The Jersey Shore Real Estate BlogRecently posted or modified blog posts in the category - Buying a Homehttps://www.murphyleegroup.com/blog/Copyright MurphyLeeGroup.com2024-01-31T12:51:15-07:00tag:murphyleegroup.com,2012-09-20:14744Foreclosure Activity Is Still Lower than the Norm<img src="https://assets.site-static.com/userfiles/1482/image/20240131-Foreclosure-Activity-Is-Still-Lower-than-the-Norm.jpg" width="750" height="410" style="font-size: 17px;" />
Have you seen headlines talking about the increase in foreclosures in today’s <a href="https://www.simplifyingthemarket.com/en/2023/12/19/expert-quotes-on-the-2024-housing-market-forecast/?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" rel="noopener noreferrer" target="_blank">housing market</a>? If so, they may leave you feeling a bit uneasy about <a href="https://www.simplifyingthemarket.com/en/2024/01/12/home-prices-forecast-to-climb-over-the-next-5-years-infographic/?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" rel="noopener noreferrer" target="_blank">what’s ahead</a>. But remember, these clickbait titles don’t always give you the full story.
The truth is, if you compare the current numbers with what usually happens in the market, you’ll see there’s no need to worry.
Putting the Headlines into Perspective
The increase the media is calling attention to is misleading. That’s because they’re only comparing the most recent numbers to a time where foreclosures were at historic lows. And that’s making it sound like a bigger deal than it is.
In 2020 and 2021, the moratorium and forbearance program helped millions of homeowners stay in their homes, allowing them to get back on their feet during a very challenging period.
When the moratorium came to an end, there was an expected rise in foreclosures. But just because foreclosures are up doesn’t mean the <a href="https://www.simplifyingthemarket.com/en/2023/11/29/why-the-economy-wont-tank-the-housing-market/?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" rel="noopener noreferrer" target="_blank">housing market</a> is in trouble.
Historical Data Shows There Isn’t a Wave of Foreclosures
Instead of comparing today’s numbers with the last few abnormal years, it’s better to compare to long-term trends – specifically to the housing crash – since that’s what people worry may happen again.
Take a look at the graph below. It uses foreclosure <a href="https://www.attomdata.com/news/market-trends/foreclosures/attom-2023-year-end-u-s-foreclosure-market-report/" rel="noopener noreferrer" target="_blank">data</a> from ATTOM, a property data provider, to show foreclosure activity has been consistently lower (shown in orange) since the crash in 2008 (shown in Cabernet):
<a href="https://files.keepingcurrentmatters.com/KeepingCurrentMatters/content/images/20240130/20240131-us-forclosure-activity-increases-from-2022-but-still-below-pre-pandemic-levels.png" rel="noopener noreferrer" target="_blank"><img src="https://assets.site-static.com/userfiles/1482/image/20240131-us-forclosure-activity-increases-from-2022-but-still-below-pre-pandemic-levels.jpg" width="960" height="720" /></a>
So, while foreclosure filings are up in the latest report, it’s clear this is nothing like it was back then.
In fact, we’re not even back at the levels we’d see in more normal years, like 2019. As Rick Sharga, Founder and CEO of the CJ Patrick Company, <a href="https://www.forbes.com/advisor/mortgages/real-estate/housing-market-predictions/" rel="noopener noreferrer" target="_blank">explains</a>:
“Foreclosure activity is still only at about 60% of pre-pandemic levels. . .”
That’s largely because buyers today are more qualified and less likely to default on their loans. Delinquency rates are still low and most homeowners have <a href="https://www.simplifyingthemarket.com/en/2024/01/09/ways-your-home-equity-can-help-you-reach-your-goals/?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" rel="noopener noreferrer" target="_blank">enough equity</a> to keep them from going into foreclosure. As Molly Boesel, Principal Economist at CoreLogic, <a href="https://www.corelogic.com/intelligence/loan-performance-insights-january-2024/" rel="noopener noreferrer" target="_blank">says</a>:
“U.S. mortgage delinquency rates remained healthy in October, with the overall delinquency rate unchanged from a year earlier and the serious delinquency rate remaining at a historic low… borrowers in later stages of delinquencies are finding alternatives to defaulting on their home loans.”
The reality is, while increasing, the data shows a foreclosure crisis is not where the market is today, or where it’s headed.
Bottom Line
Even though the housing market is experiencing an expected rise in foreclosures, it’s nowhere near the crisis levels seen when the housing bubble burst. If you have questions about what you’re hearing or reading about the housing market, let’s connect.2024-01-31T12:42:11-07:002024-01-31T12:51:15-07:00Curtis Leetag:murphyleegroup.com,2012-09-20:146453 Key Factors Affecting Home Affordability<img src="https://files.keepingcurrentmatters.com/KeepingCurrentMatters/content/images/20240116/202401183-Key-Factors-Affecting-Home-Affordability.png" width="960" style="font-size: 17px;" />
Over the past year, a lot of people have been talking about <a href="https://www.simplifyingthemarket.com/en/2023/12/28/what-you-need-to-know-about-saving-for-a-home-in-2024/?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" rel="noopener noreferrer" target="_blank">housing affordability</a> and how tight it’s gotten. But just recently, there’s been a little bit of relief on that front. Mortgage rates have gone down since their most recent peak in October. But there’s more to being able to <a href="https://www.simplifyingthemarket.com/en/2023/12/26/get-ready-to-buy-a-home-by-improving-your-credit-score/?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" rel="noopener noreferrer" target="_blank">afford a home</a> than just mortgage rates.
To really understand home affordability, you need to look at the combination of three important factors: mortgage rates, home prices, and wages. Let’s dive into the latest data on each one to see why affordability is improving.
1. Mortgage Rates
<a href="https://www.freddiemac.com/pmms/archive" rel="noopener noreferrer" target="_blank">Mortgage rates</a> have come down in recent months. And looking forward, most experts expect them to <a href="https://www.simplifyingthemarket.com/en/2023/12/20/why-mortgage-rates-could-continue-to-decline/?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" rel="noopener noreferrer" target="_blank">decline further</a> over the course of the year. Jiayi Xu, an economist at Realtor.com, <a href="https://www.cnn.com/2024/01/11/economy/mortgage-rates-climb-for-the-second-week-in-a-row/index.html" rel="noopener noreferrer" target="_blank">explains</a>:
“While there could be some fluctuations in the path forward … the general expectation is that mortgage rates will continue to trend downward, as long as the economy continues to see progress on inflation.”
And even a small change in mortgage rates can have a big impact on your <a href="https://www.simplifyingthemarket.com/en/2024/01/08/what-lower-mortgage-rates-mean-for-your-purchasing-power/?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" rel="noopener noreferrer" target="_blank">purchasing power</a>, making it easier for you to afford the home you want by reducing your monthly mortgage payment.
2. Home Prices
The second important factor is home prices. After going up at a relatively normal pace last year, they’re expected to continue rising moderately in 2024. That’s because even with inventory projected to grow slightly this year, there still aren’t enough homes for sale for all the people who want to buy them. <a href="https://brightmls.com/article/2024-national-housing-market-outlook" rel="noopener noreferrer" target="_blank">According</a> to Lisa Sturtevant, Chief Economist at Bright MLS:
“More inventory will be generally offset by more buyers in the market. As a result, it is expected that, overall, the median home price in the U.S. will grow modestly . . .”
That’s great news for you because it means prices aren’t likely to skyrocket like they did during the pandemic. But it also means it’ll probably cost you more to wait. So, if you’re ready, willing, and able to buy, and you can find the right home, purchasing before more buyers enter the market and prices rise further might be in your best interest.
3. Wages
Another positive factor in affordability right now is rising income. The graph below uses <a href="https://fred.stlouisfed.org/series/CES0500000017" rel="noopener noreferrer" target="_blank">data</a> from the Federal Reserve to show how wages have grown over time:
<a href="https://files.keepingcurrentmatters.com/KeepingCurrentMatters/content/images/20240116/20240118-Wages-Climbing-at-a-faster-pace.png" rel="noopener noreferrer" target="_blank"><img src="https://assets.site-static.com/userfiles/1482/image/20240118-Wages-Climbing-at-a-faster-pace.jpg" width="960" height="720" /></a>
If you look at the blue dotted trendline, you can see the rate at which wages typically rise. But on the right side of the graph, wages are above the trend line today, meaning they’re going up at a higher rate than normal.
Higher wages improve affordability because they reduce the percentage of your income it takes to pay your mortgage. That’s because you don’t have to put as much of your paycheck toward your monthly housing cost.
What This Means for You
<a href="https://www.simplifyingthemarket.com/en/2024/01/01/3-keys-to-hitting-your-homeownership-goals-in-2024/?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" rel="noopener noreferrer" target="_blank">Home affordability</a> depends on three things: mortgage rates, home prices, and wages. The good news is, they’re moving in a positive direction for <a href="https://www.simplifyingthemarket.com/en/2024/01/10/avoid-these-common-mistakes-after-applying-for-a-mortgage/?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" rel="noopener noreferrer" target="_blank">buyers</a> overall.
Bottom Line
If you're thinking about <a href="https://www.mykcm.com/2024/01/05/achieving-your-homebuying-dreams-in-2024-infographic/" rel="noopener noreferrer" target="_blank">buying a home</a>, it's important to know the main factors impacting affordability are improving. To get the latest updates on each, let's connect.2024-01-21T13:16:29-07:002024-01-21T13:26:10-07:00Curtis Leetag:murphyleegroup.com,2012-09-20:13849Understanding the Benefits of Owning Your First Home<img src="https://files.keepingcurrentmatters.com/content/images/20231003/20231004-Understanding-the-benefits-of-owning-your-first-home.png" width="600" style="font-size: 17px;" />
Are you considering buying your first <a href="https://www.simplifyingthemarket.com/en/2023/09/21/the-many-non-financial-benefits-of-homeownership/?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" rel="noopener noreferrer" target="_blank">home</a>? If so, it can be helpful to know what led other people to make that decision. According to a <a href="https://s22.q4cdn.com/957797852/files/doc_news/2023/09/9-14-23-first-time-homebuyers-undeterred-by-rising-mortgage-interest-rates.pdf" rel="noopener noreferrer" target="_blank">recent survey</a> of first-time homebuyers by PulteGroup:
“When asked why they purchased their first home recently, the answer was simple: because they wanted to. Either the desire to stop renting or recognition that homeownership is a smart financial investment was the main motivator for 72% of respondents.”
While that survey looked specifically at first-time homebuyers buying newly built homes, the same sentiment is true for just about anyone buying their first home. Here’s a bit more information to help you think about those two benefits of homeownership to see if they’re a key factor for you too.
When You Buy a Home, You Have More Stability than When You Rent
You might want to stop renting because rents keep <a href="https://www.census.gov/housing/hvs/files/currenthvspress.pdf" rel="noopener noreferrer" target="_blank">going up</a>. If you’re a renter, that means there’s a chance your payment will increase each time you sign a new rental agreement or renew your current one.
On the other hand, when you buy your home with a fixed-rate mortgage, your monthly housing payment is predictable over the length of that loan. This stability can give you a peace of mind that renting just can’t provide. Jeff Ostrowski, real estate journalist, <a href="https://www.moneygeek.com/mortgage/resources/rent-vs-buy-guide/" rel="noopener noreferrer" target="_blank">breaks it down</a>:
“With a fixed-rate mortgage, your monthly principal and interest payment is set for as long as you keep the loan. Sign a rental lease, however, and you could see your rent rise the following year, the year after that and so on.”
When You Buy a Home, You Grow Your Wealth as Home Values Climb
Beyond that, owning a home can also be a great long-term investment. While renting may be the more affordable option right now, it doesn’t provide an avenue for you to grow your wealth over time. Mark Fleming, Chief Economist at First American, <a href="https://blog.firstam.com/economics/the-reconomy-podcast-should-you-rent-or-buy-a-home-right-now" rel="noopener noreferrer" target="_blank">explains</a> that’s an important distinction to consider:
“Given current dynamics, more young households may choose to rent in the near term as the cost to own, excluding house price appreciation, has unequivocally increased. Yet, accounting for house price appreciation in that cost of homeownership, whether to rent or buy will depend on where, and if, a home is likely to cost more or less in the near future.”
Basically, renting doesn’t allow you to build equity. In contrast, homeownership can help you grow your net worth as your home’s value <a href="https://www.simplifyingthemarket.com/en/2023/09/08/home-price-forecasts-revised-for-2023-infographic/?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" rel="noopener noreferrer" target="_blank">appreciates</a>. That’s a significant perk you can’t get if you keep renting.
When you take that into account, it may make better financial sense to buy. Most experts project home prices will <a href="https://www.simplifyingthemarket.com/en/2023/09/12/what-experts-project-for-home-prices-over-the-next-5-years/?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" rel="noopener noreferrer" target="_blank">continue to appreciate</a> over the next few years at a pace that’s more normal for the market. That means when you buy a home, not only are you investing in a place to live, but you’re also investing in your financial future.
Bottom Line
If you're ready, it can be a smart move to buy your first <a href="https://www.mykcm.com/2023/09/07/get-ready-for-smaller-more-affordable-homes/" rel="noopener noreferrer" target="_blank">home</a> instead of renting. Let’s connect so you can stabilize your housing payment and start building wealth for your future.2023-10-05T06:26:59-07:002023-10-05T06:31:48-07:00Curtis Leetag:murphyleegroup.com,2012-09-20:12203NJHMFA Grant Raised to $15,000
<img src="https://assets.site-static.com/userfiles/1482/image/NJHMFA_DPA_15k_FLYER_PK_1_1400.jpg" width="1444" height="1451" />
2023-03-15T14:11:07-07:002023-09-27T07:21:04-07:00Curtis Leetag:murphyleegroup.com,2012-09-20:101992022 Fall Homebuyer's Guide Now Available!
The market is still strong for sellers, but that doesn't mean there aren't great homes to still be had at reasonable prices and terms. Check out our Fall Buyer's Guide below.
<br />Feel free to contact us with any questions.
2022-09-08T04:55:00-07:002022-09-08T05:48:23-07:00Curtis Leetag:murphyleegroup.com,2012-09-20:8624Are You Wondering if This Is the Year To Buy a Home?<img width="750" height="410" src="https://files.mykcm.com/2022/03/15132118/20220316-KCM-Share0.jpg" class="attachment-entry size-entry wp-post-image" alt="Are You Wondering if This Is the Year To Buy a Home? | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2022/03/15132118/20220316-KCM-Share0.jpg 750w, https://files.mykcm.com/2022/03/15132118/20220316-KCM-Share0-600x328.jpg 600w, https://files.mykcm.com/2022/03/15132118/20220316-KCM-Share0-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" style="font-size: 17px;" />
Every year, many renters ask themselves the same question: Should I continue <a href="https://www.simplifyingthemarket.com/2022/02/25/the-difference-between-renting-and-owning-infographic/?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" title="renting">renting</a>, or is it time to <a href="https://www.simplifyingthemarket.com/2022/03/10/how-to-navigate-a-market-where-multiple-offers-is-the-new-normal/?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" title="buy a home">buy a home</a>? If you’re a renter, chances are you’ve asked yourself that question at least once, and it’s likely because you’ve faced an increase in your monthly housing costs over time. After all, according to <a href="https://www.census.gov/housing/hvs/files/currenthvspress.pdf" title="Census" target="_blank" rel="noopener noreferrer">Census</a> data, rents have risen consistently for decades.
To make an informed and powerful decision, the first step is understanding what’s happening in today’s housing market so you can determine which option is the better long-term <a href="https://www.simplifyingthemarket.com/2022/01/31/owning-is-more-affordable-than-renting-in-the-majority-of-the-country/?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" title="financial decision">financial decision</a> for you.
Rents Are Going Up Again This Year
Rents are skyrocketing right now. <a href="https://news.move.com/2022-02-22-Realtor-com-R-January-Rental-Report-Buying-a-Starter-Home-is-More-Affordable-than-Renting-in-Over-Half-of-the-Largest-U-S-Metros" title="Data" target="_blank" rel="noopener noreferrer">Data</a> from realtor.com shows just how much rental prices are surging throughout the country. The graph below highlights rental unit price increases over the past year:
<a href="https://files.mykcm.com/2022/03/15114235/20220316-MEM-Eng-1.png" target="_blank" rel="noopener noreferrer"><img class="aligncenter wp-image-101509" src="https://assets.site-static.com/userfiles/1482/image/20220316-MEM-Eng-1.jpg" alt="Are You Wondering if This Is the Year To Buy a Home? | MyKCM" width="1000" height="750" /></a>
If you’re a renter and plan on signing a new lease, your monthly costs are likely to go up when you do. Those rising costs can have a big impact on your financial goals, including any <a href="https://www.simplifyingthemarket.com/2022/03/02/down-payment-assistance-programs-can-help-you-achieve-homeownership/?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" title="plans">plans</a> you’re making to save for a home purchase.
Homeownership Offers Stable Monthly Costs
Of course, one of the key benefits of owning your home is that you’re able to <a href="https://www.simplifyingthemarket.com/2022/02/21/real-estate-voted-the-best-investment-eight-years-in-a-row/?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" title="lock in">lock in</a> and stabilize your payments for the duration of your loan. That’s not the case when you rent.
While rents are already on the rise, there’s a good chance many people will see their rental costs increase even more this year. As Danielle Hale, Chief Economist at realtor.com, <a href="https://www.prnewswire.com/news-releases/realtorcom-december-rental-report-rental-market-wraps-up-2021-with-price-growth-thats-5-3-times-faster-than-in-2020--301468347.html" title="says" target="_blank" rel="noopener noreferrer">says</a>:
“With rents already at a high and expected to keep going up, rental affordability will increasingly challenge many Americans in 2022. For those thinking about making the transition from renting to buying their first home, rising rents will remain a motivating factor. . . .”
So, if you're ready to become a homeowner, waiting any longer may not make financial sense. Instead, escape the cycle of <a href="https://www.simplifyingthemarket.com/2022/01/04/avoid-the-rental-trap-in-2022/?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" title="rising rents">rising rents</a> and enjoy the <a href="https://www.simplifyingthemarket.com/2022/02/14/are-you-ready-to-fall-in-love-with-homeownership/?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" title="many benefits">many benefits</a> that come with homeownership today.
Bottom Line
Starting your journey towards homeownership can pay off significantly this year. If you’re financially ready today, let’s connect so we can discuss your options.
2022-03-16T13:04:00-07:002022-03-16T13:06:27-07:00Curtis Leetag:murphyleegroup.com,2012-09-20:8547Key Factors That Impact Affordability Today<img width="750" height="410" src="https://files.mykcm.com/2022/03/08130721/20220309-KCM-Share.jpg" class="attachment-entry size-entry wp-post-image" alt="Key Factors That Impact Affordability Today | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2022/03/08130721/20220309-KCM-Share.jpg 750w, https://files.mykcm.com/2022/03/08130721/20220309-KCM-Share-600x328.jpg 600w, https://files.mykcm.com/2022/03/08130721/20220309-KCM-Share-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" style="font-size: 17px;" />
You can’t read an article about residential real estate without the author mentioning the affordability challenges that today’s buyers face. There’s no doubt homes are less affordable today than they were over the last two years, but that doesn’t mean homes are now unaffordable.
There are three measures used to establish home affordability: home prices, mortgage rates, and wages. Let’s look closely at each of these components.
1. Home Prices
The most recent <a href="https://www.corelogic.com/intelligence/u-s-home-price-insights/" title="Home Price Insights" target="_blank" rel="noopener noreferrer">Home Price Insights</a> report by CoreLogic shows home values have increased by 19.1% from last January to this January. That was one reason affordability declined over the past year.
2. Mortgage Rates
While the current <a href="https://www.simplifyingthemarket.com/2022/03/08/how-global-uncertainty-is-impacting-mortgage-rates/?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" title="global uncertainty">global uncertainty</a> makes it difficult to project mortgage rates, we do know current rates are almost one full percentage point higher than they were last year. According to <a href="https://www.freddiemac.com/pmms/pmms30" title="Freddie Mac" target="_blank" rel="noopener noreferrer">Freddie Mac</a>, the average monthly rate for last February was 2.81%. This February it was 3.76%. That increase in the mortgage rate also contributes to homes being less affordable than they were last year.
3. Wages
The one big, positive component in the affordability equation is an increase in American wages. In a <a href="https://www.realtytrac.com/blog/can-real-estate-prices-go-even-higher/" title="recent article" target="_blank" rel="noopener noreferrer">recent article</a> by RealtyTrac, Peter Miller addresses that point:
“Prices are up, but what about wages? ADP reports that job holder incomes increased 5.9% last year but rose 8.0% for those who switched employers. In effect, some of the higher cost to buy a home has been offset by more cash income.”
The National Association of Realtors (NAR) also recently released information that looks at income and affordability. The NAR <a href="https://www.nar.realtor/blogs/economists-outlook/housing-affordability-conditions-fade-in-December" title="data" target="_blank" rel="noopener noreferrer">data</a> provides a comparison of the current median family income versus the qualifying income for a median-priced home in each region of the country. Here’s a graph of their findings:
<a href="https://files.mykcm.com/2022/03/08130724/20220309-MEM-Eng-1.png" target="_blank" rel="noopener noreferrer"><img class="aligncenter wp-image-101389" src="https://assets.site-static.com/userfiles/1482/image/20220309-MEM-Eng-1.jpg" alt="Key Factors That Impact Affordability Today | MyKCM" /></a>
As the graph shows, the median family income (shown in blue on the graph) is greater than the qualifying income needed to buy a median-priced home (shown in green on the graph) in all four regions of the country. While those figures may vary in certain locations within each region, it’s important to note that, in most of the country, homes are still affordable.
So, when you think about affordability, remember that the picture includes more than just <a href="https://www.simplifyingthemarket.com/2022/03/03/are-home-prices-continuing-to-rise/?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" title="home prices">home prices</a> and <a href="https://www.simplifyingthemarket.com/2022/02/02/the-top-indicator-if-you-want-to-know-where-mortgage-rates-are-heading/?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" title="mortgage rates">mortgage rates</a>. When prices rise and rates rise, it does impact affordability, and experts project both of those things will climb in the months ahead. That’s why it’s less affordable to buy a home than it was over the past two years when prices and rates were lower than they are today. But wages need to be factored into affordability as well. Because wages have been rising, they’re a big reason that, while less affordable, homes are not unaffordable today.
Bottom Line
To find out more about affordability in our local area, let’s discuss where home prices are locally, what’s happening with mortgage rates, and get you in contact with a lender so you can make an informed financial decision. Remember, while less affordable, homes are not unaffordable, which still gives you an opportunity to buy today.
2022-03-09T17:50:00-07:002022-03-09T17:57:12-07:00Curtis Leetag:murphyleegroup.com,2012-09-20:83964 Simple Graphs Showing Why This Is Not a Housing Bubble<img width="750" height="410" src="https://files.mykcm.com/2022/02/16120300/20220217-KCM-Share.jpg" class="attachment-entry size-entry wp-post-image" alt="4 Simple Graphs Showing Why This Is Not a Housing Bubble | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2022/02/16120300/20220217-KCM-Share.jpg 750w, https://files.mykcm.com/2022/02/16120300/20220217-KCM-Share-600x328.jpg 600w, https://files.mykcm.com/2022/02/16120300/20220217-KCM-Share-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" style="font-size: 17px;" />
A <a href="https://magazine.realtor/daily-news/2022/02/03/77-of-consumers-believe-we-re-in-a-housing-bubble" title="recent survey" target="_blank" rel="noopener noreferrer">recent survey</a> revealed that many consumers believe there’s a housing bubble beginning to form. That feeling is understandable, as year-over-year home price appreciation is still in the double digits. However, this market is very different than it was during the housing crash 15 years ago. Here are four key reasons why today is nothing like the last time.
1. Houses Are Not Unaffordable Like They Were During the Housing Boom
The affordability formula has three components: the price of the home, wages earned by the purchaser, and the mortgage rate available at the time. Conventional lending standards say a purchaser should not spend more than <a href="https://myhome.freddiemac.com/buying/what-can-you-afford" title="28%" target="_blank" rel="noopener noreferrer">28%</a> of their gross income on their mortgage payment.
Fifteen years ago, prices were high, wages were low, and mortgage rates were over 6%. Today, prices are still high. Wages, however, have increased, and the mortgage rate, even after the recent spike, is still well below 6%. That means the average purchaser today pays less of their monthly income toward their mortgage payment than they did back then.
In the latest <a href="https://www.attomdata.com/news/market-trends/home-sales-prices/attom-q4-2021-u-s-home-affordability-report/" title="Affordability Report" target="_blank" rel="noopener noreferrer">Affordability Report</a> by ATTOM Data, Chief Product Officer Todd Teta addresses that exact point:
“The average wage earner can still afford the typical home across the U.S., but the financial comfort zone continues shrinking as home prices keep soaring and mortgage rates tick upward.”
Affordability isn’t as strong as it was last year, but it’s much better than it was during the boom. Here’s a chart showing that difference:
<a href="https://files.mykcm.com/2022/02/16120303/20220217-MEM-Eng-1.png" target="_blank" rel="noopener noreferrer"><img class="aligncenter wp-image-101200" src="https://files.mykcm.com/2022/02/16120303/20220217-MEM-Eng-1.png" alt="4 Simple Graphs Showing Why This Is Not a Housing Bubble | MyKCM" width="600" height="450" /></a>
If costs were so prohibitive, how did so many homes sell during the housing boom?
2. Mortgage Standards Were Much More Relaxed During the Boom
During the housing bubble, it was much easier to get a mortgage than it is today. As an example, let’s review the number of mortgages granted to purchasers with credit scores under 620. According to <a href="https://credit.org/blog/what-is-a-good-credit-score-infographic/" title="credit.org" target="_blank" rel="noopener noreferrer">credit.org</a>, a credit score between 550-619 is considered poor. In defining those with a score below 620, they explain:
“Credit agencies consider consumers with credit delinquencies, account rejections, and little credit history as subprime borrowers due to their high credit risk.”
Buyers can still qualify for a mortgage with a credit score that low, but they’re considered riskier borrowers. Here’s a graph showing the mortgage volume issued to purchasers with a credit score less than 620 during the housing boom, and the subsequent volume in the 14 years since.
<a href="https://files.mykcm.com/2022/02/16120306/20220217-MEM-Eng-2.png" target="_blank" rel="noopener noreferrer"><img class="aligncenter wp-image-101201" src="https://files.mykcm.com/2022/02/16120306/20220217-MEM-Eng-2.png" alt="4 Simple Graphs Showing Why This Is Not a Housing Bubble | MyKCM" width="600" height="450" /></a>
Mortgage standards are nothing like they were the last time. Purchasers that acquired a mortgage over the last decade are much more qualified. Let’s take a look at what that means going forward.
3. The Foreclosure Situation Is Nothing Like It Was During the Crash
The most obvious difference is the number of homeowners that were facing foreclosure after the housing bubble burst. The Federal Reserve issues a <a href="https://www.newyorkfed.org/microeconomics/hhdc.html" title="report" target="_blank" rel="noopener noreferrer">report</a> showing the number of consumers with a new foreclosure notice. Here are the numbers during the crash compared to today:
<a href="https://files.mykcm.com/2022/02/16120309/20220217-MEM-Eng-3.png" target="_blank" rel="noopener noreferrer"><img class="aligncenter wp-image-101202" src="https://files.mykcm.com/2022/02/16120309/20220217-MEM-Eng-3.png" alt="4 Simple Graphs Showing Why This Is Not a Housing Bubble | MyKCM" width="600" height="450" /></a>
There’s no doubt the 2020 and 2021 numbers are impacted by the forbearance program, which was created to help homeowners facing uncertainty during the pandemic. However, there are fewer than 800,000 homeowners left in the program today, and most of those will be able to work out a repayment plan with their banks.
Rick Sharga, Executive Vice President of RealtyTrac, <a href="https://www.attomdata.com/news/market-trends/foreclosures/attom-november-2021-u-s-foreclosure-market-report/" title="explains" target="_blank" rel="noopener noreferrer">explains</a>:
“The fact that foreclosure starts declined despite hundreds of thousands of borrowers exiting the CARES Act mortgage forbearance program over the last few months is very encouraging. It suggests that the ‘forbearance equals foreclosure’ narrative was incorrect.”
Why are there so few foreclosures now? Today, homeowners are equity rich, not tapped out.
In the run-up to the housing bubble, some homeowners were using their homes as personal ATM machines. Many immediately withdrew their equity once it built up. When home values began to fall, some homeowners found themselves in a negative equity situation where the amount they owed on their mortgage was greater than the value of their home. Some of those households decided to walk away from their homes, and that led to a rash of distressed property listings (foreclosures and short sales), which sold at huge discounts, thus lowering the value of other homes in the area.
Homeowners, however, have learned their lessons. Prices have risen nicely over the last few years, leading to <a href="https://www.attomdata.com/news/market-trends/home-sales-prices/attom-q4-2021-u-s-home-equity-and-underwater-report/" title="over 40%" target="_blank" rel="noopener noreferrer">over 40%</a> of homes in the country having more than 50% equity. But owners have not been tapping into it like the last time, as evidenced by the fact that national tappable equity has increased to a record <a href="https://www.blackknightinc.com/wp-content/uploads/2022/02/BKI_MM_Dec2021_Report.pdf" title="$9.9 trillion" target="_blank" rel="noopener noreferrer">$9.9 trillion</a>. With the average home equity now standing at <a href="https://twitter.com/odetakushi/status/1471125050199883783" title="$300,000" target="_blank" rel="noopener noreferrer">$300,000</a>, what happened last time won’t happen today.
As the latest <a href="https://www.corelogic.com/intelligence/homeowner-equity-insights/" title="Homeowner Equity Insights" target="_blank" rel="noopener noreferrer">Homeowner Equity Insights</a> report from CoreLogic explains:
“Not only have equity gains helped homeowners more seamlessly transition out of forbearance and avoid a distressed sale, but they’ve also enabled many to continue building their wealth.”
There will be nowhere near the same number of foreclosures as we saw during the crash. So, what does that mean for the housing market?
4. We Don’t Have a Surplus of Homes on the Market – We Have a Shortage
The supply of inventory needed to sustain a normal real estate market is approximately six months. Anything more than that is an overabundance and will causes prices to depreciate. Anything less than that is a shortage and will lead to continued price appreciation. As the next graph shows, there were too many homes for sale from 2007 to 2010 (many of which were short sales and foreclosures), and that caused prices to tumble. Today, there’s a shortage of inventory, which is causing the acceleration in home values to continue.
<a href="https://files.mykcm.com/2022/02/16120313/20220217-MEM-Eng-4.png" target="_blank" rel="noopener noreferrer"><img class="aligncenter wp-image-101203" src="https://files.mykcm.com/2022/02/16120313/20220217-MEM-Eng-4.png" alt="4 Simple Graphs Showing Why This Is Not a Housing Bubble | MyKCM" width="600" height="450" /></a>
Inventory is nothing like the last time. Prices are rising because there’s a healthy demand for homeownership at the same time there’s a shortage of homes for sale.
Bottom Line
If you’re worried that we’re making the same mistakes that led to the housing crash, the graphs above show data and insights to help alleviate your concerns.
2022-02-20T18:06:00-07:002022-02-20T18:07:46-07:00Curtis Leetag:murphyleegroup.com,2012-09-20:8086Achieving the Dream of Homeownership<img src="https://assets.site-static.com/userfiles/1482/image/IMG_20220117_195225.jpg" width="750" height="514" />
Homeownership has long been considered the American Dream, and it’s one every American should feel confident and powerful pursuing. But owning a home is also a deeply personal dream. Our home provides us with safety and security, and it’s a place where we can <a href="https://www.simplifyingthemarket.com/2021/12/23/when-a-house-becomes-a-home/?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" title="grow and flourish">grow and flourish</a>.
Today, we remember the legacy of Dr. Martin Luther King, Jr. Many of us will remember his passion and determination for the causes he championed, including his famous “<a href="https://www.npr.org/2010/01/18/122701268/i-have-a-dream-speech-in-its-entirety" title="I Have a Dream" target="_blank" rel="noopener noreferrer">I Have a Dream</a>” speech in 1963. As we reflect on his message today, it may inspire your own dream of homeownership. And if so, know you’re not alone. With a trusted <a href="https://www.simplifyingthemarket.com/2021/11/26/reasons-to-hire-a-real-estate-professional-infographic/?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" title="real estate advisor">real estate advisor</a> at your side, you can begin your journey toward homeownership by answering the questions below.
1. Where Do I Start?
The <a href="https://www.simplifyingthemarket.com/2021/11/19/your-journey-to-homeownership-infographic/?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" title="process">process</a> of buying a home is not one to enter into lightly. You need to decide on key things like how long you plan on living in an area, how much space you need, what kind of commute works for you, and how much you can spend.
Then, when you decide you’re ready to buy, you’ll need to apply for a <a href="https://www.simplifyingthemarket.com/2021/12/27/key-things-to-avoid-after-applying-for-a-mortgage/?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" title="mortgage">mortgage</a>. Your lender will look at several factors to determine how much you’re able to borrow, including your credit history. Lenders want to understand how well you’ve managed paying your student loans, credit cards, car loans, and other past debts.
According to <a href="https://myhome.freddiemac.com/buying/what-can-you-afford" title="Freddie Mac" target="_blank" rel="noopener noreferrer">Freddie Mac</a>:
“To get a rough estimate of what you can afford, most lenders suggest that you should spend no more than 28% of your monthly gross (pre-tax) income on your mortgage payment, including principal, interest, taxes and insurance.”
2. How Do I Save Enough for a Down Payment?
Speaking of how much you can afford, you’ll want to know what to save for a <a href="https://www.simplifyingthemarket.com/2021/12/22/the-perks-of-putting-20-down-on-a-home/?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" title="down payment">down payment</a>. While the idea of saving for a down payment can be daunting, there are many different options and resources that can help.
According to <a href="https://www.businessinsider.com/personal-finance/tips-for-saving-for-a-down-payment" title="Business Insider" target="_blank" rel="noopener noreferrer">Business Insider</a>, automatic savings can bring you one step closer to achieving your target down payment:
“If you receive your paycheck as a direct deposit, you may want to arrange for your company to send a percentage of each check directly into a savings account for the down payment. . . . The automatic-savings strategy makes it so you don't have to constantly remember to save money.”
Before you know it, you’ll have enough for a down payment if you’re disciplined and thoughtful about your process. And the best part is, you may need to save less for your <a href="https://www.simplifyingthemarket.com/2022/01/03/how-much-do-you-need-for-your-down-payment/?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" title="down payment">down payment</a> than you think. Your agent and lender can help you understand your options.
3. How Can I Reach My Financial Goals?
Another way to increase your savings is by sticking to a planned budget. If you’ve never budgeted before, there are tools available. For example, MoneyFit.org provides a <a href="https://static1.squarespace.com/static/5b1056f17e3c3a3d50d4605c/t/5f8dbbd1c5bc3f25be3b180d/1603124184016/Money+Fit+Automatic+Budget+Worksheet.pdf" title="budgeting worksheet" target="_blank" rel="noopener noreferrer">budgeting worksheet</a> you can use to create your own plan and <a href="https://moneyfit.org/how-to-budget" title="five rules" target="_blank" rel="noopener noreferrer">five rules</a> to follow when you’re saving. They recommend you:
Identify Goals
Record Expenses
Record Earnings
Compare and Calculate
Fix Weak Spots
If you’re already budgeting, consider finding ways to tighten your spending a bit more to accelerate your journey to homeownership. After all, putting even a little extra into your savings each month can truly add up over time.
Bottom Line
As you set out to realize your dream of homeownership this year, know that it’s achievable with careful planning. Most importantly, let’s connect today so you don’t have to walk alone on this journey.
2022-01-17T17:56:00-07:002022-01-17T17:57:57-07:00Curtis Leetag:murphyleegroup.com,2012-09-20:7508Why a Wave of Foreclosures Is Not on the Way<img width="750" height="410" src="https://files.mykcm.com/2021/11/01113422/20211104-KCM-Share.jpg" class="attachment-entry size-entry wp-post-image" alt="Why a Wave of Foreclosures Is Not on the Way | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2021/11/01113422/20211104-KCM-Share.jpg 750w, https://files.mykcm.com/2021/11/01113422/20211104-KCM-Share-600x328.jpg 600w, https://files.mykcm.com/2021/11/01113422/20211104-KCM-Share-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" style="font-size: 17px;" />
With forbearance plans coming to an end, many are concerned the housing market will experience a wave of foreclosures similar to what happened after the housing bubble 15 years ago. Here are a few reasons why that won’t happen.
There are fewer homeowners in trouble this time
After the last housing crash, about <a href="https://economics.cmail20.com/t/ViewEmail/d/6DD5AA0E9F6529292540EF23F30FEDED/5323CD85A2087AFD22947492D9797BBC" title="9.3 million households" target="_blank" rel="noopener noreferrer">9.3 million households</a> lost their homes to a foreclosure, short sale, or because they simply gave it back to the bank.
As stay-at-home orders were issued early last year, the fear was the pandemic would impact the housing industry in a similar way. Many projected up to <a href="https://blog.firstam.com/economics/this-time-its-different-why-a-wave-of-foreclosures-is-unlikely" title="30% of all mortgage holders" target="_blank" rel="noopener noreferrer">30% of all mortgage holders</a> would enter the forbearance program. In reality, only 8.5% actually did, and that number is now <a href="https://www.mba.org/2021-press-releases/october/share-of-mortgage-loans-in-forbearance-decreases-to-221-percent" title="down to 2.2%" target="_blank" rel="noopener noreferrer">down to 2.2%</a>.
As of last Friday, the total number of mortgages still in forbearance <a href="https://www.blackknightinc.com/blog-posts/forbearances-flat-for-second-consecutive-week/" title="stood at&nbsp; 1,221,000" target="_blank" rel="noopener noreferrer">stood at 1,221,000</a>. That’s far fewer than the 9.3 million households that lost their homes just over a decade ago.
Most of the mortgages in forbearance have enough equity to sell their homes
Due to rapidly rising home prices over the last two years, of the 1.22 million homeowners currently in forbearance, <a href="https://cdn.blackknightinc.com/wp-content/uploads/2021/06/BKI_MM_Apr2021_Report.pdf" title="93% have at least 10% equity" target="_blank" rel="noopener noreferrer">93% have at least 10% equity</a> in their homes. This 10% equity is important because it enables homeowners to sell their homes and pay the related expenses instead of facing the hit on their credit that a foreclosure or short sale would create.
The remaining 7% might not have the option to sell, but if the entire 7% of those 1.22 million homes went into foreclosure, that would total about 85,400 mortgages. To give that number context, here are the <a href="https://www.newyorkfed.org/microeconomics/hhdc.html" title="annual foreclosure numbers" target="_blank" rel="noopener noreferrer">annual foreclosure numbers</a> for the three years leading up to the pandemic:
2017: 314,220
2018: 279,040
2019: 277,520
The probable number of foreclosures coming out of the forbearance program is nowhere near the number of foreclosures that impacted the housing crash 15 years ago. It’s actually less than one-third of any of the three years prior to the pandemic.
The current market can absorb listings coming to the market
When foreclosures hit the market back in 2008, there was an oversupply of houses for sale. It’s exactly the opposite today. In 2008, there was over a nine-month supply of listings on the market. Today, that number is less than a <a href="https://www.nar.realtor/research-and-statistics/housing-statistics/existing-home-sales" title="three-month supply" target="_blank" rel="noopener noreferrer">three-month supply</a>. Here’s a graph showing the difference between the two markets.<a href="https://files.mykcm.com/2021/11/01113425/20211104-MEM-Eng-1.png" target="_blank" rel="noopener noreferrer"><img class="aligncenter wp-image-99825" src="https://assets.site-static.com/userfiles/1482/image/IMG_20211105_211245.jpg" alt="Why a Wave of Foreclosures Is Not on the Way | MyKCM" width="1000" height="750" /></a>
Bottom Line
The data indicates why <a href="https://www.tomferry.com/our-podcast/experience-91/" title="Ivy Zelman" target="_blank" rel="noopener noreferrer">Ivy Zelman</a>, founder of the major housing market analytical firm Zelman and Associates, was on point when she stated:
“The likelihood of us having a foreclosure crisis again is about zero percent.”
2021-11-05T18:14:00-07:002021-11-05T18:17:45-07:00Curtis Leetag:murphyleegroup.com,2012-09-20:6695Key Questions To Ask Yourself Before Buying a Home<img src="https://assets.site-static.com/userfiles/1482/image/20210802-KCM-Share.jpg" width="750" height="410" />
Sometimes it can feel like everyone has advice when it comes to buying a home. While your friends and loved ones may have your best interests in mind, they may also be missing crucial information about today’s housing market that you need to make your best decision.
Before you decide whether you’re ready to buy a home, you should know how to answer these three questions.
1. What’s Going on with Home Prices?
Home prices are one factor that directly impacts how much it will cost to buy a home and how much you stand to gain as a homeowner when prices appreciate.
The graph below shows just how much <a href="https://www.simplifyingthemarket.com/2021/07/06/a-look-at-home-price-appreciation-through-2025/?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" title="experts">experts</a> are forecasting prices to rise this year:<a href="https://files.simplifyingthemarket.com/2021/07/29160837/20210802-MEM-Eng-1.png?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" target="_blank" rel="noopener noreferrer"><img class="aligncenter wp-image-98865" src="https://files.mykcm.com/2021/07/29160837/20210802-MEM-Eng-1.png" alt="Key Questions To Ask Yourself Before Buying a Home | MyKCM" width="600" height="450" /></a>Continued price appreciation is great news for <a href="https://www.simplifyingthemarket.com/2021/06/18/owning-a-home-has-distinct-financial-benefits-over-renting-infographic/?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" title="existing homeowners">existing homeowners</a> but can pose a significant challenge if you <a href="https://www.simplifyingthemarket.com/2021/07/07/the-truths-young-homebuyers-need-to-hear/?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" title="wait to buy">wait to buy</a>. Using these forecasts, you can determine just how much waiting could cost you. If prices increase based on the average of all forecasts (12.46%), a median-priced home that cost $350,000 in January of 2021 will cost an additional $43,610 by the end of the year. What does this mean for you? Put simply, with home prices increasing, the longer you wait, the more it could cost you.
2. Are Today’s Low Mortgage Rates Going To Last?
Another significant factor that should inform your decision is mortgage interest rates. Today’s average rates remain close to record-lows. Much like prices, though, experts forecast rates will rise over the coming months, as the chart below shows:<a href="https://files.simplifyingthemarket.com/2021/07/29160840/20210802-MEM-Eng-2.png?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" target="_blank" rel="noopener noreferrer"><img class="aligncenter wp-image-98866" src="https://files.mykcm.com/2021/07/29160840/20210802-MEM-Eng-2.png" alt="Key Questions To Ask Yourself Before Buying a Home | MyKCM" width="600" height="450" /></a>Your monthly mortgage payment can be significantly impacted by even the <a href="https://www.simplifyingthemarket.com/2021/07/19/what-you-should-do-before-interest-rates-rise/?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" title="slightest increase">slightest increase</a> in mortgage rates, which makes the overall cost of the home greater over time when you wait.
3. Why Is Homeownership Important to You?
The final question is a personal one. Before deciding, you’ll need to understand your motivation to buy a home and why homeownership is an important goal for you. The financial benefits of owning a home are often easier to account for than the many emotional ones.
The <a href="https://72nut3mk2z64bywh6c1thwjy-wpengine.netdna-ssl.com/wp-content/uploads/2021/06/USMI-National-Homeownership-Market-Survey-June-2021.pdf" title="2021 National Homeownership Market Survey" target="_blank" rel="noopener noreferrer">2021 National Homeownership Market Survey</a> shows that six of the nine reasons Americans value homeownership are because of how it impacts them on a personal, aspirational level. The survey says homeownership provides:
Stability
Safety
A Sense of Accomplishment
A Life Milestone
A Stake in the Community
Personal Pride
The <a href="https://www.neighborworks.org/getattachment/73023399-4bb0-4d98-b2f8-8a3aa940d065/attachment.aspx" title="National Housing &amp; Financial Capability Survey" target="_blank" rel="noopener noreferrer">National Housing & Financial Capability Survey</a> from NeighborWorks America also highlights the emotional benefits of homeownership:<a href="https://files.simplifyingthemarket.com/2021/07/29160843/20210802-MEM-Eng-3.png?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" target="_blank" rel="noopener noreferrer"><img class="aligncenter wp-image-98867" src="https://files.mykcm.com/2021/07/29160843/20210802-MEM-Eng-3.png" alt="Key Questions To Ask Yourself Before Buying a Home | MyKCM" width="600" height="450" /></a>Clearly, there’s a value to <a href="https://www.simplifyingthemarket.com/2021/05/03/americans-find-the-nonfinancial-benefits-of-homeownership-most-valuable/?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" title="homeownership">homeownership</a> beyond the many great financial opportunities it provides. It gives homeowners a sense of pride, safety, security, and accomplishment – which impacts their lives and how they feel daily.
Bottom Line
Homeownership is life-changing, and buying a home can positively impact you in so many ways. With any decision this big, it helps to have a trusted advisor by your side each step of the way. If you’re ready to begin your journey toward homeownership, let’s connect to discuss your options and begin your journey.
2021-08-03T08:29:00-07:002021-08-03T08:31:49-07:00Curtis Leetag:murphyleegroup.com,2012-09-20:6626 What You Should Do Before Interest Rates Rise<img src="https://assets.site-static.com/userfiles/1482/image/20210719-KCM-branded.jpg" width="750" height="410" />
In today’s real estate market, mortgage interest rates are near record lows. If you’ve been in your current home for several years and haven’t refinanced lately, there’s a good chance you have a mortgage with an interest rate higher than today’s average. Here are some options you should consider if you want to take advantage of today’s current low rates before they rise.
Sell and Move Up (or Downsize)
Many of today’s homeowners are rethinking what they need in a home and redefining what their <a href="https://www.simplifyingthemarket.com/2021/06/03/dreaming-of-a-bigger-home-why-not-buy-it-this-year/?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" title="dream home" target="_blank" rel="noopener noreferrer">dream home</a> means. For some, continued remote work is bringing about the need for additional space. For others, moving to a lower cost-of-living area or downsizing may be great options. If you’re considering either of these, there may not be a better time to move. Here’s why.
The chart below shows average <a href="http://www.freddiemac.com/pmms/" title="mortgage rates" target="_blank" rel="noopener noreferrer">mortgage rates</a> by decade compared to where they are today:<a href="https://files.simplifyingthemarket.com/2021/07/16134037/20210719-MEM-Eng-1.png?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" target="_blank" rel="noopener noreferrer"><img class="aligncenter wp-image-98577" src="https://files.mykcm.com/2021/07/16134037/20210719-MEM-Eng-1.png" alt="What You Should Do Before Interest Rates Rise | MyKCM" width="600" height="450" /></a>Today’s rates are below 3%, but <a href="https://www.simplifyingthemarket.com/2021/06/30/what-do-experts-see-on-the-horizon-for-the-second-half-of-the-year/?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" title="experts forecast" target="_blank" rel="noopener noreferrer">experts forecast</a> rates to rise over the next few years.
If the interest rate on your current mortgage is higher than today’s average, take advantage of this opportunity by making a move and securing a lower rate. <a href="https://www.simplifyingthemarket.com/2021/04/21/planning-to-move-you-can-still-secure-a-low-mortgage-rate-on-your-next-home/?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" title="Lower rates" target="_blank" rel="noopener noreferrer">Lower rates</a> mean you may be able to get more house for your money and still have a lower monthly mortgage payment than you might expect.
Waiting, however, might mean you miss out on this historic opportunity. Below is a chart showing how your monthly payment will change if you buy a home as mortgage rates increase:<a href="https://files.simplifyingthemarket.com/2021/07/16134040/20210719-MEM-Eng-2.png?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" target="_blank" rel="noopener noreferrer"><img class="aligncenter wp-image-98578" src="https://files.mykcm.com/2021/07/16134040/20210719-MEM-Eng-2.png" alt="What You Should Do Before Interest Rates Rise | MyKCM" width="600" height="450" /></a>
Breaking It All Down:
Using the chart above, let’s look at the breakdown of a $300,000 mortgage:
When mortgage rates rise, so does the monthly payment you can secure.
Even the smallest increase in rates can make a difference in your monthly mortgage payment.
As interest rates rise, you’ll need to look at a lower-priced home to try and keep the same target monthly payment, meaning you may end up with less home for your money.
No matter what, whether you’re looking to make a <a href="https://www.simplifyingthemarket.com/2021/06/11/have-your-day-in-the-sun-by-moving-up-this-summer-infographic/?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" title="move up" target="_blank" rel="noopener noreferrer">move up</a> or <a href="https://www.simplifyingthemarket.com/2021/04/13/some-buyers-prefer-smaller-homes/?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" title="downsize" target="_blank" rel="noopener noreferrer">downsize</a> to a home that better suits your needs, now is the time. Even a small change in interest rates can have a big impact on your purchasing power.
Refinance
If making a move right now still doesn’t feel right for you, consider refinancing. With the current low mortgage rates, refinancing is a great option if you’re looking to lower your monthly payments and stay in your current home.
Bottom Line
Take advantage of today’s low rates before they begin to rise. Whether you’re thinking about moving up, downsizing, or refinancing, let’s connect today to discuss which option is best for you.
For more mortgage or refinance information contact our mortgage partner Bob Faust
<a href="https://www.dkmortgage.com/faust/" target="_blank"><img src="https://assets.site-static.com/userfiles/1482/image/IMG_20210725_074228.jpg" width="750" height="475" /></a>
2021-07-25T04:48:00-07:002021-07-25T04:56:38-07:00Curtis Leetag:murphyleegroup.com,2012-09-20:6602 It Isn't 2008, This Isn’t a Housing Bubble<img src="https://assets.site-static.com/userfiles/1482/image/20210720-KCM-Share_1.jpg" width="750" height="410" />
With home prices continuing to deliver double-digit increases, some are concerned we’re in a housing bubble like the one in 2006. However, a closer look at the market data indicates this is nothing like 2006 for three major reasons.
1. The housing market isn’t driven by risky mortgage loans.
Back in 2006, nearly everyone could qualify for a loan. The <a href="https://www.mba.org/news-research-and-resources/research-and-economics/single-family-research/mortgage-credit-availability-index" title="Mortgage Credit Availability Index" target="_blank" rel="noopener noreferrer">Mortgage Credit Availability Index</a> (MCAI) from the Mortgage Bankers’ Association is an indicator of the availability of mortgage money. The higher the index, the easier it is to obtain a mortgage. The MCAI more than doubled from 2004 (378) to 2006 (869). Today, the index stands at 130. As an example of the difference between today and 2006, let’s look at the <a href="https://www.newyorkfed.org/microeconomics/hhdc/background.html" title="volume of mortgages" target="_blank" rel="noopener noreferrer">volume of mortgages</a> that originated when a buyer had less than a 620 credit score.<a href="https://files.simplifyingthemarket.com/2021/07/19150732/20210720-MEM-Eng-1.png?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" target="_blank" rel="noopener noreferrer"><img class="aligncenter wp-image-98641" src="https://files.mykcm.com/2021/07/19150732/20210720-MEM-Eng-1.png" alt="3 Charts That Show This Isn’t a Housing Bubble | MyKCM" width="600" height="450" /></a>Dr. Frank Nothaft, Chief Economist for CoreLogic, reiterates this <a href="https://www.corelogic.com/intelligence/u-s-home-price-insights/" title="point" target="_blank" rel="noopener noreferrer">point</a>:
“There are marked differences in today’s run up in prices compared to 2005, which was a bubble fueled by risky loans and lenient underwriting. Today, loans with high-risk features are absent and mortgage underwriting is prudent.”
2. Homeowners aren’t using their homes as ATMs this time.
During the housing bubble, as prices skyrocketed, people were refinancing their homes and pulling out large sums of cash. As prices began to fall, that caused many to spiral into a negative equity situation (where their mortgage was higher than the value of the house).
Today, homeowners are letting their equity build. Tappable equity is the amount available for homeowners to access before hitting a maximum 80% combined loan-to-value ratio (thus still leaving them with at least 20% equity). In 2006, that number was $4.6 billion. Today, that number stands at over <a href="https://www.blackknightinc.com/wp-content/uploads/2021/07/BKI_MM_May2021_Report.pdf" title="$8 billion" target="_blank" rel="noopener noreferrer">$8 billion</a>.
Yet, the percentage of cash-out refinances (where the homeowner takes out at least 5% more than their original mortgage amount) is <a href="http://www.freddiemac.com/research/datasets/refinance-stats/index.page" title="half of what it was in 2006" target="_blank" rel="noopener noreferrer">half of what it was in 2006</a>.<a href="https://files.simplifyingthemarket.com/2021/07/19150734/20210720-MEM-Eng-2.png?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" target="_blank" rel="noopener noreferrer"><img class="aligncenter wp-image-98642" src="https://files.mykcm.com/2021/07/19150734/20210720-MEM-Eng-2.png" alt="3 Charts That Show This Isn’t a Housing Bubble | MyKCM" width="600" height="450" /></a>
3. This time, it’s simply a matter of supply and demand.
FOMO (the Fear Of Missing Out) dominated the housing market leading up to the 2006 housing bubble and drove up buyer demand. Back then, housing supply more than kept up as many homeowners put their houses on the market, as evidenced by the over seven months’ supply of existing housing inventory available for sale in 2006. Today, that number is barely two months.
Builders also overbuilt during the bubble but pulled back significantly over the next decade. Sam Khater, VP and Chief Economist, Economic & Housing Research at Freddie Mac, <a href="http://www.freddiemac.com/perspectives/sam_khater/20210415_single_family_shortage.page" title="explains" target="_blank" rel="noopener noreferrer">explains</a> that pullback is the major factor in the lack of available inventory today:
“The main driver of the housing shortfall has been the long-term decline in the construction of single-family homes.”
Here’s a chart that quantifies Khater’s remarks:<a href="https://files.simplifyingthemarket.com/2021/07/19150737/20210720-MEM-Eng-3.png?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" target="_blank" rel="noopener noreferrer"><img class="aligncenter wp-image-98643" src="https://files.mykcm.com/2021/07/19150737/20210720-MEM-Eng-3.png" alt="3 Charts That Show This Isn’t a Housing Bubble | MyKCM" width="600" height="450" /></a>Today, there are simply not enough homes to keep up with current demand.
Bottom Line
This market is nothing like the run-up to 2006. Bill McBride, the author of the prestigious Calculated Risk blog, predicted the last housing bubble and crash. This is what he has to say about <a href="https://www.theatlantic.com/ideas/archive/2021/05/us-housing-market-records/619029/" title="today’s housing market" target="_blank" rel="noopener noreferrer">today’s housing market</a>:
“It’s not clear at all to me that things are going to slow down significantly in the near future. In 2005, I had a strong sense that the hot market would turn and that, when it turned, things would get very ugly. Today, I don’t have that sense at all, because all of the fundamentals are there. Demand will be high for a while because Millennials need houses. Prices will keep rising for a while because inventory is so low."
Let's connect to discuss how the market impacts your search for a new home.<br />Give us a call at 800-633-1142 or email Info@MurphyLeeGroup.com
2021-07-20T11:48:00-07:002021-07-22T03:28:55-07:00Curtis Leetag:murphyleegroup.com,2012-09-20:63615 Things Homebuyers Need To Know When Making an Offer<img width="750" height="410" src="https://files.mykcm.com/2021/06/11132747/20210621-KCM-Share.jpg" class="attachment-entry size-entry wp-post-image" alt="5 Things Homebuyers Need To Know When Making an Offer | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2021/06/11132747/20210621-KCM-Share.jpg 750w, https://files.mykcm.com/2021/06/11132747/20210621-KCM-Share-600x328.jpg 600w, https://files.mykcm.com/2021/06/11132747/20210621-KCM-Share-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" style="font-size: 17px;" />
When it comes to buying a house, you’re looking for the perfect place to call home. The problem is, in today’s market there just aren’t that many homes available to purchase. With <a href="https://www.simplifyingthemarket.com/2021/04/28/patience-is-the-key-to-buying-a-home-this-year/?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" title="inventory" target="_blank" rel="noopener noreferrer">inventory</a> hovering near record lows and sky-high buyer <a href="https://www.simplifyingthemarket.com/2021/05/06/why-waiting-to-buy-a-home-could-cost-you-a-small-fortune/?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" title="demand" target="_blank" rel="noopener noreferrer">demand</a>, a multi-offer scenario is the new normal. Here are five things to keep in mind when you’re ready to make an offer.
1. Know Your Numbers
Having a complete understanding of your budget and how much house you can <a href="https://www.simplifyingthemarket.com/2021/05/26/buying-a-home-is-still-affordable/?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" title="afford" target="_blank" rel="noopener noreferrer">afford</a> is essential. That’s why you should connect with a lender to get <a href="https://www.simplifyingthemarket.com/2021/05/07/the-power-of-mortgage-pre-approval-infographic/?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" title="pre-approved" target="_blank" rel="noopener noreferrer">pre-approved</a> for a loan early in the homebuying process. Taking this step shows sellers you’re a serious, qualified buyer and can give you a competitive edge in a bidding war.
2. Brace for a Fast Pace
Today’s market is dynamic and fast-paced. According to the <a href="https://www.nar.realtor/research-and-statistics/research-reports/realtors-confidence-index" title="Realtors Confidence Index" target="_blank" rel="noopener noreferrer">Realtors Confidence Index</a> from the National Association of Realtors (NAR), the average home is on the market for just <a href="https://www.simplifyingthemarket.com/2021/05/28/homes-across-the-country-are-selling-fast-infographic-3/?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" title="17 days" target="_blank" rel="noopener noreferrer">17 days</a> – that means from start to finish, a house for sale in today’s climate is active for roughly 2.5 weeks. A skilled agent will do everything they can to help you stay on top of every possible opportunity. And, as soon as you find the right home for your needs, that agent will help you draft and submit your best offer as quickly as possible.
3. Lean on a Real Estate Professional
While homebuying may seem like a whirlwind process to you, local real estate agents do this every day, and we know what works. That expertise can be used to give you a significant leg up on your competition. An agent can help you consider what <a href="https://www.simplifyingthemarket.com/2021/02/24/how-much-leverage-do-todays-house-sellers-have/?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" title="levers" target="_blank" rel="noopener noreferrer">levers</a> you can pull that might be enticing to a seller, like:
Offering flexible rent-back options to give the seller more time to move out
Your ability to do a quick close or make an offer that’s not contingent on the sale of your current home
It may seem simple, but catering to what a seller may need can help your offer stand out.
4. Make a Strong, but Fair Offer
Let’s face it – we all love a good deal. In the past, offering at or near the <a href="https://www.simplifyingthemarket.com/2021/06/08/in-todays-market-listing-prices-are-like-an-auctions-reserve-price/?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" title="asking price" target="_blank" rel="noopener noreferrer">asking price</a> was enough to make your offer appealing to sellers. In today’s market, that’s often not the case. According to <a href="https://www.cnbc.com/2021/05/21/april-existing-home-sales-drop-marking-three-straight-months-of-declines.html" title="Lawrence Yun" target="_blank" rel="noopener noreferrer">Lawrence Yun</a>, Chief Economist at NAR:
“For every listing there are 5.1 offers. Half of the homes are being sold above list price.”
In such a competitive market, emotions and prices can run high. Use an agent as your trusted advisor to make a strong, but fair offer based on market value, recent sales, and demand.
5. Be a Flexible Negotiator
If you followed tip #3, you drafted the offer with the seller’s needs in mind. That said, the seller may still counter with their own changes. Be prepared to amend your offer to include flexible move-in dates, a higher price, or minimal contingencies (conditions you set that the seller must meet for the purchase to be finalized). Just remember, there are certain contingencies you don’t want to forego. <a href="https://myhome.freddiemac.com/blog/homeownership/20201019_5_rules_for_making_an_offer_on_a_home.page" title="Freddie Mac" target="_blank" rel="noopener noreferrer">Freddie Mac</a> explains:
“Resist the temptation to waive the inspection contingency, especially in a hot market or if the home is being sold ‘as-is’, which means the seller won’t pay for repairs. Without an inspection contingency, you could be stuck with a contract on a house you can’t afford to fix.”
Bottom Line
When it’s time to make an offer, it’s important to consider not just what you need, but what the seller may need too. Let’s connect so you have expert advice on this step in the homebuying process to put your best offer on the table.
2021-06-21T10:26:00-07:002021-06-22T10:29:26-07:00Curtis Leetag:murphyleegroup.com,2012-09-20:6331 Housing Wealth: The Missing Piece of the Affordability Equation<img width="750" height="410" src="https://files.mykcm.com/2021/06/16101541/20210617-KCM-Share.jpg" class="attachment-entry size-entry wp-post-image" alt="Housing Wealth: The Missing Piece of the Affordability Equation | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2021/06/16101541/20210617-KCM-Share.jpg 750w, https://files.mykcm.com/2021/06/16101541/20210617-KCM-Share-600x328.jpg 600w, https://files.mykcm.com/2021/06/16101541/20210617-KCM-Share-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" style="font-size: 17px;" />
The real estate market is soaring today. Residential home values are rising, and that’s a big win for homeowners. In 2020, there was a double-digit increase in home values – a trend that’s expected to head toward similar levels this year.
However, skyrocketing prices are causing some to start questioning affordability in the current housing market. Many are quick to emphasize the fact that homes today are less affordable than they were last year. Black Knight, a leading provider of data and analytics across the homeownership life cycle, <a href="https://cdn.blackknightinc.com/wp-content/uploads/2021/06/BKI_MM_Apr2021_Report.pdf" title="just reported" target="_blank" rel="noopener noreferrer">just reported</a> on the issue.
The findings show the historical averages of the national payment to income ratio, which they define as “the share of the median income needed to make the monthly payments on the median-priced home.” Their study reveals:
The average over the last 25 years was 23.6%
The average over the last 5 years was 20.1%
The average today stands at 20.5%
Right now, housing payments are slightly less affordable than the five-year average – but only by less than ½ a percentage point. However, they’re significantly more affordable than the 25-year average. Put another way, a buyer will likely make a slightly greater financial sacrifice to afford a home right now than if they purchased a home within the last five years. On the other hand, it also means the potential financial sacrifice is not nearly as great as it was over the last 25 years.
Does making a sacrifice to buy a home today make financial sense in the long term?
Last week, the Federal Reserve announced that, in the first three months of the year, household net worth increased by <a href="https://finance.yahoo.com/news/u-household-net-worth-reaches-160000570.html" title="$968 billion" target="_blank" rel="noopener noreferrer">$968 billion</a> based solely on the values of the real estate they owned. Another report from CoreLogic reveals the average annual gain in homeowner equity was <a href="https://www.corelogic.com/" title="$33,400" target="_blank" rel="noopener noreferrer">$33,400</a> per borrower.
Homeownership continues to be the cornerstone to building personal wealth. For most Americans, their home is the largest asset they own. On top of that, the difference between the net worth of homeowners and renters is significant at every income level. Here’s a table detailing that point using data from a <a href="https://blog.firstam.com/economics/homeownership-remains-strongly-linked-to-wealth-building" title="study" target="_blank" rel="noopener noreferrer">study</a> done by First American:<a href="https://files.simplifyingthemarket.com/2021/06/16102320/20210617-MEM-Eng-1a.png?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" target="_blank" rel="noopener noreferrer"><img class="aligncenter wp-image-98266" src="https://files.mykcm.com/2021/06/16102320/20210617-MEM-Eng-1a.png" alt="Housing Wealth: The Missing Piece of the Affordability Equation | MyKCM" width="600" height="450" /></a>
Owning a home is an essential steppingstone to grow a household’s net worth. Despite the slightly greater sacrifice in the percentage of monthly income you’ll spend on housing today, for most homebuyers, the payoff of starting to build equity now will be worth it.
Bottom Line
Since prices have risen dramatically over the past 18 months, it’s slightly less affordable to buy a home today than it was a year ago. However, when you consider the equity gain and weigh the long-term benefits of building your net worth, you may question if you can afford not to buy now.
2021-06-19T06:17:00-07:002021-06-19T06:19:43-07:00Curtis Leetag:murphyleegroup.com,2012-09-20:6294Hope Is on the Horizon for Today’s Housing Shortage<img width="750" height="410" src="https://files.mykcm.com/2021/06/11120049/20210615-KCM-Share.jpg" class="attachment-entry size-entry wp-post-image" alt="Hope Is on the Horizon for Today’s Housing Shortage | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2021/06/11120049/20210615-KCM-Share.jpg 750w, https://files.mykcm.com/2021/06/11120049/20210615-KCM-Share-600x328.jpg 600w, https://files.mykcm.com/2021/06/11120049/20210615-KCM-Share-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" style="font-size: 17px;" />
The major challenge in today’s housing market is that there are more buyers looking to purchase than there are homes available to buy. Simply put, supply can’t keep up with demand. A normal market has a 6-month supply of homes for sale. Anything over that indicates it’s a buyers’ market, but an inventory level below that threshold means we’re in a <a href="https://www.simplifyingthemarket.com/2021/03/29/what-it-means-to-be-in-a-sellers-market/?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" title="sellers’ market" target="_blank" rel="noopener noreferrer">sellers’ market</a>. Today’s inventory level sits far below the norm.
According to the <a href="https://www.nar.realtor/newsroom/existing-home-sales-decline-2-7-in-april" title="Existing Home Sales Report" target="_blank" rel="noopener noreferrer">Existing Home Sales Report</a> from the National Association of Realtors (NAR):
“Total housing inventory at the end of April amounted to 1.16 million units, up 10.5% from March's inventory and down 20.5% from one year ago (1.46 million). Unsold inventory sits at a 2.4-month supply at the current sales pace, slightly up from March's 2.1-month supply and down from the 4.0-month supply recorded in April 2020. These numbers continue to represent near-record lows.”
Basically, while we are seeing some improvement, we’re still at near-record lows for housing inventory (as shown in the graph below). Here’s why. Since the pandemic began, sellers have been cautious when it comes to putting their homes on the market. At the same time that fewer people are listing their homes, more and more people are trying to buy them thanks to today’s low<a href="https://www.simplifyingthemarket.com/2021/05/05/are-interest-rates-expected-to-rise-over-the-next-year/?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" title=" mortgage rates" target="_blank" rel="noopener noreferrer"> mortgage rates</a>. The influx of buyers aiming to capitalize on those rates are purchasing this <a href="https://www.simplifyingthemarket.com/2021/04/23/this-isnt-a-bubble-its-simply-lack-of-supply-infographic/?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" title="limited supply" target="_blank" rel="noopener noreferrer">limited supply</a> of homes as quickly as they’re coming to market.<a href="https://files.simplifyingthemarket.com/2021/06/11120054/20210615-MEM-Eng-1.png?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" target="_blank" rel="noopener noreferrer"><img class="aligncenter wp-image-98214" src="https://files.mykcm.com/2021/06/11120054/20210615-MEM-Eng-1.png" alt="Hope Is on the Horizon for Today’s Housing Shortage | MyKCM" width="600" height="450" /></a>This inventory shortage doesn’t just apply to existing homes that are already built. When it comes to <a href="https://www.simplifyingthemarket.com/2021/04/28/patience-is-the-key-to-buying-a-home-this-year/?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" title="new construction" target="_blank" rel="noopener noreferrer">new construction</a>, builders are trying to do their part to bring more newly built homes into the market. However, due to challenges with things like lumber supply, they’re also not able to keep up with demand. In their <a href="https://www.census.gov/construction/nrs/pdf/newressales.pdf" title="Monthly New Residential Sales report" target="_blank" rel="noopener noreferrer">Monthly New Residential Sales report</a>, the United States Census Bureau states:
“The seasonally‐adjusted estimate of new houses for sale at the end of April was 316,000. This represents a supply of 4.4 months at the current sales rate.”
<a href="https://files.simplifyingthemarket.com/2021/06/11120051/20210615-MEM-Eng-2.png?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" target="_blank" rel="noopener noreferrer"><img class="aligncenter wp-image-98213" src="https://files.mykcm.com/2021/06/11120051/20210615-MEM-Eng-2.png" alt="Hope Is on the Horizon for Today’s Housing Shortage | MyKCM" width="600" height="450" /></a>Sam Khater, Chief Economist at Freddie Mac, <a href="http://www.freddiemac.com/perspectives/sam_khater/20210415_single_family_shortage.page" title="elaborates" target="_blank" rel="noopener noreferrer">elaborates</a>:
“In the span of five decades, entry level construction fell from 418,000 units per year in the late 1970s to 65,000 in 2020.
While in 2020 only 65,000 entry-level homes were completed, there were 2.38 million first-time homebuyers that purchased homes. Not all renters looking to purchase their first home were in the market for entry-level homes, however, the large disparity illustrates the significant and rapidly widening gap between entry-level supply and demand.”
Despite today’s low inventory, there is hope on the horizon.
Regarding existing home sales, Sabrina Speianu, Senior Economic Research Analyst at realtor.com, <a href="https://www.realtor.com/research/may-2021-data/" title="explains" target="_blank" rel="noopener noreferrer">explains</a>:
“In May, newly listed homes grew by 5.4% on a year-over-year basis compared to the earlier days of the COVID-19 pandemic last year…
In May, the share of newly listed homes compared to active daily inventory hit a historical high of 44.4%, 17.3 percentage points higher than last year and 15.1 percentage points above typical levels seen in 2017 to 2019. This is a reflection of quickly selling homes and, for buyers, it means that while they can expect fresh new listings every week, they will have to be prepared to move quickly on desirable homes.”
As for newly built homes, builders are also confident about what’s ahead for housing inventory. Robert Dietz, Chief Economist at the National Association of Home Builders (NAHB), <a href="https://eyeonhousing.org/2021/05/hmi-building-materials-top-housing-concerns/" title="shares" target="_blank" rel="noopener noreferrer">shares</a>:
“Builder confidence in the market remains strong due to a lack of resale inventory, low mortgage interest rates, and a growing demographic of prospective home buyers.”
Things are starting to look up for residential real estate inventory. As the country continues to reopen, <a href="https://www.simplifyingthemarket.com/2021/05/19/sellers-are-ready-to-enter-the-housing-market/?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" title="more houses" target="_blank" rel="noopener noreferrer">more houses</a> are likely to be listed for sale. However, as long as buyer demand remains high, it will take time for the balance between supply and demand to truly neutralize.
Bottom Line
Although it may be challenging to find a house to buy in today’s market, there is hope on the horizon. <a href="https://www.simplifyingthemarket.com/2021/06/14/the-right-expert-will-guide-you-through-this-unprecedented-market/?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" title="Let’s connect" target="_blank" rel="noopener noreferrer">Let’s connect</a> to talk about your home search so we can find your dream home this summer.
2021-06-15T13:16:00-07:002021-06-15T13:17:21-07:00Curtis Leetag:murphyleegroup.com,2012-09-20:6287The Right Expert Will Guide You Through This Unprecedented Market<img width="750" height="410" src="https://files.mykcm.com/2021/06/10162916/20210614-KCM-Share.jpg" class="attachment-entry size-entry wp-post-image" alt="The Right Expert Will Guide You Through This Unprecedented Market | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2021/06/10162916/20210614-KCM-Share.jpg 750w, https://files.mykcm.com/2021/06/10162916/20210614-KCM-Share-600x328.jpg 600w, https://files.mykcm.com/2021/06/10162916/20210614-KCM-Share-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" style="font-size: 17px;" />
In a normal market, it’s good to have an experienced guide coaching you through the process of buying or selling a home. That person can advise you on important things like <a href="https://www.simplifyingthemarket.com/2021/06/09/home-price-appreciation-is-as-simple-as-supply-and-demand/?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" title="pricing" target="_blank" rel="noopener noreferrer">pricing</a> your home correctly or the first <a href="https://www.simplifyingthemarket.com/2020/12/04/the-path-to-homeownership-infographic/?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" title="steps" target="_blank" rel="noopener noreferrer">steps</a> to take when you’re ready to buy. However, the market we’re in today is far from normal. As a result, an expert isn’t just good to have by your side – an expert is essential.
Today’s housing market is full of extremes. <a href="https://www.simplifyingthemarket.com/2021/04/21/planning-to-move-you-can-still-secure-a-low-mortgage-rate-on-your-next-home/?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" title="Mortgage rates" target="_blank" rel="noopener noreferrer">Mortgage rates</a> hovering near record-lows are driving high <a href="https://www.simplifyingthemarket.com/2021/05/26/buying-a-home-is-still-affordable/?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" title="buyer demand" target="_blank" rel="noopener noreferrer">buyer demand</a>. On the other hand, an absence of <a href="https://www.simplifyingthemarket.com/2021/05/13/your-house-could-be-the-oasis-in-an-inventory-desert/?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" title="sellers" target="_blank" rel="noopener noreferrer">sellers</a> is creating record-low housing inventory. This imbalance in supply and demand is leading to a skyrocketing rate of bidding wars and more houses selling <a href="https://www.simplifyingthemarket.com/2021/06/08/in-todays-market-listing-prices-are-like-an-auctions-reserve-price/?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" title="over" target="_blank" rel="noopener noreferrer">over</a> their asking price. This is driving home price <a href="https://www.simplifyingthemarket.com/2021/05/11/experts-say-home-prices-will-continue-to-appreciate/?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" title="appreciation" target="_blank" rel="noopener noreferrer">appreciation</a> and gains in home <a href="https://www.simplifyingthemarket.com/2021/05/20/should-i-move-or-refinance/?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" title="equity" target="_blank" rel="noopener noreferrer">equity</a>. These market conditions aren’t just extreme – they can be overwhelming. Having a trusted expert to coach you through the process of buying and selling a home gives you clarity, confidence, and success through each step.
Here are just a few of the ways a real estate expert is invaluable:
Contracts – We help with the disclosures and contracts necessary in today’s heavily regulated environment.
Experience – We’re well-versed in real estate and experienced with the entire sales process, including how it’s changed over the past year.
Negotiations – We act as a buffer in negotiations with all parties throughout the entire transaction while advocating for your best interests.
Education – We simply and effectively explain today’s market conditions and decipher what they mean for your individual goals.
Pricing – We help you understand today’s real estate values when setting the price of your home or making an offer to purchase one.
A real estate agent can be your essential guide through this unprecedented market, but truth be told, not all agents are created equal. A true expert can carefully walk you through the whole real estate process, look out for your unique needs, and advise you on the best ways to achieve success. Finding the right agent should be your top priority when you’re ready to buy or sell a home.
So, how do you choose the right expert?
It starts with trust. You’ll have to be able to trust the advice your agent is going to give you, so make sure you’re connected to a true professional. An agent can’t give you perfect advice because it’s impossible to know exactly what’s going to happen at every turn – especially in this unique market. A true professional expert can, however, give you the best possible advice based on the information and situation at hand, helping you make the necessary adjustments and best decisions along the way. The right agent – the professional – will help you plan the steps to take for success, advocate for you throughout the process, and coach you on the essential knowledge you need to make confident decisions toward your goals. That’s exactly what you want and deserve.
Bottom Line
It’s crucial right now to work with a real estate expert who understands how the market is changing and what that means for home buyers and sellers. If you’re planning to make a move this year, let’s connect so you have someone who can answer your questions, give you the best advice, and guide you along the way.
2021-06-14T17:10:00-07:002021-06-14T17:14:53-07:00Curtis Leetag:murphyleegroup.com,2012-09-20:6286Why This Is Not Like 2008 Again<img width="750" height="410" src="https://files.mykcm.com/2021/06/09161403/20210610-KCM-Share.jpg" class="attachment-entry size-entry wp-post-image" alt="Why This Is Not Like 2008 Again | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2021/06/09161403/20210610-KCM-Share.jpg 750w, https://files.mykcm.com/2021/06/09161403/20210610-KCM-Share-600x328.jpg 600w, https://files.mykcm.com/2021/06/09161403/20210610-KCM-Share-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" style="font-size: 17px;" />
During the Great Recession, just over a decade ago, the financial systems the world depended on started to collapse. It created a panic that drove some large companies out of business (ex. Lehman Brothers) and many more into <a href="https://www.forbes.com/sites/steveschaefer/2011/08/10/the-great-recessions-biggest-bankruptcies-where-are-they-now/?sh=4592abc24b7e" title="bankruptcy" target="_blank" rel="noopener noreferrer">bankruptcy</a>.
The financial crisis that accompanied the current pandemic caused hardship to certain industries and hurt many small businesses. However, it hasn’t rattled the world economy. It seems that a year later, things are slowly getting back to normal for many companies.
Why is there a drastic difference between 2008 and now?
In a <a href="https://www.realtytrac.com/blog/the-big-real-estate-news-no-one-is-covering/" title="post" target="_blank" rel="noopener noreferrer">post</a> from RealtyTrac, they explain:
“We changed the rules. We told banks they needed more reserves and that they could no longer underwrite toxic mortgages. It turns out that regulation — properly done — can help us navigate financial minefields.”
Here are the results of that regulation, captured in a graph depicting the number of failed banks since 2007.<a href="https://files.simplifyingthemarket.com/2021/06/09161358/20210610-MEM-Eng-1.png?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" target="_blank" rel="noopener noreferrer"><img class="aligncenter wp-image-98196" src="https://files.mykcm.com/2021/06/09161358/20210610-MEM-Eng-1.png" alt="Why This Is Not Like 2008 Again | MyKCM" width="600" height="450" /></a>
What was different this time?
The post mentioned above explains:
“In 2008 the government saw the foreclosure meltdown as a top-down problem and set aside $700 billion for banks under the Troubled Asset Relief Program (TARP). Not all of the $700 billion was used, but the important point is that the government did not act with equal fervor to help flailing homeowners, millions of whom lost their homes to foreclosures and short sales.
This time around the government forcefully moved to help ordinary citizens. Working from the bottom-up, an estimated $5.3 trillion went to the public in 2020 through such mechanisms as the Paycheck Protection Program (PPP), expanded unemployment benefits, tax incentives, and help for local governments. So far this year we have the $1.9 billion American Rescue Plan with millions of $1,400 checks as well as proposals to spend trillions more on infrastructure…Bank deposits increased by nearly $2 trillion during the past year and credit card debt fell.”
Bottom Line
Many have suffered over the past year. However, the economic toll of the current recession was nowhere near the scope of the Great Recession, and it won’t result in a housing crisis.
2021-06-12T17:05:00-07:002021-06-14T17:08:52-07:00Curtis Leetag:murphyleegroup.com,2012-09-20:6288Home Price Appreciation Is as Simple as Supply and Demand<img width="750" height="410" src="https://files.mykcm.com/2021/06/08165524/20210609-KCM-Share.jpg" class="attachment-entry size-entry wp-post-image" alt="Home Price Appreciation Is as Simple as Supply and Demand | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2021/06/08165524/20210609-KCM-Share.jpg 750w, https://files.mykcm.com/2021/06/08165524/20210609-KCM-Share-600x328.jpg 600w, https://files.mykcm.com/2021/06/08165524/20210609-KCM-Share-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" style="font-size: 17px;" />
Home price appreciation continues to <a href="https://www.simplifyingthemarket.com/2021/06/07/why-you-may-want-to-cash-in-on-your-second-home/?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" title="accelerate" target="_blank" rel="noopener noreferrer">accelerate</a>. Today, prices are driven by the simple concept of supply and demand. Pricing of any item is determined by how many items are available compared to how many people want to buy that item. As a result, the strong year-over-year home price appreciation is simple to explain. The demand for housing is up while the supply of homes for sale hovers at historic lows.
Let’s use three maps to show how this theory continues to affect the residential real estate market.
Map #1 – State-by-state price appreciation reported by the Federal Housing Finance Agency (<a href="https://www.fhfa.gov/DataTools/Tools/Pages/House-Price-Index-(HPI).aspx" title="FHFA" target="_blank" rel="noopener noreferrer">FHFA</a>) for the first quarter of 2021 compared to the first quarter of 2020:<a href="https://files.simplifyingthemarket.com/2021/06/08165519/20210609-MEM-Eng-1.png?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" target="_blank" rel="noopener noreferrer"><img class="aligncenter wp-image-98189" src="https://files.mykcm.com/2021/06/08165519/20210609-MEM-Eng-1.png" alt="Home Price Appreciation Is as Simple as Supply and Demand | MyKCM" width="600" height="450" /></a>As the map shows, certain states (colored in red) have appreciated well above the national average of 12.6%.
Map #2 – The change in state-by-state inventory levels year-over-year reported by <a href="https://www.realtor.com/research/data/" title="realtor.com" target="_blank" rel="noopener noreferrer">realtor.com</a>:<a href="https://files.simplifyingthemarket.com/2021/06/08165515/20210609-MEM-Eng-2.png?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" target="_blank" rel="noopener noreferrer"><img class="aligncenter wp-image-98188" src="https://files.mykcm.com/2021/06/08165515/20210609-MEM-Eng-2.png" alt="Home Price Appreciation Is as Simple as Supply and Demand | MyKCM" width="600" height="450" /></a>Comparing the two maps shows a correlation between change in listing inventory and price appreciation in many states. The best examples are Idaho, Utah, and Arizona. Though the correlation is not as easy to see in every state, the overall picture is one of causation.
The reason prices continue to accelerate is that housing inventory is still at all-time lows while demand remains high. However, this may be changing.
Is there relief around the corner?
The report by realtor.com also shows the monthly change in inventory for each state.
Map #3 – State-by-state changes in inventory levels month-over-month reported by <a href="https://www.realtor.com/research/data" title="realtor.com" target="_blank" rel="noopener noreferrer">realtor.com</a>:<a href="https://files.simplifyingthemarket.com/2021/06/08165512/20210609-MEM-Eng-3.png?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" target="_blank" rel="noopener noreferrer"><img class="aligncenter wp-image-98187" src="https://files.mykcm.com/2021/06/08165512/20210609-MEM-Eng-3.png" alt="Home Price Appreciation Is as Simple as Supply and Demand | MyKCM" width="600" height="450" /></a>As the map indicates, 39 of the 50 states (plus the District of Columbia) saw increases in inventory over the last month. This may be evidence that homeowners who have been afraid to let buyers in their homes during the pandemic are now putting their houses on the market.
We’ll know for certain as we move through the rest of the year.
Bottom Line
Some are concerned by the rapid price appreciation we’ve experienced over the last year. The maps above show that the increases were warranted based on great demand and limited supply. Going forward, if the number of homes for sale better aligns with demand, price appreciation will moderate to more historical levels.
2021-06-10T18:09:00-07:002021-06-14T18:11:23-07:00Curtis Leetag:murphyleegroup.com,2012-09-20:47205 Tips for Homebuyers Who Want to Make a Competitive Offer<img width="750" height="410" src="https://files.mykcm.com/2020/11/19112023/20201130-KCM-Share.jpg" class="attachment-entry size-entry wp-post-image" alt="5 Tips for Homebuyers Who Want to Make a Competitive Offer | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2020/11/19112023/20201130-KCM-Share.jpg 750w, https://files.mykcm.com/2020/11/19112023/20201130-KCM-Share-600x328.jpg 600w, https://files.mykcm.com/2020/11/19112023/20201130-KCM-Share-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" style="font-size: 17px;" />
Today’s real estate market has high <a href="https://www.simplifyingthemarket.com/2020/10/28/buyer-interest-is-growing-among-younger-generations/?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" title="buyer interest" target="_blank" rel="noopener noreferrer">buyer interest</a> and low housing <a href="https://www.simplifyingthemarket.com/2020/11/17/homes-for-sale-are-rapidly-disappearing/?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" title="inventory" target="_blank" rel="noopener noreferrer">inventory</a>. With so many buyers competing for a limited number of homes, it’s more important than ever to know the ins and outs of making a confident and competitive offer. Here are five keys to success for this important stage in the homebuying process.
1. Listen to Your Real Estate Agent
A recent <a href="http://www.freddiemac.com/blog/homeownership/20201019_5_rules_for_making_an_offer_on_a_home.page" title="article" target="_blank" rel="noopener noreferrer">article</a> from Freddie Mac offers guidance on making an offer on a home in today’s market. Right off the bat, it points out how emotional this can be for buyers and why trusted professionals can help you stay focused on the most important things:
“Remember to let your homebuying team guide you on your journey, not your emotions. Their support and expertise will keep you from compromising on your must-haves and future financial stability.”
Your real estate professional should be your primary source for answers to the questions you have when you’re ready to make an offer.
2. Understand Your Finances
Having a complete understanding of your budget and how much house you can afford is essential. The best way to know this is to reach out to your lender to get pre-approved for a loan early in the homebuying process. Only 44% of today’s prospective homebuyers are planning to apply for pre-approval, so be sure to take this step so you stand out from the crowd. It shows sellers you’re a serious, qualified buyer and can give you a competitive edge if you enter a <a href="https://www.simplifyingthemarket.com/2020/10/16/how-to-prepare-for-a-bidding-war-infographic/?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" title="bidding war" target="_blank" rel="noopener noreferrer">bidding war</a>.
3. Be Ready to Move Quickly
According to the <a href="https://www.nar.realtor/research-and-statistics/research-reports/realtors-confidence-index" title="Realtors Confidence Index" target="_blank" rel="noopener noreferrer">Realtors Confidence Index</a>, published monthly by the National Association of Realtors (NAR), the average property being sold today is receiving more than three offers and is only on the market for a few weeks. These are both results of today’s competitive market, showing how important it is to stay agile and vigilant in your search. As soon as you find the right home for your needs, be prepared to work with your agent to submit an offer as quickly as possible.
4. Make a Fair Offer
It’s only natural to want the best deal you can get on a home. However, Freddie Mac also warns that submitting an offer that’s too low can lead sellers to doubt how serious you are as a buyer. Don’t submit an offer that will be tossed out as soon as it’s received. The expertise your agent brings to this part of the process will help you stay competitive:
“Your agent will work with you to make an informed offer based on the market value of the home, the condition of the home and recent home sale prices in the area.”
5. Be a Flexible Negotiator
After submitting an offer, the seller may accept it, reject it, or counter it with their own changes. In a competitive market, it’s important to stay nimble throughout the negotiation process. Your position can be strengthened with an offer that includes flexible move-in dates, a higher price, or minimal contingencies (conditions you set that the seller must meet for the purchase to be finalized). There are, however, certain contingencies you don’t want to forego. Freddie Mac explains:
“Resist the temptation to waive the inspection contingency, especially in a hot market or if the home is being sold ‘as-is’, which means the seller won’t pay for repairs. Without an inspection contingency, you could be stuck with a contract on a house you can’t afford to fix.”
Bottom Line
Today’s competitive market makes it more important than ever to make a strong offer on a home, and a trusted expert can help you rise to the top along the way.
2020-12-01T09:44:00-07:002020-12-01T09:46:50-07:00Curtis Leetag:murphyleegroup.com,2012-09-20:4666Chances of Another Foreclosure Crisis? “About Zero Percent.”<img width="750" height="410" src="https://files.mykcm.com/2020/11/16165023/20201118-KCM-Share.jpg" class="attachment-entry size-entry wp-post-image" alt="Chances of Another Foreclosure Crisis? “About Zero Percent.” | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2020/11/16165023/20201118-KCM-Share.jpg 750w, https://files.mykcm.com/2020/11/16165023/20201118-KCM-Share-600x328.jpg 600w, https://files.mykcm.com/2020/11/16165023/20201118-KCM-Share-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" style="font-size: 17px;" />
There seems to be some concern that the 2020 economic downturn will lead to another foreclosure crisis like the one we experienced after the housing crash a little over a decade ago. However, there’s one major difference this time: a robust forbearance program.
During the housing crash of 2006-2008, many felt homeowners should be forced to pay their mortgages despite the economic hardships they were experiencing. There was no empathy for the challenges those households were facing. In a 2009 Wall Street Journal article titled <a href="https://www.wsj.com/articles/BL-DVB-7851" title="Is Walking Away From Your Mortgage Immoral?" target="_blank" rel="noopener noreferrer">Is Walking Away From Your Mortgage Immoral?</a>, John Courson, Chief Executive of the Mortgage Bankers Association, was asked to comment on those not paying their mortgage. He famously said:
“What about the message they will send to their family and their kids?”
Courson suggested that people unable to pay their mortgage were bad parents.
What resulted from that lack of empathy? Foreclosures mounted.
This time is different. There was an immediate understanding that homeowners were faced with a challenge not of their own making. The government quickly jumped in with a mortgage forbearance program that relieved the financial burden placed on many households. The program allowed many borrowers to suspend their monthly mortgage payments until their economic condition improved. It was the right thing to do.
What happens when forbearance programs expire?
Some analysts are concerned many homeowners will not be able to make up the back payments once their forbearance plans expire. They’re concerned the situation will lead to an onslaught of foreclosures.
The banks and the government learned from the challenges the country experienced during the housing crash. They don’t want a surge of foreclosures again. For that reason, they’ve put in place <a href="https://www.simplifyingthemarket.com/2020/10/21/why-todays-options-will-save-homeowners-from-foreclosure/?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" title="alternative ways" target="_blank" rel="noopener noreferrer">alternative ways</a> homeowners can pay back the money owed over an extended period of time.
Another major difference is that, unlike 2006-2008, today’s homeowners are sitting on a record amount of <a href="https://www.simplifyingthemarket.com/2020/10/02/rising-home-equity-can-power-your-next-move-infographic/?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" title="equity" target="_blank" rel="noopener noreferrer">equity</a>. That equity will enable them to sell their houses and walk away with cash instead of going through foreclosure.
Bottom Line
The differences mentioned above will be the reason we’ll avert a surge of foreclosures. As Ivy Zelman, a highly respected thought leader for housing and CEO of Zelman & Associates, said:
“The likelihood of us having a foreclosure crisis again is about zero percent.”
2020-11-20T12:26:00-07:002020-11-20T12:28:24-07:00Curtis Leetag:murphyleegroup.com,2012-09-20:4647Why Working from Home May Spark Your Next Move
<img width="750" height="410" src="https://files.mykcm.com/2020/11/12171924/20201116-KCM-Share.jpg" class="attachment-entry size-entry wp-post-image" alt="Why Working from Home May Spark Your Next Move | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2020/11/12171924/20201116-KCM-Share.jpg 750w, https://files.mykcm.com/2020/11/12171924/20201116-KCM-Share-600x328.jpg 600w, https://files.mykcm.com/2020/11/12171924/20201116-KCM-Share-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" />
If you’ve been <a href="https://www.mykcm.com/2020/08/06/how-is-remote-work-changing-homebuyer-needs/" title="working from home">working from home</a> this year, chances are you’ve been at it a little longer than you initially expected. Businesses all over the country have figured out how to operate remotely to keep their employees healthy, safe, and productive. For many, it may be carrying into next year, and possibly beyond.
While the pandemic continues, Americans are re-evaluating their homes, floorplans, locations, needs, and more. Some need more space, while others need less. Whether you’re renting or own your home, if remote work is part of your future, you may be thinking about <a href="https://www.mykcm.com/2020/10/28/buyer-interest-is-growing-among-younger-generations/" title="moving">moving</a>, especially while today’s mortgage rates are so low.
A recent study from Upwork <a href="https://www.upwork.com/press/releases/economist-report-remote-workers-on-the-move" title="notes" target="_blank" rel="noopener noreferrer">notes</a>:
“Anywhere from 14 to 23 million Americans are planning to move as a result of remote work.”
To put this into perspective, last year, 6 million homes were sold in the U.S. This means roughly 2 – 4X as many people are considering moving now, and there’s a direct connection to their ability to work from home.
The same study also notes while 45.3% of people are planning to stay within a 2-hour drive from their current location, 41.5% of the people who are citing working from home as their primary reason for making a move are willing to look for a home more than 4 hours away from where they live now (See graph below):<a href="https://files.mykcm.com/2020/11/12171927/20201116-MEM-Eng-1.jpeg" rel="noopener noreferrer" class="use_kcm_lightbox" target="_blank"><img loading="lazy" class="aligncenter wp-image-96453" src="https://files.mykcm.com/2020/11/12171927/20201116-MEM-Eng-1.jpeg" alt="Why Working from Home May Spark Your Next Move | MyKCM" width="600" height="450" srcset="https://files.mykcm.com/2020/11/12171927/20201116-MEM-Eng-1.jpeg 2539w, https://files.mykcm.com/2020/11/12171927/20201116-MEM-Eng-1-600x450.jpeg 600w, https://files.mykcm.com/2020/11/12171927/20201116-MEM-Eng-1-1024x768.jpeg 1024w, https://files.mykcm.com/2020/11/12171927/20201116-MEM-Eng-1-768x576.jpeg 768w, https://files.mykcm.com/2020/11/12171927/20201116-MEM-Eng-1-1536x1152.jpeg 1536w, https://files.mykcm.com/2020/11/12171927/20201116-MEM-Eng-1-2048x1536.jpeg 2048w, https://files.mykcm.com/2020/11/12171927/20201116-MEM-Eng-1-100x75.jpeg 100w, https://files.mykcm.com/2020/11/12171927/20201116-MEM-Eng-1-1046x784.jpeg 1046w, https://files.mykcm.com/2020/11/12171927/20201116-MEM-Eng-1-1484x1113.jpeg 1484w" sizes="(max-width: 600px) 100vw, 600px" /></a>In some cases, moving a little further away from your current location might mean you can get <a href="https://www.mykcm.com/2020/09/22/the-cost-of-a-home-is-far-more-important-than-the-price/" title="more">more</a> home for your money. If you have the opportunity to work remotely, you may have more options available by expanding your search. Upwork also indicates, of those surveyed:
“People are seeking less expensive housing: Altogether, more than half (52.5%) are planning to move to a house that is significantly more affordable than their current home.”
Whether you can eliminate your daily commute to the office, or you simply need more space to work from home, your plans may be changing. If that’s the case, it’s time to connect with a local real estate professional to assess your evolving needs and determine your path together.
Bottom Line
This has been a year of change, and what you need in a home is no exception. Let’s connect today to make sure you have expert guidance on your side to help you find a home that fits your remote work needs.
2020-11-17T10:53:00-07:002020-11-17T11:00:10-07:00Curtis Leetag:murphyleegroup.com,2012-09-20:4633Homeownership Is a Key to Building Wealth<img width="750" height="410" src="https://assets.site-static.com/userfiles/1482/image/20201110-KCM-mlg2.jpg" class="attachment-entry size-entry wp-post-image" alt="Homeownership Is a Key to Building Wealth | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2020/11/09104210/20201110-KCM-Share.jpg 750w, https://files.mykcm.com/2020/11/09104210/20201110-KCM-Share-600x328.jpg 600w, https://files.mykcm.com/2020/11/09104210/20201110-KCM-Share-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" />
<article id="post-96424" class="post-96424 post type-post status-publish format-standard has-post-thumbnail hentry category-buyers category-sellers category-pricing category-rent-vs-buy">
For years, real estate has been considered the best <a href="https://www.mykcm.com/2020/07/10/americans-rank-real-estate-best-investment-for-7-years-running-infographic/" title="investment">investment</a> you can make. A major reason for this is due to the net worth a household gains through homeownership. In fact, according to the <a href="https://www.federalreserve.gov/publications/files/scf20.pdf" title="2019 Survey of Consumer Finance Data" target="_blank" rel="noopener noreferrer">2019 Survey of Consumer Finance Data</a> from the Federal Reserve, for the average homeowner:
“…a primary home accounts for 90% of the total wealth of a family in the U.S.”
How do homeowners gain wealth?
Most large purchases, like cars and appliances, depreciate in value as they age, so it’s understandable to question how owning a home can increase wealth over time. In a simple equation, the National Association of Realtors (NAR) <a href="https://www.nar.realtor/blogs/economists-outlook/metro-area-wealth-gains-from-homeownership-as-of-2020-q2" title="explains" target="_blank" rel="noopener noreferrer">explains</a> how the combination of paying your mortgage and home price appreciation grow overall wealth:
Principal Payments + Price Appreciation Gains = Housing Wealth Gain
As home values increase and you make payments toward your home loan, you’ll gain wealth through equity. The same article from NAR also addresses how wealth gains tend to play out over time:
“Housing wealth accumulation takes time and is built up by paying off the mortgage debt and by price appreciation. And while home prices can fall, home prices tend to recover and go up over the longer term. As of September 2020, the median sales price of existing home sales was $311,800, a 35% gain since July 2006 when prices peaked at $230,000.”
Taking a look at how equity has grown for the typical homeowner, it’s clear to see how real estate is a sound long-term investment. NAR notes:
“Nationally, a person who purchased a typical home 30 years ago would have typically gained about $283,000 as of the second quarter of 2020.” (See graph below):
<a href="https://files.mykcm.com/2020/11/09104212/20201110-MEM-Eng-1.jpg" rel="noopener noreferrer" class="use_kcm_lightbox" target="_blank"><img loading="lazy" class="aligncenter wp-image-96426" src="https://files.mykcm.com/2020/11/09104212/20201110-MEM-Eng-1.jpg" alt="Homeownership Is a Key to Building Wealth | MyKCM" width="600" height="450" srcset="https://files.mykcm.com/2020/11/09104212/20201110-MEM-Eng-1.jpg 1000w, https://files.mykcm.com/2020/11/09104212/20201110-MEM-Eng-1-600x450.jpg 600w, https://files.mykcm.com/2020/11/09104212/20201110-MEM-Eng-1-768x576.jpg 768w, https://files.mykcm.com/2020/11/09104212/20201110-MEM-Eng-1-100x75.jpg 100w" sizes="(max-width: 600px) 100vw, 600px" /></a>
Bottom Line
Whether you’re a current homeowner planning to put your <a href="https://www.mykcm.com/2020/10/02/rising-home-equity-can-power-your-next-move-infographic/" title="equity">equity</a> toward a new home or have hopes of buying your first home soon, homeownership will always be a great opportunity to build your net worth and overall wealth. Owning a home is truly an investment in your financial future.
</article>
2020-11-14T10:43:00-07:002020-11-14T11:00:19-07:00Curtis Leetag:murphyleegroup.com,2012-09-20:4562Rent vs. Buy: How to Decide What’s Best for You
<img width="750" height="410" src="https://files.mykcm.com/2020/11/02123707/20201103-KCM-Share.jpg" class="attachment-entry size-entry wp-post-image" alt="Rent vs. Buy: How to Decide What’s Best for You | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2020/11/02123707/20201103-KCM-Share.jpg 750w, https://files.mykcm.com/2020/11/02123707/20201103-KCM-Share-600x328.jpg 600w, https://files.mykcm.com/2020/11/02123707/20201103-KCM-Share-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" />
According to the U.S. Census Bureau, <a href="https://www.census.gov/housing/hvs/files/currenthvspress.pdf" title="median rent" target="_blank" rel="noopener noreferrer">median rent</a> continues to rise. With today’s <a href="https://www.mykcm.com/2020/10/28/buyer-interest-is-growing-among-younger-generations/" title="low mortgage rates">low mortgage rates</a>, there’s great opportunity for current renters to make a move into homeownership that stretches each dollar a little bit further.
While the best timeline to buy a home is different for everyone, the question remains: Should I continue renting or is it time for me to buy? The answer depends on your current situation and your future plans, so here are some thoughts to help you decide if you’re ready to own a home of your own.
1. Rent Will Continue to Increase
This is one of the top reasons why renters decide to move because in most cases, rent will continue increasing each year. As noted above, the U.S. Census Bureau recently released its quarterly homeownership <a href="https://www.census.gov/housing/hvs/files/currenthvspress.pdf" title="report" target="_blank" rel="noopener noreferrer">report</a>, and as the graph below shows, median rent is climbing year after year. When you own a home, you’ll lock in your monthly payment for the life of your loan, creating consistency and predictability in your payments.<a href="https://files.mykcm.com/2020/11/02123708/20201103-MEM-Eng-1.jpg" rel="noopener noreferrer" class="use_kcm_lightbox" target="_blank"><img loading="lazy" class="aligncenter wp-image-96314" src="https://files.mykcm.com/2020/11/02123708/20201103-MEM-Eng-1.jpg" alt="Rent vs. Buy: How to Decide What’s Best for You | MyKCM" width="600" height="450" srcset="https://files.mykcm.com/2020/11/02123708/20201103-MEM-Eng-1.jpg 1000w, https://files.mykcm.com/2020/11/02123708/20201103-MEM-Eng-1-600x450.jpg 600w, https://files.mykcm.com/2020/11/02123708/20201103-MEM-Eng-1-768x576.jpg 768w, https://files.mykcm.com/2020/11/02123708/20201103-MEM-Eng-1-100x75.jpg 100w" sizes="(max-width: 600px) 100vw, 600px" /></a>
2. Freedom to Customize
This is a big decision-making point for many people who want to be able to paint, renovate, and make home upgrades. In many cases, landlords determine all of these selections and prefer you do not alter them as a renter. As a homeowner, you have the freedom to decorate and personalize your home to truly make it your own.
3. Privacy
When renting, your landlord has access to your space in case of an emergency. If you own your home, however, you’re the one to decide who can come inside. Given today’s health concerns around the pandemic, this may be a growing priority for you.
4. Flexibility for Relocation
If you’re renting, it may be easier to move quickly should you have a job transfer or simply decide it’s time for a change. When you’re a homeowner and need to sell your house, this might take a little more time. Today, however, with the housing market’s <a href="https://www.mykcm.com/2020/10/29/three-ways-low-inventory-is-a-win-for-sellers/" title="low inventory">low inventory</a>, this may no longer be the case. Homes are selling at a <a href="https://www.mykcm.com/2020/10/23/selling-your-house-is-the-right-move-right-now-infographic/" title="record-breaking">record-breaking</a> pace, so you may have more flexibility than you think.
5. Building Equity
When you pay your rent, your landlord earns the <a href="https://www.mykcm.com/2020/10/02/rising-home-equity-can-power-your-next-move-infographic/" title="equity">equity</a> the property gains. If you own your home, the benefits of your investment go directly toward your <a href="https://www.mykcm.com/2020/10/26/two-important-impacts-of-home-equity/" title="net worth">net worth</a>. This is savings you’ll be able to use in the future for things like sending children to college, starting a new business, buying a bigger home, or simply downsizing to save for retirement.
6. Tax Advantages
When you own your home, there are additional advantages that work in your favor as well. You can deduct things like your property taxes and mortgage interest (Always make sure you check with your accountant to see which tax-deductible benefits apply to your situation). When you rent, however, the tax benefits are directed to your landlord.
Bottom Line
It’s up to you to decide if you’d prefer to <a href="https://www.mykcm.com/2020/08/28/the-cost-of-renting-vs-buying-a-home-infographic-4/" title="rent or buy">rent or buy</a>, and it’s different for every person. If you’d like to learn more about the pros and cons of each, as well as <a href="https://www.mykcm.com/2020/10/27/how-down-payment-assistance-opens-the-door-to-homeownership/" title="resources">resources</a> to help you along the way, let’s connect to discuss your options. This way, you can make a confident and informed decision with a trusted expert on your side.
2020-11-03T10:10:00-07:002020-11-03T10:12:23-07:00Curtis Leetag:murphyleegroup.com,2012-09-20:33971st Time Homebuyer Grant<img src="https://assets.site-static.com/userfiles/1482/image/florida-down-payment-assistance.jpg" width="650" height="434" />
The NJHMFA Down Payment Assistance Program (DPA) provides $10,000 for qualified first-time homebuyers to use as down payment and closing cost assistance when purchasing a home in New Jersey. The DPA is an interest-free, five-year forgivable second loan with no monthly payment.
<br />To participate in this program, the DPA must be paired with an <a href="https://theroadhomenj.com/index.html#msg-box8-10">NJHMFA first mortgage loan</a>. The first mortgage loan is a competitive 30-year, fixed-rate government-insured loan, originated through an NJHMFA participating lender. Certain restrictions such as maximum household income and purchase price limits apply. <a href="http://www.njhousing.gov/homeownership/buyers/first/" target="_blank">View the income and purchase price limits here.</a><br /><br />Our NJHMFA's participating lender will help walk you through program qualification details including income and purchase price limits, and help you complete the application process.
Do I Qualify for This Program?
Are you a first-time homebuyer with a credit score of 620 or greater?<br />You're considered a first-time homebuyer if you have not owned a home within the previous three years.<br /><br />
Are you planning to purchase a home in New Jersey?<br />This program applies to homes to be used as a primary residence in all <br />Counties of New Jersey.
If Your credit is under 620 or you don't know your credit, we have a mortgage representative who can help with other mortgage programs and/or credit repair.
If you answered YES to the questions above, Register below and we'll be happy to provide more information on the program.
2020-03-08T18:25:00-07:002020-03-08T18:30:42-07:00Curtis Leetag:murphyleegroup.com,2012-09-20:3362Let's Get You Home2020-02-29T05:44:00-07:002020-11-14T10:25:00-07:00Curtis Leetag:murphyleegroup.com,2012-09-20:3322How To Use DigiSign (VIDEO)2020-02-18T14:02:00-07:002020-11-14T10:33:29-07:00Curtis Leetag:murphyleegroup.com,2012-09-20:3278Homebuyer Seminar<img src="https://assets.site-static.com/userfiles/1482/image/florida-down-payment-assistance.jpg" width="650" height="434" />
Time/Date: Thursday, March 5th @ 6:00pm
The NJHMFA Down Payment Assistance Program (DPA) provides $10,000 for qualified first-time homebuyers to use as down payment and closing cost assistance when purchasing a home in New Jersey. The DPA is an interest-free, five-year forgivable second loan with no monthly payment.
<br />To participate in this program, the DPA must be paired with an <a href="https://theroadhomenj.com/index.html#msg-box8-10">NJHMFA first mortgage loan</a>. The first mortgage loan is a competitive 30-year, fixed-rate government-insured loan, originated through an NJHMFA participating lender. Certain restrictions such as maximum household income and purchase price limits apply. <a href="http://www.njhousing.gov/homeownership/buyers/first/" target="_blank">View the income and purchase price limits here.</a><br /><br />Our NJHMFA's participating lender will help walk you through program qualification details including income and purchase price limits, and help you complete the application process.
Do I Qualify for This Program?
Are you a first-time homebuyer with a credit score of 620 or greater?<br />You're considered a first-time homebuyer if you have not owned a home within the previous three years.<br /><br />
Are you planning to purchase a home in New Jersey?<br />This program applies to homes to be used as a primary residence in all <br />Counties of New Jersey.
If Your credit is under 620 or you don't know your credit, stop by we'll have a mortgage representative onsite who can help with other mortgage programs and/or credit repair.
If you answered YES to the questions above, Register for our FREE seminar below<br />Lender, Lawyer & Realtors on hand to answer all your questions.
Location: BHHS Zack Shore REALTORS<br />1031 Lacey Road<br />Forked River, NJ 08731<br /><a href="https://goo.gl/maps/46RrZf4nYo3rT8V7A" target="_blank">(Google Map)<br /><br /></a>Time/Date: Thrusday, March 5th @ 6:00pm
2020-02-04T09:51:00-07:002020-02-20T14:51:48-07:00Curtis Leetag:murphyleegroup.com,2012-09-20:3090Winter 2020 Home Buyer's Guide Now Available
Are You Thinking About Buying a Home?
The process of buying a home can be overwhelming at times, but you don’t need to go through it alone.
You may be wondering if now is a good time to buy a home…or if interest rates are projected to rise or fall. The free eGuide below will answer many of your questions and likely bring up a few things you didn’t even know you should consider when buying a home.
Simply fill out the form below to receive your copy of the eGuide, and feel free to get in touch if you have any questions.
<img src="https://assets.site-static.com/userfiles/1482/image/BuyingaHomeWinter2020.jpg" width="816" height="1056" />
2019-12-18T05:29:00-07:002019-12-18T05:41:59-07:00Curtis Leetag:murphyleegroup.com,2012-09-20:2935The Cost Across TimeThe Cost Across Time [INFOGRAPHIC]
<img width="1046" height="808" src="https://files.mykcm.com/2019/11/21055835/20191122-MEM-1046x808.jpg" class="attachment-entry size-entry wp-post-image" alt="The Cost Across Time [INFOGRAPHIC] | MyKCM" srcset="https://files.mykcm.com/2019/11/21055835/20191122-MEM-1046x808.jpg 1046w, https://files.mykcm.com/2019/11/21055835/20191122-MEM-600x464.jpg 600w, https://files.mykcm.com/2019/11/21055835/20191122-MEM-1024x791.jpg 1024w, https://files.mykcm.com/2019/11/21055835/20191122-MEM-768x593.jpg 768w, https://files.mykcm.com/2019/11/21055835/20191122-MEM-1536x1187.jpg 1536w, https://files.mykcm.com/2019/11/21055835/20191122-MEM-2048x1583.jpg 2048w, https://files.mykcm.com/2019/11/21055835/20191122-MEM-100x77.jpg 100w, https://files.mykcm.com/2019/11/21055835/20191122-MEM-1484x1147.jpg 1484w" sizes="(max-width: 1046px) 100vw, 1046px" /><br /><br />
Some Highlights:
With interest rates around 3.66%, now is a great time to look back at where they’ve been over the past few decades. Comparatively, they’re pretty low!
According to <a href="http://www.freddiemac.com/fmac-resources/research/pdf/201910-Forecast.pdf" title="Freddie Mac" target="_blank" rel="noopener noreferrer">Freddie Mac</a>, rates are projected to increase to 3.9% by this time next year.
The impact your interest rate has on your monthly mortgage payment is significant. An increase of just $20 dollars in your monthly payment can add up to $240 per year and $7,200 over the life of your loan.
Maybe it’s time to lock in now, while rates are still historically low.
2019-11-22T12:33:00-07:002019-11-22T12:36:50-07:00Curtis Leetag:murphyleegroup.com,2012-09-20:2918 Expert Advice: 3 Benefits to Owning a Home<img width="750" height="410" src="https://files.mykcm.com/2019/11/07083558/20191119-KCM-Share.jpg" class="attachment-entry size-entry wp-post-image" alt="Expert Advice: 3 Benefits to Owning a Home | MyKCM" srcset="https://files.mykcm.com/2019/11/07083558/20191119-KCM-Share.jpg 750w, https://files.mykcm.com/2019/11/07083558/20191119-KCM-Share-600x328.jpg 600w, https://files.mykcm.com/2019/11/07083558/20191119-KCM-Share-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" style="font-size: 17px;" />
Success is something often worth repeating, and Brent Sutherland, a Certified Financial Planner and Real Estate Investor, has certainly made his way in a momentum-driving direction. Here are 3 tips he shares from a recent piece in <a href="https://www.businessinsider.com/financial-planner-advice-use-real-estate-investing-to-build-wealth" title="Business Insider" target="_blank" rel="noopener noreferrer">Business Insider</a> on the benefits of owning real estate:
1. Real estate diversifies your income
"While it is certainly important to be properly diversified with your investments, it is even more important to be diversified with your income. This is because the largest financial risk for most of you is the loss of your primary source of income, which is typically in the form of a day job."
The article highlights how having multiple sources of income, such as those derived from real estate investments, can eventually lead to relying less and less on a day job. Sound dreamy? It can be. When done well, real estate investments may eventually open up your time and the financial freedom to explore other things, like travel and other aspirations you may have for the future, particularly in the golden years of <a href="https://www.simplifyingthemarket.com/2017/06/22/the-importance-of-home-equity-in-retirement-planning/?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" title="retirement" target="_blank" rel="noopener noreferrer">retirement</a>.
2. Real estate produces near-immediate results
"You can achieve and feel the results almost immediately. Property improvements are visible and tangible. You can cash, spend, and invest rent payments. Today! Not 30 years in the future."
Currently, home prices are <a href="https://www.simplifyingthemarket.com/2019/09/17/home-prices-increase-in-every-price-range/?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" title="appreciating" target="_blank" rel="noopener noreferrer">appreciating</a> in all price ranges, and just <a href="https://www.simplifyingthemarket.com/2019/11/07/forget-the-price-of-the-home-the-cost-is-what-matters/?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" title="last week" target="_blank" rel="noopener noreferrer">last week</a> CoreLogic announced their 12-month home value projection at 5.6%, an increase from 4.5% noted earlier this summer. With that in mind, real estate today is definitely driving immediate results!
3. Passive income can help you become financially independent sooner
"If you need $40,000 a year to live, you could alternatively invest in assets that generate an 8% cash-on-cash return. This is a very reasonable assumption. And it means you would only need to save a total of $500,000 (instead of $1 million). Yet, your investments would still meet your annual household living needs.
While returns, taxes, and inflation can, of course, affect your timeline, cash-flowing real-estate is a clear asset.”
Homeownership is a form of ‘<a href="https://www.simplifyingthemarket.com/2019/08/19/a-great-way-to-increase-your-familys-net-worth/?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" title="forced savings" target="_blank" rel="noopener noreferrer">forced savings</a>.’ Every time you pay your mortgage, you’re contributing to your net worth by increasing the equity in your home, bringing you one step closer to true financial independence.
Bottom Line
If you want to increase your savings and overall net worth, real estate is a great way to go. To learn how you can make it happen, let’s get together to discuss the process.
Who is Brent Sutherland?
Sutherland was 35 when he bought his first single home to rent out for income, less than five years later, he owns eight additional properties and part of a commercial real estate project.
2019-11-19T08:38:00-07:002019-11-19T08:42:56-07:00Eileen Murphytag:murphyleegroup.com,2012-09-20:2910The Cost of Renting vs. Buying a Home<img width="720" height="540" src="https://files.mykcm.com/2019/11/13082324/20191115-MEM-ENG.jpg" class="attachment-entry size-entry wp-post-image" alt="The Cost of Renting vs. Buying a Home [INFOGRAPHIC] | MyKCM" srcset="https://files.mykcm.com/2019/11/13082324/20191115-MEM-ENG.jpg 720w, https://files.mykcm.com/2019/11/13082324/20191115-MEM-ENG-600x450.jpg 600w, https://files.mykcm.com/2019/11/13082324/20191115-MEM-ENG-100x75.jpg 100w" sizes="(max-width: 720px) 100vw, 720px" style="font-size: 17px;" />
Some Highlights:
Historically, the choice between renting and buying a home has been a tough decision.
Looking at the <a href="https://www.zillow.com/research/affordability/" title="percentage of income" target="_blank" rel="noopener noreferrer">percentage of income</a> needed to rent a median-priced home today (27.7%) vs. the percentage needed to buy a median-priced home (17.5%), the choice is clear.
Every market is different. Before you renew your lease, find out if you can put your housing costs to work by buying a home this year.
2019-11-15T10:59:00-07:002019-11-15T11:01:10-07:00Curtis Leetag:murphyleegroup.com,2012-09-20:2908Homeownership Rate Remains on the Rise<img width="750" height="410" src="https://files.mykcm.com/2019/11/07081538/20191112-KCM-Share.jpg" class="attachment-entry size-entry wp-post-image" alt="Homeownership Rate Remains on the Rise | MyKCM" srcset="https://files.mykcm.com/2019/11/07081538/20191112-KCM-Share.jpg 750w, https://files.mykcm.com/2019/11/07081538/20191112-KCM-Share-600x328.jpg 600w, https://files.mykcm.com/2019/11/07081538/20191112-KCM-Share-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" style="font-size: 17px;" />
In the third quarter of 2019, the U.S. homeownership rate rose again, signaling another strong indicator of the current housing market.
The U.S. Census Bureau <a href="https://www.census.gov/housing/hvs/files/currenthvspress.pdf" title="announced" target="_blank" rel="noopener noreferrer">announced</a>,
“The homeownership rate of 64.8 percent was not statistically different from the rate in the third quarter 2018 (64.4 percent), but was 0.7 percentage points higher than the rate in the second quarter 2019 (64.1 percent).”
<a href="https://files.simplifyingthemarket.com/2019/11/07081452/20191112-MEM-ENG.jpg?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" target="_blank" rel="noopener noreferrer"><img class="aligncenter wp-image-90268" src="https://files.mykcm.com/2019/11/07081452/20191112-MEM-ENG.jpg" alt="Homeownership Rate Remains on the Rise | MyKCM" width="600" height="450" /></a>Today there is still a lack of <a href="https://www.simplifyingthemarket.com/2019/10/29/thinking-of-selling-your-home-the-waiting-is-the-hardest-part/?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" title="inventory" target="_blank" rel="noopener noreferrer">inventory</a>, particularly at the entry and middle-level segments of the market, but that is not stopping buyers from making every effort to pursue homeownership. The many <a href="https://www.simplifyingthemarket.com/2019/09/19/one-of-the-top-reasons-to-own-a-home/?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" title="financial" target="_blank" rel="noopener noreferrer">financial</a> and <a href="https://www.simplifyingthemarket.com/2019/02/26/what-are-the-benefits-of-becoming-a-homeowner/?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" title="non-financial" target="_blank" rel="noopener noreferrer">non-financial</a> benefits continue to drive the American Dream and will likely do so for generations to come.
Bottom Line
If you’re thinking of buying a home, let’s get together to make your dream a reality.
2019-11-14T13:08:00-07:002019-11-14T13:09:40-07:00Melissa Marratag:murphyleegroup.com,2012-09-20:2796Fall 2019 Buyer's Guide Now Available
Are You Thinking About Buying a Home?
The process of buying a home can be overwhelming at times, but you don’t need to go through it alone.
You may be wondering if now is a good time to buy a home…or if interest rates are projected to rise or fall. The free eGuide below will answer many of your questions and likely bring up a few things you didn’t even know you should consider when buying a home.
Simply fill out the form below to receive your copy of the eGuide, and feel free to get in touch if you have any questions.
<img src="https://assets.site-static.com/userfiles/1482/image/fall_buyer_19.jpg" width="800" height="1035" />
2019-09-28T09:38:00-07:002019-09-28T10:08:24-07:00Curtis Leetag:murphyleegroup.com,2012-09-20:2702Homeownership Will Always Be a Part of the American Dream<img width="750" height="410" src="https://files.mykcm.com/2019/08/30060735/20190902-Share-KCM.jpg" class="attachment-entry size-entry wp-post-image" alt="Homeownership Will Always Be a Part of the American Dream | MyKCM" srcset="https://files.mykcm.com/2019/08/30060735/20190902-Share-KCM.jpg 750w, https://files.mykcm.com/2019/08/30060735/20190902-Share-KCM-600x328.jpg 600w, https://files.mykcm.com/2019/08/30060735/20190902-Share-KCM-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" style="font-size: 17px;" />
On Labor Day we celebrate the hard work that helps us achieve the American Dream.
Growing up, many of us thought about our future lives with great ambition. We drew pictures of what jobs we wanted to have and where we would live as a representation of a secure life for ourselves and our families. Today we celebrate the workers that make this country a place where those dreams can become a reality.
According to Wikipedia,
“<a href="https://en.wikipedia.org/wiki/Labor_Day" title="Labor Day" target="_blank" rel="noopener noreferrer">Labor Day</a> honors the American labor movement and the contributions that workers have made to the development, growth, endurance, strength, security, prosperity, productivity, laws, sustainability, persistence, structure, and well-being of the country.”
The hard work that happens every day across this country allows so many to achieve the American Dream. The <a href="https://www.nar.realtor/research-and-statistics/research-reports/aspiring-home-buyers-profile" title="2019 Aspiring Home Buyers Profile" target="_blank" rel="noopener noreferrer">2019 Aspiring Home Buyers Profile</a> by the National Association of Realtors (NAR) says,
“Approximately 75% of non-homeowners believe homeownership is part of their American Dream, while 9 in 10 current homeowners said the same.”
Looking at the number of non-owners, you may wonder, ‘If they believe in homeownership, why haven’t they bought a home yet?’. Well, increasing home prices and low inventory can be part of the reason why some haven’t jumped in, but that does not mean there is a lack of interest. The same report shows the increase in the desire to buy in the last year (as shown in the graph below):<a href="https://files.simplifyingthemarket.com/2019/08/30060643/20190902-MEM.jpg?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" target="_blank" rel="noopener noreferrer"><img class="aligncenter wp-image-88921" src="https://files.mykcm.com/2019/08/30060643/20190902-MEM.jpg" alt="Homeownership Will Always Be a Part of the American Dream | MyKCM" width="600" height="450" /></a>As we can see, there are more and more people each quarter who want to buy a home. The good news is, as more inventory comes to the market, more non-homeowners will be able to fulfill their dreams. Finally, they’ll be able to move into that home they drew when they were little kids!
Bottom Line
If you’re a homeowner considering selling, this fall might be the right time, as there are buyers in the market ready to buy. Let’s get together to determine how you can benefit from the pent-up housing demand.
2019-09-02T09:53:00-07:002019-09-02T17:39:59-07:00Curtis Leetag:murphyleegroup.com,2012-09-20:2694Experts Predict a Strong Housing Market for the Rest of 2019<img width="750" height="410" src="https://assets.site-static.com/userfiles/1482/image/20190826-Share-KCMedit.jpg" class="attachment-entry size-entry wp-post-image" alt="Experts Predict a Strong Housing Market for the Rest of 2019 | MyKCM" srcset="https://files.mykcm.com/2019/08/22132755/20190826-Share-KCM.jpg 750w, https://files.mykcm.com/2019/08/22132755/20190826-Share-KCM-600x328.jpg 600w, https://files.mykcm.com/2019/08/22132755/20190826-Share-KCM-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" style="font-size: 17px;" />
We’re in the back half of the year, and with a decline in interest rates as well as home price and wage appreciation, many are wondering what the predictions are for the remainder of 2019.
Here’s what some of the experts have to say:
<a href="https://dsnews.com/daily-dose/08-19-2019/home-price-slowdown-cause-for-concern" title="Ralph McLaughlin, Deputy Chief Economist for CoreLogic" target="_blank" rel="noopener noreferrer">Ralph McLaughlin, Deputy Chief Economist for CoreLogic</a>
“We see the cooldown flattening or even reversing course in the coming months and expect the housing market to continue coming into balance. In the meantime, buyers are likely claiming some ground from what has been seller’s territory over the past few years. If mortgage rates stay low, wages continue to grow, and inventory picks up, we can expect the U.S. housing market to further stabilize throughout the remainder of the year.”
<a href="https://finance.yahoo.com/news/low-interest-rates-give-housing-market-a-boost-144124709.html" title="Lawrence Yun, Chief Economist at NAR" target="_blank" rel="noopener noreferrer">Lawrence Yun, Chief Economist at NAR</a>
“We expect the second half of year will be notably better than the first half in terms of home sales, mainly because of lower mortgage rates.”
<a href="http://www.freddiemac.com/pmms/" title="Freddie Mac" target="_blank" rel="noopener noreferrer">Freddie Mac</a>
“The drop in mortgage rates continues to stimulate the real estate market and the economy. Home purchase demand is up five percent from a year ago and has noticeably strengthened since the early summer months…The benefit of lower mortgage rates is not only shoring up home sales, but also providing support to homeowner balance sheets via higher monthly cash flow and steadily rising home equity.”
Bottom Line
The housing market will be strong for the rest of 2019. If you’d like to know more about our specific market, let’s get together to discuss what’s happening in our area.
2019-08-29T04:39:00-07:002019-08-29T05:06:25-07:00Curtis Leetag:murphyleegroup.com,2012-09-20:2693Top Priorities When Moving with Kids<img width="750" height="410" src="https://files.mykcm.com/2019/08/26101809/20190828-Share-KCM.jpg" class="attachment-entry size-entry wp-post-image" alt="Top Priorities When Moving with Kids | MyKCM" srcset="https://files.mykcm.com/2019/08/26101809/20190828-Share-KCM.jpg 750w, https://files.mykcm.com/2019/08/26101809/20190828-Share-KCM-600x328.jpg 600w, https://files.mykcm.com/2019/08/26101809/20190828-Share-KCM-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" style="font-size: 17px;" />
According to the Pew Research Center, around <a href="https://www.pewresearch.org/fact-tank/2019/08/14/back-to-school-dates-u-s/" title="37%" target="_blank" rel="noopener noreferrer">37%</a> of U.S students will be going back to school soon and the rest have already started the new academic year. With school-aged children in your home, buying or selling a house can take on a whole different approach when it comes to finding the right size, location, school district, and more.
Recently, the <a href="https://www.nar.realtor/sites/default/files/documents/2019-moving-with-kids-08-12-2019.pdf" title="2019 Moving with Kids Report" target="_blank" rel="noopener noreferrer">2019 Moving with Kids Report</a> from the National Association of Realtors®(NAR) studied “the different purchasing habits as well as seller preferences during the home buying and selling process.” This is what they found:
When Purchasing a Home
The major difference between the homebuyers who have children and those who do not is the importance of the neighborhood. In fact, 53% said the quality of the school district is an important factor when purchasing a home, and 50% select neighborhoods by the convenience to the schools.
Buyers with children also purchase larger, detached single-family homes with 4 bedrooms and 2 full bathrooms at approximately 2,110 square feet.
Furthermore, 26% noted how childcare expenses delayed the home-buying process and forced additional compromises: 31% in the size of the home, 24% in the price, and 18% in the distance from work.
When Selling a Home
Of those polled, 23% of buyers with children sold their home "very urgently," and 46% indicated "somewhat urgently, within a reasonable time frame." Selling with urgency can pressure sellers to accept offers that are not in their favor. Lawrence Yun, Chief Economist at NAR <a href="https://www.nar.realtor/newsroom/when-the-back-to-school-shopping-list-includes-a-house" title="explains" target="_blank" rel="noopener noreferrer">explains</a>,
“When buying or selling a home, exercising patience is beneficial, but in some cases – such as facing an upcoming school year or the outgrowing of a home – sellers find themselves rushed and forced to accept a less than ideal offer.”
For sellers with children, 21% want a real estate professional to help them sell the home within a specific time frame, 20% at a competitive price, and 19% to market their home to potential buyers.
Bottom Line
Buying or selling a home can be driven by different priorities when you are also raising a family. If you’re a seller with children and looking to relocate, let’s get together to navigate the process in the most reasonable time frame for you and your family.
2019-08-28T08:12:00-07:002019-08-28T08:14:16-07:00Curtis Leetag:murphyleegroup.com,2012-09-20:2676A Great Way to Increase Your Family’s Net Worth<img width="750" height="410" src="https://files.mykcm.com/2019/08/14075657/20190819-Share-KCM.jpg" class="attachment-entry size-entry wp-post-image" alt="A Great Way to Increase Your Family’s Net Worth | MyKCM" srcset="https://files.mykcm.com/2019/08/14075657/20190819-Share-KCM.jpg 750w, https://files.mykcm.com/2019/08/14075657/20190819-Share-KCM-600x328.jpg 600w, https://files.mykcm.com/2019/08/14075657/20190819-Share-KCM-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" style="font-size: 17px;" />
Every three years, the Federal Reserve conducts its <a href="https://www.federalreserve.gov/econres/scfindex.htm" title="Survey of Consumer Finances" target="_blank" rel="noopener noreferrer">Survey of Consumer Finances</a>. Data is collected across all economic and social groups. The latest survey data covers 2013-2016.
The study revealed that the median net worth of a homeowner is $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.
Owning a home is a great way to build family wealth.
As we’ve said before, simply put, homeownership is a form of ‘forced savings.’ Every time you pay your mortgage, you are contributing to your net worth by increasing the <a href="https://www.simplifyingthemarket.com/2019/06/04/how-homeownership-delivers-unsurpassed-family-wealth/?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" title="equity" target="_blank" rel="noopener noreferrer">equity</a> in your home.
That is why Gallup <a href="https://www.simplifyingthemarket.com/2019/06/28/americans-rank-real-estate-best-investment-for-6-years-running-infographic/?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" title="reported" target="_blank" rel="noopener noreferrer">reported</a> Americans picked real estate as the best long-term investment for the sixth year in a row. According to this year’s results, 35% of Americans chose real estate. Stocks followed at 27%, then savings accounts and gold.
Bottom Line
If you want to find out how you can use your monthly housing cost to increase your family’s wealth, let’s get together to help you through the process.
2019-08-21T11:44:00-07:002019-08-22T10:44:33-07:00Curtis Leetag:murphyleegroup.com,2012-09-20:2673Busting the Myth About a Housing Affordability Crisis<img width="750" height="410" src="https://files.mykcm.com/2019/08/13111414/20190815-Share-KCM.jpg" class="attachment-entry size-entry wp-post-image" alt="Busting the Myth About a Housing Affordability Crisis | MyKCM" srcset="https://files.mykcm.com/2019/08/13111414/20190815-Share-KCM.jpg 750w, https://files.mykcm.com/2019/08/13111414/20190815-Share-KCM-600x328.jpg 600w, https://files.mykcm.com/2019/08/13111414/20190815-Share-KCM-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" style="font-size: 17px;" />
It seems you can’t find a headline with the term “housing affordability” without the word “crisis” attached to it. That’s because some only consider the fact that residential real estate prices have continued to appreciate. However, we must realize it’s not just the price of a home that matters, but the price relative to a purchaser’s buying power.
Homes, in most cases, are purchased with a mortgage. The current mortgage rate is a major component of the affordability equation. Mortgage rates have fallen by over a full percentage point since December 2018. Another major piece of the affordability equation is a buyer’s income. The median family income has risen by 3.5% over the last year.
Let’s look at three different reports issued recently that reveal how homes are very affordable in comparison to historic numbers, and how they have become even more affordable over the past several months.
1. National Association of Realtors’ (NAR) <a href="https://www.nar.realtor/blogs/economists-outlook/june-2019-housing-affordability-index" title="Housing Affordability Index" target="_blank" rel="noopener noreferrer">Housing Affordability Index</a>:
Here is a graph showing the index going all the way back to 1990. The higher the column, the more affordable homes are:<a href="https://files.simplifyingthemarket.com/2019/08/13111812/20190815-MEM-1.jpg?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" target="_blank" rel="noopener noreferrer"><img class="aligncenter wp-image-88356" src="https://files.mykcm.com/2019/08/13111812/20190815-MEM-1.jpg" alt="Busting the Myth About a Housing Affordability Crisis | MyKCM" width="600" height="450" /></a>We can see that homes are less affordable today (the green bar) than they were during the housing crash (the red bars). This was when distressed properties like foreclosures and short sales saturated the market and sold for massive discounts. However, homes are more affordable today than at any time from 1990 to 2008.
NAR’s report on the index also shows that the percentage of a family’s income needed for a mortgage payment (16.5%) is dramatically lower than last year and is well below the historic norm of 21.2%.<a href="https://files.simplifyingthemarket.com/2019/08/13112152/20190815-MEM-2.jpg?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" target="_blank" rel="noopener noreferrer"><img class="aligncenter wp-image-88358" src="https://files.mykcm.com/2019/08/13112152/20190815-MEM-2.jpg" alt="Busting the Myth About a Housing Affordability Crisis | MyKCM" width="600" height="450" /></a>
2. Black Knight’s <a href="https://www.blackknightinc.com/black-knights-june-2019-mortgage-monitor/" title="Mortgage Monitor" target="_blank" rel="noopener noreferrer">Mortgage Monitor</a>:
This report reveals that as a result of falling interest rates and slowing home price appreciation, affordability is the best it has been in 18 months. Black Knight Data & AnalyticsPresident Ben Graboske explains:
“For much of the past year and a half, affordability pressures have put a damper on home price appreciation. Indeed, the rate of annual home price growth has declined for 15 consecutive months. More recently, declining 30-year fixed interest rates have helped to ease some of those pressures, improving the affordability outlook considerably…And despite the average home price rising by more than $12K since November, today’s lower fixed interest rates have worked out to a $108 lower monthly payment...Lower rates have also increased the buying power for prospective homebuyers looking to purchase the average-priced home by the equivalent of 15%.”
3. First American’s <a href="https://blog.firstam.com/economics/why-consumer-house-buying-power-may-reach-a-record-in-2019" title="Real House Price Index" target="_blank" rel="noopener noreferrer">Real House Price Index</a>:
While affordability has increased recently, Mark Fleming, First American’s Chief Economist explains:
“If the 30-year, fixed-rate mortgage declines just a fraction more, consumer house-buying power would reach its highest level in almost 20 years.”
Fleming goes on to say that the gains in affordability are about mortgage rates and the increase in family incomes:
“Average nominal household incomes are nearly 57 percent higher today than in January 2000. Record income levels combined with mortgage rates near historic lows mean consumer house-buying power is more than 150 percent greater today than it was in January 2000.”
Bottom Line
If you’ve put off the purchase of a first home or a move-up home because of affordability concerns, you should take another look at your ability to purchase in today’s market. You may be pleasantly surprised!
2019-08-17T13:52:00-07:002019-08-17T13:59:03-07:00Eileen Murphytag:murphyleegroup.com,2012-09-20:26675 Real Estate Reality TV Myths Explained<img width="750" height="410" src="https://files.mykcm.com/2019/08/09131910/20190813-Share-KCM.jpg" class="attachment-entry size-entry wp-post-image" alt="5 Real Estate Reality TV Myths Explained | MyKCM" srcset="https://files.mykcm.com/2019/08/09131910/20190813-Share-KCM.jpg 750w, https://files.mykcm.com/2019/08/09131910/20190813-Share-KCM-600x328.jpg 600w, https://files.mykcm.com/2019/08/09131910/20190813-Share-KCM-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" style="font-size: 17px;" />
Have you ever been flipping through the channels, only to find yourself glued to the couch in an HGTV binge session? We’ve all been there, watching entire seasons of shows like “Property Brothers,” “Fixer Upper,” and “Love It or List It,” all in one sitting.
When you’re in the middle of your real estate-themed TV show marathon, you might start to think everything you see on the screen must be how it works in real life. However, you may need a reality check.
Reality TV Show Myths vs. Real Life:
Myth #1: Buyers look at 3 homes and decide to purchase one of them.<br />Truth: There may be buyers who fall in love and buy the first home they see, but according to the National Association of Realtors, the average homebuyer tours <a href="https://www.nar.realtor/reports/highlights-from-the-profile-of-home-buyers-and-sellers" title="10 homes" target="_blank" rel="noopener noreferrer">10 homes</a> as a part of their search.
Myth #2: The houses the buyers are touring are still for sale.<br />Truth: Everything is staged for TV. Many of the homes shown are already sold and are off the market.
Myth #3: The buyers haven’t made a purchase decision yet.<br />Truth: Since there is no way to show the entire <a href="https://www.simplifyingthemarket.com/2019/07/05/10-steps-to-buying-a-home-this-summer-infographic-2/?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" title="buying process" target="_blank" rel="noopener noreferrer">buying process</a> in a 30-minute show, TV producers often choose buyers who are further along in the process and have already chosen a home to buy.
Myth #4: If you list your home for sale, it will ALWAYS sell at the open house.<br />Truth: Of course, this would be great! Open houses are important to guarantee the most exposure to buyers in your area, but they are only one piece of the overall marketing of your home. Keep in mind, many homes are sold during regular showing appointments as well.
Myth #5: Homeowners decide to sell their homes after a 5-minute conversation.<br />Truth: Similar to the buyers portrayed on the shows, many of the sellers have already spent hours deliberating the decision to list their homes and move on with their lives and goals.
Bottom Line
Having an experienced <a href="https://www.simplifyingthemarket.com/2019/06/25/having-a-professional-on-your-side-makes-all-the-difference/?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" title="professional on your side" target="_blank" rel="noopener noreferrer">professional on your side</a> while navigating the real estate market is the best way to guarantee you can make the home of your dreams a true reality.
2019-08-13T04:53:00-07:002019-08-13T04:57:54-07:00Eileen Murphytag:murphyleegroup.com,2012-09-20:2665American Confidence in Housing at an All-Time High<img width="750" height="410" src="https://files.mykcm.com/2019/08/08112931/20190812-Share-KCM.jpg" class="attachment-entry size-entry wp-post-image" alt="American Confidence in Housing at an All-Time High | MyKCM" srcset="https://files.mykcm.com/2019/08/08112931/20190812-Share-KCM.jpg 750w, https://files.mykcm.com/2019/08/08112931/20190812-Share-KCM-600x328.jpg 600w, https://files.mykcm.com/2019/08/08112931/20190812-Share-KCM-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" style="font-size: 17px;" />
Fannie Mae just released the July edition of their <a href="https://www.fanniemae.com/portal/media/corporate-news/2019/july-home-purchase-sentiment-index-6908.html" title="Home Purchase Sentiment Index" target="_blank" rel="noopener noreferrer">Home Purchase Sentiment Index</a> (HPSI). The HPSI takes information regarding consumers’ confidence in the real estate market from Fannie Mae’s National Housing Survey and condenses it into a single number. Therefore, the HPSI reflects consumers’ current views and forward-looking expectations of housing market conditions.
Great News! The index reached its highest level since Fannie Mae began their survey. Breaking it down, the report revealed:
The share of Americans who say it is a good time to buy a home increased from the same time last year.
The share of those who say it is a good time to sell a home increased from the same time last year.
The share of Americans who say they are not concerned about losing their job over the next 12 months increased dramatically (16 percentage points) from the same time last year.
The share of Americans who say mortgage rates will go down over the next 12 months increased dramatically (24 percentage points) from the same time last year.
The day after the index was released, Freddie Mac also announced the 30-year fixed-rate mortgage rate fell to its lowest level in three years.
Doug Duncan, Senior Vice President and Chief Economist at Fannie Mae explained the uptick in the index:
“Consumer job confidence and favorable mortgage rate expectations lifted the HPSI to a new survey high in July, despite ongoing housing supply and affordability challenges. Consumers appear to have shaken off a winter slump in sentiment amid strong income gains. Therefore, sentiment is positioned to take advantage of any supply that comes to market, particularly in the affordable category.”
Bottom Line
Consumers are feeling good about the real estate market. Since Americans are not worried about their jobs, see mortgage rates near an all-time low, and believe it is a good time to buy, the housing market will remain strong for the rest of the year.
2019-08-12T20:19:00-07:002019-08-12T20:22:04-07:00Curtis Leetag:murphyleegroup.com,2012-09-20:2662Why All the Chicken Littles Should Calm Down<img width="750" height="410" src="https://files.mykcm.com/2019/08/07024618/20190808-Share-KCM.jpg" class="attachment-entry size-entry wp-post-image" alt="Why All the Chicken Littles Should Calm Down | MyKCM" srcset="https://files.mykcm.com/2019/08/07024618/20190808-Share-KCM.jpg 750w, https://files.mykcm.com/2019/08/07024618/20190808-Share-KCM-600x328.jpg 600w, https://files.mykcm.com/2019/08/07024618/20190808-Share-KCM-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" style="font-size: 17px;" />
The U.S. Census Bureau recently released their <a href="https://www.census.gov/housing/hvs/files/currenthvspress.pdf" title="2019 Q2 Homeownership Report" target="_blank" rel="noopener noreferrer">2019 Q2 Homeownership Report</a>. Some began to see the sky falling, believing the report showed Americans may be stepping back from their belief in homeownership.
The national homeownership rate (Americans who owned vs. rented their primary residence) increased significantly during the housing boom, reaching its peak of 69.2% in 2004. The Census Bureau reported that the second quarter of 2019 ended with a homeownership rate of 64.1%, which is down from the 64.8% rate for the fourth quarter of 2018. Based on this news, some started to question the consumer’s belief in the idea of homeownership as a major part of the American Dream.
Everyone Calm Down…
It is true the homeownership rate did fall. However, if you look at the national rate over the last 35 years (1984-2019), you can see that the current homeownership rate has returned to historical norms. The 64.1% rate is equivalent to the rates in 1984 and 1994.<a href="https://files.simplifyingthemarket.com/2019/08/07122938/20190808-MEM1.jpg?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" target="_blank" rel="noopener noreferrer"><img class="aligncenter wp-image-88044" src="https://files.mykcm.com/2019/08/07122938/20190808-MEM1.jpg" alt="Why All the Chicken Littles Should Calm Down | MyKCM" width="600" height="450" /></a>
What Will the Future Bring?
Part of the reason the homeownership rate slipped is a lack of inventory available for purchase for first-time home buyers. The demand is there, but currently, the supply is not. It seems, however, that is about to change.
In a recent report, Ivy Zelman explained that builders have finally started to increase the number of homes they’re constructing at the lower-end price points:
“Robust growth in the entry-level price point of late should translate to a reacceleration in homeownership rates moving forward.”
Bottom Line
Today, the homeownership rate sits at historic norms. In all probability, it will increase as more inventory becomes available. There is no reason for concern.
2019-08-11T06:00:00-07:002019-08-11T06:02:58-07:00Curtis Leetag:murphyleegroup.com,2012-09-20:2661Rent Vs. Own<img width="1046" height="1210" src="https://files.mykcm.com/2019/08/07132307/20190809-MEM-1046x1210.jpg" class="attachment-entry size-entry wp-post-image" alt="Rent Vs. Own [INFOGRAPHIC] | MyKCM" srcset="https://files.mykcm.com/2019/08/07132307/20190809-MEM-1046x1210.jpg 1046w, https://files.mykcm.com/2019/08/07132307/20190809-MEM-519x600.jpg 519w, https://files.mykcm.com/2019/08/07132307/20190809-MEM-768x888.jpg 768w, https://files.mykcm.com/2019/08/07132307/20190809-MEM-885x1024.jpg 885w, https://files.mykcm.com/2019/08/07132307/20190809-MEM-100x116.jpg 100w, https://files.mykcm.com/2019/08/07132307/20190809-MEM.jpg 1080w" sizes="(max-width: 1046px) 100vw, 1046px" style="font-size: 17px;" />
Some Highlights:
Owning your own home vs. renting may lead to some great options, such as locking in your monthly payments and having the freedom to customize your living space.
Whether you rent or own, you have to cover someone’s mortgage costs. You may as well be doing so to build your own wealth, rather than that of your landlord.
Renting and owning both have up-front fees when you sign your lease or close, respectively. Think about putting that money to work for you!
2019-08-09T07:29:00-07:002019-08-09T07:32:07-07:00Eileen Murphytag:murphyleegroup.com,2012-09-20:2660Millionaire to Millennials: The Costly Mistake of Not Buying Now<img width="750" height="410" src="https://files.mykcm.com/2019/08/02081141/20190805-Share-KCM.jpg" class="attachment-entry size-entry wp-post-image" alt="Millionaire to Millennials: The Costly Mistake of Not Buying Now | MyKCM" srcset="https://files.mykcm.com/2019/08/02081141/20190805-Share-KCM.jpg 750w, https://files.mykcm.com/2019/08/02081141/20190805-Share-KCM-600x328.jpg 600w, https://files.mykcm.com/2019/08/02081141/20190805-Share-KCM-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" style="font-size: 17px;" />
On his personal <a href="https://davidbach.com/millennials-not-buying-home-disaster/" title="website" target="_blank" rel="noopener noreferrer">website</a>, self-made millionaire David Bach makes a striking statement:
“Not prioritizing homeownership is the single biggest mistake millennials are making.”
He further stated, “Buying a home is an escalator to wealth.”
Bach explains:
“Young adults in particular aren’t hopping on this escalator, and it’s a costly mistake…If millennials don’t buy a home, their chances of actually having any wealth in this country are little to none.”
He then elaborates on the game of homeownership:
“Start by crunching the numbers…actually do the math...This way, you’re really clear on your goals and you won’t just say to yourself, ‘I’ll never afford this!'
A good rule of thumb is to make sure your total monthly housing payment doesn’t consume more than 30 percent of your take-home pay.”
Bach concludes by saying,
“Oftentimes, buying your first home means you’re not buying your dream home…You’re just getting into the market.”
Bottom Line
Whenever a well-respected millionaire gives investment advice, listeners usually clamor to hear it. This millionaire shares some simple and straightforward insights: “The fact is, you aren’t really in the game of building wealth until you own some real estate.”
Who is David Bach?
Bach is a self-made millionaire who has written nine consecutive New York Times bestsellers. His book, “The Automatic Millionaire,” spent 31 weeks on the New York Times bestseller list. He is one of the only business authors in history to have four books simultaneously on the New York Times, Wall Street Journal, BusinessWeek, and USA Today bestseller lists.
He has been a contributor to NBC’s Today Show, appearing more than 100 times, as well as a regular on ABC, CBS, Fox, CNBC, CNN, Yahoo, The View, and PBS. He has also been profiled in many major publications, including the New York Times, BusinessWeek, USA Today, People, Reader’s Digest, Time, Financial Times, Washington Post, Wall Street Journal, Working Woman, Glamour, Family Circle, Redbook, Huffington Post, Business Insider, Investors’ Business Daily, and Forbes.
2019-08-08T05:25:00-07:002019-08-08T05:28:21-07:00Eileen Murphytag:murphyleegroup.com,2012-09-20:2650Americans’ Powerful Belief in Homeownership as an Investment<img width="750" height="410" src="https://files.mykcm.com/2019/07/04101604/20190711-Share-KCM.jpg" class="attachment-entry size-entry wp-post-image" alt="Americans' Powerful Belief in Homeownership as an Investment | MyKCM" srcset="https://files.mykcm.com/2019/07/04101604/20190711-Share-KCM.jpg 750w, https://files.mykcm.com/2019/07/04101604/20190711-Share-KCM-600x328.jpg 600w, https://files.mykcm.com/2019/07/04101604/20190711-Share-KCM-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" style="font-size: 17px;" />
The Federal Reserve Bank (The Fed) recently released their <a href="https://www.newyorkfed.org/microeconomics/sce/housing#main" title="2019&nbsp; Survey of Consumer Expectations Housing Survey" target="_blank" rel="noopener noreferrer">2019 Survey of Consumer Expectations Housing Survey</a>. The survey reported that 65% of Americans believe homeownership is a good financial investment. Since 2014, the percentage has increased by over nine percent.<a href="https://files.simplifyingthemarket.com/2019/07/04101659/20190711-MEM.jpg?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" target="_blank" rel="noopener noreferrer"><img class="aligncenter wp-image-86482" src="https://files.mykcm.com/2019/07/04101659/20190711-MEM.jpg" alt="Americans' Powerful Belief in Homeownership as an Investment | MyKCM" width="600" height="450" /></a>The Fed’s survey also showed that when the results are broken down by age, education, income, or region of the country, more than 55% of Americans in each category see homeownership as a good investment.
This coincides with a recent <a href="https://www.simplifyingthemarket.com/2019/05/23/4-most-popular-bottom-line-investments-in-america/?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" title="Gallup survey" target="_blank" rel="noopener noreferrer">Gallup survey</a> of Americans which revealed that real estate was their number one choice for the best long-term investment when compared to stocks, savings accounts or gold.
Bottom Line
Americans' belief in residential real estate as a good financial investment continues to grow as the housing market returns to normalcy.
2019-08-02T20:26:00-07:002019-08-02T20:28:46-07:00Eileen Murphytag:murphyleegroup.com,2012-09-20:2643How to Judge the Impact of the Next Economic Slowdown on HousingHow to Judge the Impact of the Next Economic Slowdown on Housing
<img width="750" height="410" src="https://files.mykcm.com/2019/08/31123641/20190801-Share-KCM1.jpg" class="attachment-entry size-entry wp-post-image" alt="How to Judge the Impact of the Next Economic Slowdown on Housing | MyKCM" srcset="https://files.mykcm.com/2019/08/31123641/20190801-Share-KCM1.jpg 750w, https://files.mykcm.com/2019/08/31123641/20190801-Share-KCM1-600x328.jpg 600w, https://files.mykcm.com/2019/08/31123641/20190801-Share-KCM1-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" /><br /><br />
We’ve experienced economic growth for almost a decade, which is the longest recovery in the nation’s history. Experts know a recession can’t be too far off, but when will this economic slowdown actually occur?
Pulsenomics just released a <a href="https://pulsenomics.com/surveys/#home-price-expectations" title="special report" target="_blank" rel="noopener noreferrer">special report</a> revealing that nearly 6 out of 10 of the 90 economists, investment strategists, and market analysts surveyed believe the next recession will occur by the end of next year. Here’s the breakdown:
9% believe a recession will occur this year
50% believe it will occur in 2020
35% believe it will occur in 2021
6% believe it will occur after 2021
When asked what would trigger the next recession, the three most common responses by those surveyed were:
Trade Policy
Stock Market Correction
Geopolitical Crisis
How might the recession impact real estate?
Challenges in the housing and mortgage markets were major triggers of the last recession. However, a housing slowdown ranked #9 on the list of potential triggers for the next recession, behind such possibilities as fiscal policy and political gridlock.
As far as the impact the recession may have on home values, the experts surveyed indicated home prices would continue to appreciate over the next few years. They called for a 4.1% appreciation rate this year, 2.8% in 2020, and 2.5% in 2021.
Bottom Line
On the same day, in the same survey, the same experts who forecasted a recession happening within the next 18 months also claimed housing will not be the trigger, and home values will still continue to appreciate.
2019-08-01T04:42:00-07:002019-08-01T04:45:59-07:00Curtis Leetag:murphyleegroup.com,2012-09-20:26423 Powerful Reasons to Buy a Home Now3 Powerful Reasons to Buy a Home Now
<img width="750" height="410" src="https://files.mykcm.com/2019/07/22125549/20190725-Share-KCM.jpg" class="attachment-entry size-entry wp-post-image" alt="3 Powerful Reasons to Buy a Home Now | MyKCM" srcset="https://files.mykcm.com/2019/07/22125549/20190725-Share-KCM.jpg 750w, https://files.mykcm.com/2019/07/22125549/20190725-Share-KCM-600x328.jpg 600w, https://files.mykcm.com/2019/07/22125549/20190725-Share-KCM-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" /><br /><br />
Whether you are a first-time buyer or looking to move up to the home of your dreams, now is a great time to purchase a home. Here are three major reasons to buy today.
1. Affordability
Many people focus solely on price when talking about home affordability. Since home prices have appreciated throughout the past year, they assume homes are less affordable. However, affordability is determined by three components:
Price
Wages
Mortgage Interest Rate
Prices are up, but so are wages - and interest rates have recently dropped dramatically (see #2 below). As a result, the National Association of Realtors’ (NAR) latest <a href="https://www.nar.realtor/blogs/economists-outlook/may-2019-housing-affordability-index" title="Affordability Index" target="_blank" rel="noopener noreferrer">Affordability Index</a> report revealed that homes are MORE affordable throughout the country today than they were a year ago.
“All four regions saw an increase in affordability from a year ago. The South had the biggest gain in affordability of 6.9%, followed by the West with a gain of 6.0%. The Midwest had an increase of 5.8%, followed by the Northeast with the smallest gain of 1.8%.”
2. Mortgage Interest Rates
Mortgage rates have dropped almost a full point after heading toward 5% last fall and early winter. Currently, they are below 4%.<br /><a href="https://files.simplifyingthemarket.com/2019/07/22125454/20190725-MEM.jpg?a=108807-d6c8f96ed3f2a0891ac0f84bcb0a1c3a" target="_blank" rel="noopener noreferrer"><img class="aligncenter wp-image-87840" src="https://files.mykcm.com/2019/07/22125454/20190725-MEM.jpg" alt="3 Powerful Reasons to Buy a Home Now | MyKCM" width="600" height="450" /></a>Additionally, Fannie Mae recently <a href="https://www.fanniemae.com/resources/file/research/emma/pdf/Housing_Forecast_071619.pdf" title="predicted" target="_blank" rel="noopener noreferrer">predicted</a> the average rate for a 30-year fixed mortgage will be 3.7% in the second half of 2019. That compares to a 4.4% average rate in the first quarter and 4% in the second quarter.
With mortgage rates remaining near historic lows, Fannie Mae and <a href="https://www.corelogic.com/insights-download/home-price-index.aspx" title="others" target="_blank" rel="noopener noreferrer">others</a> have increased their forecasts for housing appreciation for the rest of the year. If home price gains are about to re-accelerate, buying now rather than later makes financial sense.
3. Increase Family Wealth
Homeownership has always been recognized as a sensational way to build long-term family wealth. A <a href="https://www.attomdata.com/news/market-trends/q2-2019-u-s-home-sales-report/" title="new report" target="_blank" rel="noopener noreferrer">new report</a> by ATTOM Data Solutions reveals:
“U.S. homeowners who sold in the second quarter of 2019 realized an average home price gain since purchase of $67,500, up from an average gain of $57,706 in Q1 2019 and up from an average gain of $60,100 in Q2 2018. The average home seller gain of $67,500 in Q2 2019 represented an average 33.9 percent return as a percentage of original purchase price.”
The longer you delay purchasing a home, the longer you are waiting to put the power of home equity to work for you.
Bottom Line
With affordability increasing, mortgage rates decreasing, and home values about to re-accelerate, it may be time to make a move. Let’s get together to determine if buying now makes sense for your family.
2019-07-31T18:29:00-07:002019-07-31T18:32:30-07:00Eileen Murphytag:murphyleegroup.com,2012-09-20:2630What Experts are Saying About the Current Housing MarketWhat Experts are Saying About the Current Housing Market
<img width="750" height="410" src="https://files.mykcm.com/2019/07/18112355/20190723-Share-KCM.jpg" class="attachment-entry size-entry wp-post-image" alt="What Experts are Saying About the Current Housing Market | MyKCM" srcset="https://files.mykcm.com/2019/07/18112355/20190723-Share-KCM.jpg 750w, https://files.mykcm.com/2019/07/18112355/20190723-Share-KCM-600x328.jpg 600w, https://files.mykcm.com/2019/07/18112355/20190723-Share-KCM-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" /><br /><br />We’re halfway through the year, and with a decline in interest rates as well as home price and wage appreciation, many are wondering what the experts predict for the second half of 2019.
Here’s what some have to say:
<a href="https://news.move.com/2019-06-06-Homes-Becoming-More-Affordable-Despite-Rising-Prices" title="Danielle Hale, Chief Economist at realtor.com" target="_blank" rel="noopener noreferrer">Danielle Hale, Chief Economist at realtor.com</a>
“Lower mortgage rates, higher wages and more homes for sale have helped counteract rising home prices, and ultimately, made it so that buyers are able to afford more than last year.”
“Our outlook implies 4% growth for the remaining months of the year, predicated on…more supply than last year, the decline in mortgage rates, moderating home price appreciation and improving affordability.”
<a href="https://www.nar.realtor/newsroom/pending-home-sales-bounce-back-1-1-in-may" title="Lawrence Yun, Chief Economist at NAR" target="_blank" rel="noopener noreferrer">Lawrence Yun, Chief Economist at NAR</a>
“Rates of 4% and, in some cases even lower, create extremely attractive conditions for consumers. Buyers, for good reason, are anxious to purchase and lock in at these rates.”
<a href="http://www.fanniemae.com/portal/media/corporate-news/2019/economic-housing-outlook-061719-6885.html" title="Doug Duncan, Chief Economist for Fannie Mae" target="_blank" rel="noopener noreferrer">Doug Duncan, Chief Economist for Fannie Mae</a>
“Moderating home price appreciation and attractive mortgage rates continue to support affordability, particularly as home builders are now paying more attention to the entry-level portion of the housing market.”
<a href="https://magazine.realtor/for-brokers/network/article/2019/05/answering-clients-most-pressing-questions-this-spring" title="Kaycee Miller in a Realtor Magazine article" target="_blank" rel="noopener noreferrer">Kaycee Miller in a Realtor Magazine article</a>
“At the moment, some observers suggest the housing market is indeed headed for a slowdown. But no need to panic — experts say the financial and economic factors that were in play during the big crash a decade ago don’t exist today.”
Bottom Line
The housing market will be stronger for the rest of 2019. If you’d like to know more about your specific market, let’s get together to chat about what’s happening in our area.
2019-07-26T13:21:00-07:002019-07-26T13:30:39-07:00Curtis Leetag:murphyleegroup.com,2012-09-20:2624Is Getting a Home Mortgage Still Too Difficult?<img src="https://assets.site-static.com/userfiles/1482/image/getting-a-home-mortgage.jpg" alt="Is Getting a Home Mortgage Still Too Difficult?" title="Is Getting a Home Mortgage Still Too Difficult?" height="410" width="750" />
Potential homebuyers are always cautioned to be aware of mortgage lending standards and the difficulty they might face when trying to obtain a mortgage. Credit availability is expanding, making it easier to get a mortgage now than it was a year ago. The market is still tight however, and homebuyers should be prepared to shop around until they find a lender who is offering something that will meet the needs of their family.
Mortgage lending companies have high standards so it is important to make sure you and anyone else who will be included on the mortgage have their credit in check. The mortgage market is strict because lenders do not want to be put in a situation where they are forced to repurchase loans that are not paid on. They also do not want to end up in a litigation situation due to loan issues.
What Has Happened to the Number of Mortgages?
Due to the strict nature and requirements of the lending companies, the number of mortgages given out has significantly dropped. A report by the Housing Financial Policy Center at the Urban Institute showed that about 6.3 million fewer mortgages were given out between 2009 and 2015. The reasons behind this statistic are strict regulations and policies. These mortgages would have been granted if the lending standards where more reasonable.
Mortgage companies rely on calculations to determine if a home buyer will become delinquent on their payment. They will not give you a loan if you are too much of a risk for them. Credit history has a huge impact on this decision since lenders can see how often you pay back your debts. The history they receive is extensive. This view into your financial past causes lenders to take less risk when lending to you for your mortgage.
The Effect on the Economy
The housing market is recovering at a slower pace than it should since less potential homebuyers are being offered loans. While the market is still recovering with positive trends, fewer buyers can create a strain on other economic factors like home goods or construction jobs. Bottom Line
After the housing market boom and bust, mortgage lenders became stricter in their lending standards. It is not impossible to get a mortgage loan, but it can still be difficult for potential home buyers. Stay on top of your credit and make sure you and anyone else who is applying are in a good financial position so you can be approved for a loan. It is important to research different companies and their requirements to ensure success in getting a mortgage.2019-07-22T13:15:00-07:002019-07-22T13:18:35-07:00Curtis Leetag:murphyleegroup.com,2012-09-20:2622Common Things to Look Out for Before Buying Your Dream Home<img src="https://assets.site-static.com/userfiles/1482/image/3-questions-to-ask-before-buying-your-dream-home.jpg" alt="Common Things to Look Out for Before Buying Your Dream Home" title="Common Things to Look Out for Before Buying Your Dream Home" height="410" width="750" />
It is easy to become overwhelmed when you enter the home buying market. Friends, family, colleagues, and even acquaintances will give you their opinions if you are a first time home buyer. While most of them are looking out for your best interest, they are not fully aware of what is happening in the housing market.
It is important for you to be prepared and have your own questions ready. No matter what other opinions you are getting, you are the one buying the home and your comfort level will help make your final decision. Here are three important questions to ask before you purchase a home.
1. Why am I Buying a Home?
Regardless of the finances, it is important to think about what made you want to buy a home in the first place. Usually the reasons don’t have to do with money. Instead, home buyers are focused on how the house will impact their family in the future. A study done by the Joint Center for House Studies at Harvard found there are four reasons people buy a home. Those reasons include schools for your children, a safe environment, more room for your family to grow, and control of your own space.
These factors are the most common reasons people look to buy a new home. When you ask yourself why you are looking to purchase a home, do any of those factors come up? Spend time with your spouse or family members who are involved in this decision and determine why you want a home in the first place. Creating this list will help when searching for a home and can help your real estate agent find the best home for your needs.
2. What is the Trend with Home Values?
Our current economy and housing market is strong. That means home values and mortgage rates are increasing. If you are looking to purchase a home but want to stay within a budget, it may be in your best interest to move quickly. It is forecasted for these trends to continue in an upward motion, causing home values to continue to increase.
3. What About Current Mortgage Rates?
The ticket price is not the only thing you should be concerned with when purchasing a home. Mortgage rates are always changing and can have a huge impact on your monthly payments. Current trends show mortgage rates are rising. This is something to consider if you are debating the right time to purchase a home, since the rates may be even higher down the road.
Bottom Line
You and your family are the only ones who can determine the right time to purchase your dream home. It is important to decide exactly why you want a new home for your family and decide on a budget that will be comfortable moving forward. This budget may affect the amount of time you have to search for a home, since home prices and mortgage rates are increasing. 2019-07-22T13:15:00-07:002019-07-22T13:18:12-07:00Curtis Lee