Is Your House Priced To Sell Immediately (PTSI)?

Is Your House Priced To Sell Immediately (PTSI)? | MyKCM

In today’s real estate market, with more houses coming to market every day and eager buyers searching for their dream home, setting the right price for your house is one of the most important things you can do.

According to CoreLogic’s latest Home Price Index, home values have risen at over 6% a year over the past two years, but have started to slow to 4.4% over the last 12 months. By this time next year, CoreLogicpredicts that home values will be 4.6% higher.

With prices slowing from their previous pace, homeowners must realize that pricing their homes a little OVER market value to leave room for negotiation will actually dramatically decrease the number of buyers who will see their listing! (see the chart below)Is Your House Priced To Sell Immediately (PTSI)? | MyKCMInstead of the seller trying to ‘win’ the negotiation with one buyer, they should price their house so that demand for the home is maximized. By doing so, the seller will not be negotiating with a buyer over the price, but will instead have multiple buyers competing with each other over the house.

The key to selling your house in 2019 is making sure your house is Priced To Sell Immediately (PTSI)! That way, your home will be seen by the most buyers and will sell at a great price before more competition comes to market!

Bottom Line

If you are debating listing your house for sale, let’s get together to discuss how to price your home appropriately for our area and maximize your exposure this Spring Market!

Do 46 Million Millennials Know They Are Mortgage Ready?

Do 46 Million Millennials Know They Are Mortgage Ready? | MyKCM

Many have written about the millennial generation and whether or not they, as a whole, believe in homeownership as part of attaining the American Dream.

Millennials have taken longer to obtain traditional milestones than the generations before them, such as getting married, having kids, and buying a home. However, that does not mean that they do not still aspire to achieve those things.

History shows that people tend to buy their first home around age 30. Nearly 5 million millennials will turn 30 in the next two years. This will continue to fuel demand for housing.

This is also one of the many reasons why the millennial homeownership rate has continued to grow over the past few years. 48.4% of Americans between the ages of 30-34 now own a home.

There are over 46 million millennials (33% of the generation) who are considered “Mortgage Ready”, meaning they meet the qualifications to be approved for a mortgage today!

  • a FICO Score ≥ 620
  • a Back-End Debt to Income Ratio ≤ 25%
  • no Foreclosures or Bankruptcies in the last 7 years
  • no severe delinquencies in 1 year

Rob Chrane, CEO of Down Payment Resource, commented on the findings of the report,

“We now know there are millions of buyers with the income & credit necessary to qualify to buy a home. The biggest question is:

Do they know it? …Unfortunately, many renters don’t investigate homeownership simply because they don’t believe it’s an option.”

The good news is that more and more millennials are realizing that they can afford a home now. Even so, more can be done to increase awareness of low down payment programs to attract even more of this generation.

New data from realtor.com shows that in December, millennials accounted for 42% of all new home loans originated in the month. This is more than any other generation.

Bottom Line

If you are one of the many millennials who may be “Mortgage Ready” but are unsure what your next steps should be, let’s get together to help guide you on your path to homeownership!

Want To Increase Your Family’s Wealth? Here’s How!

Everyone should realize that unless you are living somewhere rent-free, you are paying a mortgage – either yours or your landlord’s. Buying your own home provides you with a form of ‘forced savings’ that allows you to use your monthly housing costs to increase your family’s wealth.

Every month that you pay your mortgage, you are paying off a portion of the debt that you took on to purchase your home. Therefore, you own a little bit more of your home every month in the form of home equityAs your home’s value increases, you also gain home equity.

Every quarter, Pulsenomics surveys a nationwide panel of over 100 economists, real estate experts, and investment and market strategists. They are asked to project how residential home prices will appreciate over the next five years for their Home Price Expectation Survey (HPES).

The latest data from their Q1 2019 Survey revealed that home prices are expected to round out the year 4.3% higher than they were in January. For the next 5 years, home values will appreciate by an average of 3.21% a year.

This is great news for homeowners!

For example, let’s assume a young couple purchased and closed on a $250,000 home in January of this year. Simply through their home appreciating in value, those homeowners can build their home equity by over $40,000 over the next five years.

Want To Increase Your Family’s Wealth? Here’s How! | MyKCM

Let’s look at the potential equity gained over the same period of time at some higher price points:

Want To Increase Your Family’s Wealth? Here’s How! | MyKCM

In many cases, home equity is a large portion of a family’s overall net worth.

Bottom Line

Whether it’s your first or your fifth, if your plan for this year includes buying a home, let’s get together to help you understand where prices are headed in our area.

Preparing to Spring Forward [INFOGRAPHIC]

Preparing to Spring Forward [INFOGRAPHIC] | MyKCM

Some Highlights:

  • In the majority of the country, this weekend marks the start of Daylight Savings Time as we set our clocks forward an hour on Sunday at 2:00 AM EST.
  • Whether you plan on buying or selling this spring, these tips could help you ‘spring ahead’ of your competition!
  • Spring brings two things: more buyers & more sellers! Get prepared now to stand out in the crowd!

Why an Economic Slowdown Will NOT Crush Real Estate this Time

Why an Economic Slowdown Will NOT Crush Real Estate this Time | MyKCM

Last week, the National Association for Business Economics released their February 2019 Economic Policy Survey. The survey revealed that a majority of the panel believe an economic slowdown is in the near future:

“While only 10% of panelists expect a recession in 2019, 42% say a recession will happen in 2020, and 25% expect one in 2021.”

Their findings coincide with three previous surveys calling for a slowdown sometime in the next two years:

  1. The Pulsenomics Survey of Market Analysts
  2. The Wall Street Journal Survey of Economists
  3. The Duke University Survey of American CFOs

That raises the question: Will the real estate market be impacted like it was during the last recession?

A recession does not equal a housing crisis. According to the dictionary definition, a recession is:

“A period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters.”

During the last recession, prices fell dramatically because the housing collapse caused the recession. However, if we look at the previous four recessions, we can see that home values weren’t negatively impacted:

  • January 1980 to July 1980: Home values rose 4.5%
  • July 1981 to November 1982: Home values rose 1.9%
  • July 1990 to March 1991: Home values fell less than 1%
  • March 2001 to November 2001: Home values rose 4.8%

Most experts agree with Ralph McLaughlin, CoreLogic’s Deputy Chief Economist, who recently explained:

“There’s no reason to panic right now, even if we may be headed for a recession. We’re seeing a cooling of the housing market, but nothing that indicates a crash.”

The housing market is just “normalizing”. Inventory is starting to increase and home prices are finally stabilizing. This is a good thing for both buyers and sellers as we move forward.

Bottom Line

If there is an economic slowdown in our near future, there is no need for fear to set in. As renowned financial analyst, Morgan Housel, recently tweeted:

“An interesting thing is the widespread assumption that the next recession will be as bad as 2008. Natural to think that way, but, statistically, highly unlikely. Could be over before you realized it began.”

2 Reports That Say Now Is a Great Time to Sell

2 Reports That Say Now Is a Great Time to Sell | MyKCM

Heading into the spring buying market, there are strong trends starting to emerge.

The inventory of homes for sale has increased on a year-over-year basis for eight months in a row. Home price appreciation has continued to grow, although at a slower rate. The homeownership rate has reached heights last seen in 2014, with millennials and Generation X leading the way!

Let’s dive a little deeper into some of the recent reports that have been released and what they mean for the spring buying season!

1. National Association of Realtor’s Existing Home Sales Report

Sales of existing homes were down for the third consecutive month in January. Some of this can be explained by the natural seasonality that the real estate market experiences every year, and some can be explained even further by a lack of homes available for sale on the market.

Inventory

For the last eight months, the inventory of homes for sale has been higher when compared to the same month the year before. The challenge in the market is the mismatch of the type of home that is available for sale. First-time homebuyers looking for a starter home are often competing with other buyers to stand out, often outbidding each other.

Lawrence Yun, NAR’s Chief Economist, agrees that the market is still experiencing an inventory shortage.

“In particular, the lower end of the market is experiencing a greater shortage, and more home construction is needed.”

Home Prices

The median home price for homes sold in January was $247,500. This is up 2.8% from January 2018 and marks the 83rd consecutive month of year-over-year gains. The 2.8% growth in home prices represents the smallest year-over-year change since February 2012 but is a welcome change for buyers who had feared being priced out of the market.

Days on the Market

Properties that sold in January were on the market for an average of 49 days with 38% of homes on the market for less than a month.

Yun is positive about how today’s market conditions will help buyers this spring,

 “Existing home sales in January were weak compared to historical norms; however, they are likely to have reached a cyclical low. Moderating home prices combined with gains in household income will boost housing affordability, bringing more buyers to the market in the coming months.”

2. NAR’s Pending Home Sales Report

The national Pending Home Sales Index (PHSI) rose 4.6% to 103.2 in January from 98.7 in December. An index score of 100 is considered normal. All four major regions of the country experienced gains in January, with the largest increase coming in the South.

 “The PHSI is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.”

Increases in the PHSI often predict increases in the level of home sales in the coming months, which is great news for the housing market leading in to spring! Yun had this to say,

“Homebuyers are now returning and taking advantage of lower interest rates, while a boost in inventory is also providing more choices for consumers.”

Bottom Line

The housing market in 2019 will require homeowners to list their house at the right price to attract buyers. If interest rates continue to stay low while wages increase, and more inventory comes to market, 2019 could be one of the best years for home sales in recent history.

The Housing Market Will “Spring Forward” This Year!

The Housing Market Will “Spring Forward” This Year! | MyKCM

Just like our clocks this weekend, in the majority of the country, the housing market will soon “spring forward!” Similar to tension in a spring, the lack of inventory available for sale has been holding back the market.

Many potential sellers believe that waiting until Spring is in their best interest. Traditionally, they would have been right.

Buyer demand has seasonality to it. Usually, this falls off in the winter months, especially in areas of the country impacted by arctic conditions.

That hasn’t happened this year.

Demand for housing has remained strong as mortgage rates have remained near historic lows. Even with an increase in rates forecasted for 2019, buyers are still able to lock in an affordable monthly payment. Buyers are increasingly jumping off the fence and into the market to secure a lower rate.

The National Association of Realtors (NAR) recently reported that in 2018 the top 10 dates sellers listed their homes all fell in April, May, or June.

Those who act quickly and list now, before a flood of increased competition, will benefit from additional exposure to buyers.

Bottom Line

If you are planning on selling your home in 2019, meet with a local real estate professional to evaluate the opportunities in your market.

Interest Rates Hit New 12 Month Low!

Interest Rates Hit New 12 Month Low! | MyKCM

According to Freddie Mac’s Primary Mortgage Market Survey, interest rates for a 30-year fixed rate mortgage are currently at their lowest for 2019. Rates like these haven’t been seen since February 2018!

Last week’s survey results reported an interest rate of 4.35%. This is a welcome change from the near 5% rates seen in mid-November. At 4.32%, the second week of February 2018 was the last time rates were this low. This can be seen in the chart below.

Interest Rates Hit New 12 Month Low! | MyKCM

Freddie Mac’s Chief Economist, Sam Khater, had this to say:

“Mortgage rates fell for the third consecutive week, continuing the general downward trend that began late last year.

Wages are growing on par with home prices for the first time in years, and with more inventory available, spring home sales should help the market begin to recover from the malaise of the last few months.”

Bottom Line

If you plan on buying a home this spring, meet with a local real estate professional who can help prepare you for today’s market before rates increase!