Following last year’s real estate market was like riding a rollercoaster. The market started off strong in 2018 and then softened before finishing with a mild flurry. However, one thing that did not waiver was America’s belief that owning a home makes sense from a financial standpoint. An end-of-the-year survey by the Federal Reserve Bank’s Center for Microeconomic Data revealed that: “The majority of households continue to view housing as a good financial investment.” And that percentage has increased over the last three years. Bottom Line Though there is some uncertainty as to how the real estate market will perform over the next twelve months, one thing remains very certain: America’s belief in homeownership.

Some Highlights: Existing home sales are currently at an annual pace of 5.32 million and have increased on a monthly basis for the last two months. The inventory of existing homes for sale remains below the 6-months needed for a normal market and is now at a 3.9-month supply. Inventory remains low due to high demand from buyers who are still looking for houses to buy!

There is a lot of uncertainty regarding the real estate market heading into 2019. That uncertainty has raised concerns that we may be headed toward another housing crash like the one we experienced a decade ago. Here are four reasons why today’s market is much different: 1. There are fewer foreclosures now than there were in 2006 A major challenge in 2006 was the number of foreclosures. There will always be foreclosures, but they spiked by over 100% prior to the crash. Foreclosures sold at a discount and, in many cases, lowered the values of adjacent homes. We are ending 2018 with foreclosures at historic pre-crash numbers – much fewer foreclosures than we ended 2006 with. 2. Most homeowners have tremendous equity in their homes Ten years ago, many homeowners irrationally converted much, if not all, of their equity into cash with a cash-out refinance. When foreclosures rose and prices fell, they found themselves in a negative equity situation where their homes were worth less than their mortgage amounts. Many just walked away from their houses which led to even more foreclosures entering the market. Today is different. Over forty-eight percent of homeowners have at least 50% equity in their homes and they are not extracting their equity at the same rates they did in 2006. 3. Lending standards are much tougher One of the causes of the crash ten years ago was that lending standards were almost non-existent. NINJA loans (no income, no job, and no assets) no longer exist. ARMs (adjustable rate mortgages) still exist but only as a fraction of the number from a decade ago. Though mortgage standards have loosened somewhat during the last few years, we are nowhere near the standards that helped create the housing crisis ten years ago. 4. Affordability is better now than in 2006 Though it is difficult to afford a home for many Americans, data shows that it is more affordable to purchase a home now than it was from 1985 to 2000. And, it requires much less of a percentage of your income today than it did in 2006. Bottom Line The housing industry is facing some rough waters heading into 2019. However, the graphs above show that the market is much healthier than it was prior to the crash ten years ago.

As we head into 2019, many news outlets and housing experts warn that the housing market may slow down. Over the last six years, the inventory of homes for sale has been near historic lows, which has been the force behind increasing home prices. This has been great news for sellers as many of them have been able to capitalize on the demand in the market and sell their homes quickly and at a great profit. One of the big reasons why inventory has remained so low for so long is that an entire generation of home buyers is finally buying! The millennial generation (ages 19-35) has been the driving force behind bidding wars in many areas of the country as they ditch their renter lifestyles and put down roots in new communities. First American recently released a study entitled “How ‘Renter’ Millennials Will Transform the Housing Market.” In their study, they explained that: “…As more millennials age into their early-to-mid thirties, and begin to get married, have children and form households, they will continue to be the primary drivers of homeownership demand.” Because of this, it is safe to say that one aspect of 2019’s housing market that WILL NOTslow down is the demand for housing from young renters who are no longer satisfied living in someone else’s homes. According to the latest Housing Vacancies and Homeownership Report from the Census Bureau, home buyers under 35 are already out-buying older Americans. The chart below shows the year-over-year change in homeownership rate by those under and over the age of 35. The national homeownership rate spiked to its highest level in 2004 and then steadily declined until the second quarter of 2016 when it reversed course. Homebuyers under the age of 35 are the reason for that shift. More than half of the purchase mortgages originated by Fannie Mae and Freddie Mac in 2018 were to first-time homebuyers. In fact, “according to Census Bureau and First American calculations, over the next 10 years, aging millennials are expected to purchase at least 10 million new homes. By 2060, it is estimated millennials will have produced more than 20 million first-time home buyers.” Bottom Line If you are a homeowner who is nervous that the demand for your home will slow, don’t worry! If your home is priced competitively, there will be demand for years to come as this generation of renters is finally able to buy!

As we approach the end of the year, many homeowners find themselves asking the question,“If we’re currently in a strong real estate market, why won’t my house sell?” Below are the 5 most common reasons why a listing contract will expire: 1. The Price Sometimes when the market is hot, homeowners attempt to set their listing price higher. Their hope is that a motivated buyer will be willing to pay any price for a house in their desired neighborhood! Sellers must remember, though, that in today’s market a house must be sold twice; first to the buyer and then to their bank. A buyer can agree to pay the homeowner’s asking price, but after the bank conducts their appraisal, the price might need to be adjusted. The bank will only give the buyer a mortgage for the value of determined in the appraisal. Sellers must also keep in mind that today’s homebuyers are well-educated. Before they look to buy a house, they have already seen many houses online. They’ve done their research on the neighborhoods they are interested in, including information on the school districts in the area. They will know if your house seems overpriced and will not waste their time considering it. This is why it’s so important to make sure that your home is priced right from day one on the market! 2. The Condition of the House In many areas, builders are taking advantage of the lack of inventory of homes for sale by building new houses. These newly constructed homes create competition for existing homes in the market. For this reason, many homeowners are making renovations and updates to their homes to compete with the new construction in their marketplace. Most agents recommend that homeowners declutter their houses before putting them on the market. Buyers want to be able to imagine themselves living in the home instead of focusing on the current homeowner’s decor. It’s important to take care of the small problems like dripping faucets and torn screens, while also remembering to remove any posters hanging in your teenager’s bedroom. Making sure your home is in perfect condition will make buyers fall in love with it and will ultimately help you get the right price for your house! 3. Seller’s Motivation Why did the seller put their house on the market in the first place? Is the seller’s motivation still the same as it was when they first listed? If homeowners are really motivated to sell, they will make sure their houses are both priced right and in good condition. The seller’s motivation will push them to consider all offers and help them make the right decision for their family’s future. 4. Marketing Plan Having a marketing plan is important! According to NAR’s 2018 Profile of Home Buyers and Sellers, 95% of buyers searched online for a home last year. The days of looking for a newspaper ad or yard sign in your preferred neighborhood are over. If you want to sell your home, you need a real estate professional who understands your local market and knows how to promote your home online. Something as simple as using pictures taken by a professional photographer can make a huge impact in advertising your home! 5. Lack of Communication with Your Agent Keeping an open line of communication with your agent is crucial in getting your home sold with the least amount of hassles, in the right amount of time, and for the right price! From the beginning, establish a continuous line of communication with your agent, and make sure you review your agreement often to see if any changes need to be made. For example, adjusting the selling price! Bottom Line There are houses selling every single day because they are listed at the right price, they have the right marketing plan, and they are staged for the sale. If for some reason your home didn’t sell and you’re still motivated to get it sold, let’s get together to figure out the reason your house isn’t selling!

Here are five reasons listing your home for sale this winter makes sense. 1. Demand Is Strong The latest Buyer Traffic Report from the National Association of Realtors (NAR) shows that buyer demand remains strong throughout the vast majority of the country. These buyers are ready, willing and able to purchase… and are in the market right now! More often than not, multiple buyers are competing with each other to buy a home. Take advantage of the buyer activity currently in the market. 2. There Is Less Competition Now Housing inventory is still under the 6-month supply that is needed for a normal housing market. This means that, in the majority of the country, there are not enough homes for sale to satisfy the number of buyers in the market. This is good news for homeowners who have gained equity as their home values have increased. However, additional inventory could be coming to the market soon. Historically, the average number of years a homeowner stayed in their home was six but has hovered between nine and ten years since 2011. There is a pent-up desire for many homeowners to move, as they were unable to sell over the last few years because of a negative equity situation. As home values continue to appreciate, more and more homeowners will be given the freedom to move. The choices buyers have will continue to increase. Don’t wait until this other inventory comes to market before you decide to sell. 3. The Process Will Be Quicker Today’s competitive environment has forced buyers to do all they can to stand out from the crowd, including getting pre-approved for their mortgage financing. This makes the entire selling process much faster and much simpler as buyers know exactly what they can afford before home shopping. According to Ellie Mae’s latest Origination Insights Report, the time to close a loan has dropped to 46 days. 4. There Will Never Be a Better Time to Move Up If your next move will be into a premium or luxury home, now is the time to move up! The inventory of homes for sale at these higher price ranges has forced these markets into a buyer’s market. This means that if you are planning on selling a starter or trade-up home, your home will sell quickly, AND you’ll be able to find a premium home to call your own! Prices are projected to appreciate by 4.8% over the next year according to CoreLogic. If you are moving to a higher-priced home, it will wind up costing you more in raw dollars (both in down payment and mortgage payment) if you wait. 5. It’s Time to Move on With Your Life Look at the reason you decided to sell in the first place and determine whether it is worth waiting. Is money more important than being with family? Is money more important than your health? Is money more important than having the freedom to go on with your life the way you think you should? Only you know the answers to the questions above. You have the power to take control of the situation by putting your home on the market. Perhaps the time has come for you and your family to move on and start living the life you desire. That is what is truly important.

Some Highlights: An emerging trend for some time now has been the difference between available inventory and demand in the premium and luxury markets and that in the starter and trade-up markets and what those differences are doing to prices! Inventory continues to rise in the luxury and premium home markets which is causing prices to cool. Demand continues to rise with lower-than-normal inventory levels in the starter and trade-up home markets, causing prices to rise on a year-over-year basis for 80 consecutive months.

Every three years, the Federal Reserve conducts their Survey of Consumer Finances in which they collect data across all economic and social groups. Their latest survey data covers responses from 2013-2016. The study revealed that the median net worth of a homeowner was $231,400 – a 15% increase since 2013. At the same time, the median net worth of renters decreased by 5% ($5,200 today compared to $5,500 in 2013). These numbers reveal that the net worth of a homeowner is over 44 times greater than that of a renter. There are many who see that statistic and point toward how broad the range of respondents are for the Federal Reserve survey. Their study includes all economic and social groups and also includes all age groups. The argument is that older respondents have a higher likelihood of being homeowners, while the homeownership rate among younger survey takers is much lower. Recently, the Joint Center for Housing Studies at Harvard University focused on homeowners and renters over the age of 65. Their study revealed that the difference in net worth between homeowners and renters at this age group was actually 47.5 times greater! Homeowners over the age of 65 are much more financially prepared for retirement and often own their homes outright if they were fortunate enough to purchase their homes before the age of 36. Their 30 years of mortgage payments have paid off as they gained equity through their monthly payments and as home values appreciated. It is no surprise that lifelong-renters have had a hard time accruing net worth as the latest Census report shows that the Median Asking Rent has been climbing consistently over the last 30 years. Bottom Line As a homeowner you put your monthly mortgage payment to work for you, building your net worth with every payment.

Here are four great reasons to consider buying a home today instead of waiting. 1. Prices Will Continue to Rise CoreLogic’s latest Home Price Insight report revealed that home prices have appreciated by 5.6% over the last 12 months. The same report predicts that prices will continue to increase at a rate of 4.7% over the next year. The bottom in home prices has come and gone. Home values will continue to appreciate for years. Waiting no longer makes sense. 2. Mortgage Interest Rates Are Projected to Increase  Freddie Mac’s Primary Mortgage Market Survey shows that interest rates for a 30-year mortgage have hovered around 4.8%. Most experts predict that rates will rise over the next 12 months. The Mortgage Bankers Association, Fannie Mae, Freddie Mac and the National Association of Realtors are in unison, projecting that rates will increase in 2019. An increase in rates will impact YOUR monthly mortgage payment. A year from now, your housing expense will increase if a mortgage is necessary to buy your next home. 3. Either Way, You are Paying a Mortgage There are some renters who have not yet purchased homes because they are uncomfortable taking on the obligation of a mortgage. Everyone should realize that unless you are living with your parents rent-free, you are paying a mortgage – either yours or your landlord’s. As an owner, your mortgage payment is a form of ‘forced savings’ that allows you to build equity in your home that you can tap into later in life. As a renter, you guarantee your landlord is the person building that equity. Are you ready to put your housing cost to work for you? 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 if it is worth waiting. Whether you want to have a great place for your children to grow up, you want your family to be safer, or you just want to have control over renovations, maybe now is the time to buy. If the right thing for you and your family is to purchase a home this year, buying sooner rather than later could lead to substantial savings.

Some Highlights: The Federal Housing Finance Agency (FHFA) recently released their latest Quarterly Home Price Index report. In the report, home prices are compared both regionally and by state. Based on the latest numbers, if you plan on relocating to another state, waiting to move may end up costing you more!

Home sales numbers are leveling off, the rate of price appreciation has slowed to more historically normal averages, and inventory is finally increasing. We are headed into a more normal housing market. However, some are seeing these adjustments as red flags and are suggesting that we are headed back to the same challenges we experienced in 2008. Today, let’s look at one set of statistics that prove the current market is nothing like the one that preceded the housing crash last decade. The previous bubble was partially caused by unhealthy levels of mortgage debt. New purchasers were putting down the minimum down payment, resulting in them having little if any equity in their homes. Existing homeowners were using their homes as ATMs by refinancing and swapping their equity for cash. When prices started to fall, many homeowners found themselves in a negative equity situation (where their mortgage was higher than the value of their home) so they walked away which caused prices to fall even further. When this happened, even more homeowners found themselves in negative equity situations which caused them to walk away as well, and so a vicious cycle formed. Today, the equity situation is totally different. According to a new report from ATTOM Data Solutions more than 1-in-4 homes with a mortgage have at least 50% equity. The report explains: “…nearly 14.5 million U.S. properties were equity rich — where the combined estimated amount of loans secured by the property was 50 percent or less of the property’s estimated market value…The 14.5 million equity rich properties in Q3 2018 represented 25.7 percent of all properties with a mortgage.” In addition, according to the U.S. Census Bureau, 30.3% of homes in the country have no mortgage on them. Almost 50% of all homes have at least 50% equity. If we take both numbers, the 30.3% of all homes without a mortgage and the 17.9% with at least 50% equity (25.7% of the 69.3% of homes with a mortgage), we realize that 48.2% of all homes in the country have at least 50% equity. Bottom Line Unlike 2008, almost half of the homeowners in the country are sitting on massive amounts of home equity. They will not be walking away from their homes if the housing market begins to soften.

n real estate, the spring is often seen as the ideal time to buy or sell a house. The term “Spring Buyer’s Season” exists for a reason, as renters and those looking to move on from their current home thaw out from the winter and hit the market ready to buy. According to Bank of America’s annual Home Buyer Insights Report, 41% of renters surveyed agree that spring is the best time to buy a home. The surprising result, however, is that when ranking the seasons, winter comes in second at 24%. In many areas of the country, the spring and summer are the most competitive seasons for buyers. Families with children often want to move over the summer to make sure that their kids are ready for school in the fall. This often leads those families who haven’t found homes to buy to push pause on their search in the fall and winter months. This creates a great environment for buyers to find a home with less competition. According to moving.com, scheduling a move during the winter months also comes with the best price. “If you define ‘best’ by cost then, generally speaking, you are more likely to save on a move during the late September to April window. Demand for movers usually slows down during this time frame and rates are low.” There are also many benefits to listing your house for sale during the winter months as well! As we recently mentioned, buyers who are out in the winter are serious about wanting to find a home, and there is traditionally less competition on the market which gives you greater exposure to those buyers. Bottom Line As always, the best time to buy or move all depends on each individual buyer or seller’s goals and needs. If you are one of the many who would like to make a move this winter, let’s get together to create a plan to make it happen!

Many sellers believe that spring is the best time to place their homes on the market because buyer demand traditionally increases at that time of year, but what they don’t realize is that if every homeowner believes the same thing, then that is when they will have the most competition! The #1 Reason to List Your Home in the Winter Months is Less Competition! Housing supply traditionally shrinks at this time of year, so the choices buyers have will be limited. The chart below was created using the months’ supply of listings from the National Association of Realtors. As you can see, the ‘sweet spot’ to list your home for the most exposure naturally occurs in the late fall and winter months (November – February).  Temperatures aren’t the only thing that heats up in the spring – so do listings! In 2017, listings increased by nearly half a million houses from December to June. Don’t wait for these listings to come to market before you decide to list your house. Added Bonus: Only Serious Buyers Are Out in the Winter At this time of year, only those purchasers who are serious about buying a home will be in the marketplace. You and your family will not be bothered and inconvenienced by mere ‘lookers.’ The lookers are at the mall or online doing their holiday shopping. Bottom Line If you have been debating whether or not to sell your home and are curious about market conditions in your area, let’s get together to help you decide the best time to list your house for sale.  

Many homebuyers think that saving for their down payment is enough to buy the house of their dreams, but what about the closing costs that are required to obtain a mortgage? By law, a homebuyer will receive a loan estimate from their lender 3 days after submitting their loan application and they should receive a closing disclosure 3 days before the scheduled closing on their home. The closing disclosure includes final details about the loan and the closing costs. But what are closing costs anyway? According to Trulia: “Closing costs are lender and third-party fees paid at the closing of a real estate transaction, and they can be financed as part of the deal or be paid upfront. They range from 2% to 5% of the purchase price of a home. (For those who buy a $150,000 home, for example, that would amount to between $3,000 and $7,500 in closing fees.)” Keep in mind that if you are in the market for a home above this price range, your costs could be significantly greater. As mentioned before, Closing costs are typically between 2% and 5% of your purchase price. Trulia continues to give great advice, saying that: “…understanding and educating yourself about these costs before settlement day arrives might help you avoid any headaches at the end of the deal.” Bottom Line Speak with your lender and agent early and often to determine how much you’ll be responsible for at closing. Finding out that you’ll need to come up with thousands of dollars right before closing is not a surprise anyone is ever looking forward to.

Have a Happy Thanksgiving!

The top concern for most first-time home buyers is their ability to save for a down payment. According to a new survey, 36% of millennials took on a second job to make their dreams of homeownership a reality in 2017. Among millennials with incomes over $100,000 a year, the top ways to come up with the necessary funds were to sell stocks (20%) or to sell cryptocurrency (16%). The most popular method of savings was the most traditional; 60% of those saving for a down payment used a percentage of their paychecks to achieve their goal, while 75% of those with salaries over $100k were able to save this way. For those who have not yet begun to save for their down payment, 32% plan on pursuing additional employment, while 15% plan on driving for a ride-share service as their second job. Many first-time buyers are mistaken about the down payment needed in today’s real estate market. In fact, “In a 2017 survey, 68% of renters cited saving for a down payment as an obstacle to homeownership. Thirty-nine percent of renters believe that more than 20% is needed for a down payment and many renters are unaware of low-down payment programs.” The many benefits of homeownership make the extra jobs, sacrificing new clothes, or skipping vacations well worth it. Bottom Line If you have been saving for your down payment for a while now and are curious how much further you have to go, let’s get together to help you determine what priced home you can afford and what size down payment you’ll need.

Everyone wants a place to call home; a place that gives them a sense of security. We are currently seeing major interest from females who want to achieve this dream, and the numbers are proving it! In 2018, for the second year in a row, single female buyers accounted for 18% of all buyers. In 2017, 60% of millennial women listed as the primary borrowers on mortgages were single. According to the 2018 Home Buyer and Seller Generational Trends Report by the National Association of Realtors, one in five homebuyers in the U.S. were single females (most of them part of the baby boomer generation) as you can see in the graph below: This does not come as a surprise since 50.8% of the U.S. population is female and 15.6% of them are 65 years and over, according to the Census Bureau. What are the reasons for this demographic’s booming interest in homeownership? Bankrate published an article with what they believe to be some of the reasons: Divorce rate: Known as the “Gray Divorce,” the divorce rate has doubled for those ages 50 and over and tripled for those ages 65 and over. Average life expectancy: For women it’s 81, four years longer than men. To build home equity: Women want to build equity through their home. As mentioned by Bankrate, “some are hoping to escape rising rents, some might be downsizing or looking for a new start,” especially those going through a gray divorce. Are they only downsizing and buying small homes? Not really; The Institute of Luxury Home Marketing recently stated that: “The number of female billionaires grew faster globally in 2017 than the number of male billionaires. This redistribution of wealth has seen an impact on luxury real estate both in its purchase and design attributes – and obviously, this is important for realtors to recognize when relating to their clients.” Bottom Line Whether you are a millennial who wants to buy a starter home, a billionaire looking for that luxury home you’ve always wanted, or maybe even someone who just went through a gray divorce, let’s get together to help you create your real estate portfolio so that you can start investing your money in real estate today!

Every year at this time there are many homeowners who decide to wait until after the holidays to list their homes for the first time, while others who already have their homes on the market decide to take them off until after the holidays. Here are seven great reasons not to wait: Relocation buyers are out there. Many companies are still hiring throughout the holidays and need their new employees in their new positions as soon as possible. Purchasers who are looking for homes during the holidays are serious buyers and are ready to buy now. You can restrict the showings on your home to the times you want it shown. You will remain in control. Homes show better when decorated for the holidays. There is minimal competition for you as a seller right now. Inventory of homes for sale traditionally slows in the late fall, early winter. Let’s take a look at listing inventory as compared to the same time last year: The desire to own a home doesn’t stop when the holidays come. Buyers who were unable to find their dream homes during the busy spring and summer months are still searching! The supply of listings increases substantially after the holidays. Also, in many parts of the country, new construction will continue to surge and reach new heights which will lessen the demand for your house in 2019. Bottom Line  Waiting until after the holidays to sell your home probably doesn’t make sense.

Everyone knows that housing affordability has been negatively impacted by rising prices and increasing mortgage rates, but there is another piece to the affordability equation – wages. How much a family earns obviously impacts how easy or difficult it is for them to afford to own a home. Because of an improving economy, wages are finally beginning to increase – and that dramatically affects home affordability. According to the National Association of Realtors’ (NAR) September 2018 Housing Affordability Index, wages have increased in every region of the country: After applying current salaries, home prices, and mortgage rates to their Home Affordability Index equation, the index, though still lower than this time last year (160.1 to 146.7), increased over the last month (141.2 to 146.7). For the complete methodology used by NAR,click here. The percentage of income needed to own a home has also decreased each of the last three months. It currently sits at 17% which is substantially lower than historic numbers. Bottom Line If you are a first-time buyer or a move-up buyer who believes that purchasing a home is not within your budget, let’s get together to determine if that is still true.

Some Highlights: Historically, the choice between renting or buying a home has been a tough decision. Looking at the percentage of income needed to rent a median-priced home today (28.4%) vs. the percentage needed to buy a median-priced home (17.5%), the choice becomes obvious. Every market is different. Before you renew your lease again, find out if you can put your housing costs to work by buying this year!