active in the neighborhoods you are considering will be instrumental in helping you put in a solid offer based on their experience and other key considerations such as recent sales of similar homes, the condition of the house and what you can afford.”
Consider ways of making your offer stand out! Many buyers write a personal letter to the seller letting them know how much they would love to be the new homeowners. Your agent will be able to help you figure out if there are any other ways your offer could stand above the rest.
4. Be Prepared to Negotiate
“It’s likely that you’ll get at least one counteroffer from the sellers so be prepared. The two things most likely to be negotiated are the selling price and closing date. Given that, you’ll be glad you did your homework first to understand how much you can afford. Your agent will also be key in the negotiation process, giving you guidance on the counteroffer and making sure that the agreed-to contract terms are met.”
If your offer is approved, Freddie Mac urges you to “always get an independent home inspection, so you know the true condition of the home. If the inspection uncovers undisclosed problems or issues, you can typically re-negotiate the terms or cancel the contract.”
Whether buying your first home or your fifth, having a local real estate professional who is an expert in their market on your side is your best bet to make sure the process goes smoothly. Happy House Hunting!
CoreLogic‘s latest Equity Report revealed that 91.1% of all mortgaged properties are now in a positive equity situation, while 75.9% now have significant equity (defined as more than 20%)! The report also revealed that 548,000 households regained equity in the second quarter of 2016 and are no longer under water.
Price Appreciation = Good News for Homeowners
Frank Nothaft, CoreLogic’s Chief Economist, explains:
“Home-value gains have played a large part in restoring home equity. The CoreLogic Home Price Index (HPI) for the U.S. recorded 5.2 percent growth in the year through June, an important reason that the number of owners with negative equity fell by 850,000 in the second quarter from a year earlier.”
Anand Nallathambi, President & CEO of CoreLogic, believes this is a great sign for the market in the coming year as well, as he had this to say:
“We see home prices rising another 5 percent in the coming year based on the latest projected national CoreLogic Home Price Index. Assuming this growth is uniform across the U.S., that should release an additional 700,000 homeowners from the scourge of negative equity.”
Below is a map illustrating the percentage of households in each state with significant equity:
Many homeowners with more than 20% equity in their home would be able to use that equity as a down payment on either a larger home, or even a retirement home.
If you are one of the many Americans who are unsure of how much equity you have in your home, don’t let that be the reason you fail to move on to your dream home this year!
When a homeowner decides to sell their house, they obviously want the best possible price with the least amount of hassles. However, for the vast majority of sellers, the most important result is to actually get the home sold. In order to accomplish all three goals, a seller should realize the importance of using a real estate professional. We realize that technology has changed the purchaser’s behavior during the home buying process. For the past three years, 92% of all buyers have used the internet in their home search according to the National Association of Realtors’ most recent Profile of Home Buyers & Sellers.However, the report also revealed that 95% percent of buyers that used the internet when searching for a home purchased their home through either a real estate agent/broker or from a builder or builder’s agent. Only 2% purchased their home directly from a seller whom the buyer didn’t know. Buyers search for a home online, but then depend on an agent to find the actual home they will buy (53%), to negotiate the terms of the sale & price (48%), or to help understand the process (60%). The plethora of information now available has resulted in an increase in the percentage of buyers that reach out to real estate professionals to “connect the dots.” This is obvious, as the percentage of overall buyers who used an agent to buy their home has steadily increased from 69% in 2001.
If you are thinking of selling your home, don’t underestimate the role a real estate professional can play in the process.
The National Association of REALTORS® surveyed their members for their Confidence Index
The REALTORS® Confidence Index is a key indicator of housing market strength based on a monthly survey sent to over 50,000 real estate practitioners. Practitioners are asked about their expectations for home sales, prices and market conditions.
Homes sold in less than 60 days in 38 out of 50 states and Washington D.C.
Owning a home has great financial benefits. Because of this, more and more experts are growing concerned about the ramifications of a falling homeownership rate. Today, let’s look at the financial reasons why owning a home of your own has been a part of the American Dream for as long as America has existed. The outcomes of a falling homeownership rate can be devastating. As explained by Apartment List.com:
“Our research indicates that not owning a home has a sizable financial cost, as renters miss out on low mortgage rates and are hit by higher rents. This phenomenon may exacerbate inequality in our society, as those wealthy enough to invest in real estate benefit from lower interest rates, whereas minorities and younger Americans, hit by rising rents and student debt, risk being locked out of homeownership.”
What proof exists that owning is financially better than renting?
1. A study published by the Joint Center of Housing Studies at Harvard University shows the financial benefits of homeownership. The study mentions five major financial benefits:
Housing is typically the one leveraged investment available
You’re paying for housing whether you own or rent
Owning is usually a form of “forced savings”
There are substantial tax benefits to owning
Owning is a hedge against inflation
2. Studies have shown that homeowners have a net worth that is 45X greater than that of a renter. 3. Just last month, we explained that a family buying an average priced home this past January could build more than $46,000 in family wealth over the next five years. 4. Some argue that renting eliminates the cost of taxes and home repairs. Every potential renter must realize that all the expenses the landlord incurs are baked into the rent payment already – along with a profit margin!!
Owning a home has always been, and will always be better from a financial standpoint than renting.
There is no doubt that getting a mortgage is easier today than it was right after the housing crash a decade ago. However, the easing of credit availability has led to some questioning of whether or not we are headed for another housing crisis. Let’s put everything into the proper perspective.
Mortgage Credit Availability Over the Last Three Years
Getting a home mortgage has definitely gotten easier over the last three years as evidenced by the Mortgage Credit Availability Index, issued by the Mortgage Bankers Association, in
Getting a home mortgage has definitely gotten easier over the last three years as evidenced by the Mortgage Credit Availability Index, issued by the Mortgage Bankers Association, in the following graph (the higher the index, the easier it is to get a mortgage) However, if we look further back at the index we see quite a different story
Mortgage Credit Availability Today Compared to 2006
The graph below shows the index going back to 2004, and the first graph we showed you above is represented by the small, orange, triangular section all the way in the lower-right As this visual easily illustrates, today’s index is nowhere near the levels it shot up to in 2006.
Mortgage credit is definitely easing. However, we are not coming close to the lax standards that caused the housing crisis of last decade.