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      How Much Do You Need to Make to Buy a Home in Your State?

      How Much Do You Need to Make to Buy a Home in Your State? | MyKCM

      It’s no mystery that cost of living varies drastically depending on where you live, so a new study by GOBankingRates set out to find out what minimum salary you would need to make in order to buy a median-priced home in each of the 50 states, and Washington, D.C.

      States in the Midwest came out on top as most affordable, requiring the smallest salaries in order to buy a median-priced home. States with large metropolitan areas saw a bump in the average salary needed to buy with California, Washington, D.C., and Hawaii edging out all others with the highest salaries required.

      Below is a map with the full results of the study:

      How Much Do You Need to Make to Buy a Home in Your State? | MyKCM

      GoBankingRates gave this advice to anyone considering a home purchase,

      “Before you buy a home, it’s important to find out if you can afford the monthly mortgage payment. To do this, some financial experts recommend your housing costs — primarily your mortgage payments — shouldn’t consume more than 30 percent of your monthly income.”

      As we recently reported, research from Zillow shows that historically, Americans had spent 21% of their income on owning a median-priced home. The latest data from the fourth quarter of 2017 shows that the percentage of income needed today is only 15.7%!

      Bottom Line

      If you are considering buying a home, whether it’s your first time or your fifth time, let’s get together to evaluate your ability to do so in today’s market!

      The COST of Your Next Home Will Be LESS Than Your Parents' Home Was

      There is no doubt that the price of a home in most regions of the country is greater now than at any time in history. However, when we look at the cost of a home, it is cheaper to own today than it has been historically.

      The Difference Between PRICE and COST

      The price of a home is the dollar amount you and the seller agree to at the time of purchase. The cost of a home is the monthly expense you pay for your mortgage payment.

      To accurately compare costs in different time periods, we must look at home prices, mortgage rates, and wages during each period. Home prices were less expensive years ago, but paychecks were also smaller and mortgage rates were much higher (the average mortgage interest rate in 1988 was 10.34%).

      The best way to measure the COST of a home is to determine what percentage of income is necessary to buy a home at the time. That would take into account the price of the home, the mortgage interest rate and wages at the time.

      Zillow just released research that examined home costs using this formula. The research compares the historic percentage of income necessary to afford a mortgage to the percentage needed today. It also revealed the cost if mortgage rates continue to rise as experts are predicting. Here is a graph of their findings*:

      The COST of Your Next Home Will Be LESS Than Your Parents' Home Was | MyKCM

      Rates would need to jump to 7% in order for the percentage of necessary income to be greater than historic norms.

      Bottom Line

      Whether you are a homeowner considering selling your current house and moving up to the home of your dreams, or a first-time buyer trying to purchase your first home, it’s a great time to move forward.

      *Assumptions in the Zillow report: Buyer puts 20% down, takes out a conforming, 30-year fixed-rate mortgage at rates prevailing at the time, earns the median household income, and is buying a median-valued home.

      US Housing Market Still In ?Buy Territory'!

      US Housing Market Still In 'Buy Territory'! | MyKCM

      According to the Beracha, Hardin & Johnson Buy vs. Rent (BH&J) Index, the U.S. housing market has continued to move deeper into buy territory, supporting the belief that housing markets across the country remain a sound investment.

      The BH&J Index is a quarterly report that attempts to answer the question:

      In today’s housing market, is it better to rent or buy a home?

      The index examines the entire US housing market and then isolates 23 major cities for comparison. The researchers “measure the relationship between purchasing property and building wealth through a buildup in equity versus renting a comparable property and investing in a portfolio of stocks and bonds.” 

      While 13 of the 23 metropolitan markets examined moved further into buy territory, markets like Dallas, Denver, and Houston are currently deep into rent territory. Due to a lack of inventory, the home prices in these areas have increased by 6.7%6.3%, and 5.3%  respectively from a year ago.

      According to Eli Beracha, Ph.D., Co-Creator of the index, home prices will begin to return to more normal levels.

      Our data indicates that prices are above their 40-year trend but not significantly so as they were in 2007. Rather than a crash, I anticipate slower growth in prices accompanied by longer marketing times for sellers and increasing inventories, which should bring prices back in conjunction with their 40-year trend.”

      Bottom Line

      The majority of the country is strongly in buy territory. Buying a home makes sense socially and financially, as rents are predicted to increase substantially in the next year. Protect yourself from rising rents by locking in your housing cost with a mortgage payment now. 

      House Prices: Simply a Matter of Supply & Demand

      House Prices: Simply a Matter of Supply & Demand | MyKCM

      Why are home prices still rising? It is a simple answer. There are more purchasers in the market right now than there are available homes for them to buy. This is an example of the theory of “supply and demand” which is defined as:

      “the amount of a commodity, product, or service available and the desire of buyers for it, considered as factors regulating its price.”

      When demand exceeds supply, prices go up. This is currently happening in the residential real estate market.

      Here are the numbers for supply and demand as compared to last year for the last three months (March numbers are not yet available):

      House Prices: Simply a Matter of Supply & Demand | MyKCM

      In each of the last three months, demand (buyer traffic) has increased as compared to last year while supply (number of available listings) has decreased. If this situation persists, home values will continue to increase.

      Bottom Line

      The reason home prices are still rising is because there are many purchasers looking to buy, but very few homeowners ready to sell. This imbalance is the reason prices will remain on the uptick.

      What Should You Look for In Your Real Estate Team?

      ?What Should You Look for In Your Real Estate Team? | MyKCM

      How do you select the members of your team who are going to help make your dream of owning a home a reality? What should you be looking for? How do you know if you’ve found the right agent or lender?

      The most important characteristic that you should be looking for in your agent is someone who is going to take the time to really educate you on the choices available to you and your ability to buy in today’s market.

      As the financial guru Dave Ramsey advises:

      “When getting help with money, whether it’s insurance, real estate or investments, you should always look for someone with the heart of a teacher, not the heart of a salesman.”

      Do your research. Ask your friends and family for recommendations of professionals they’ve worked with in the past and have had good experiences with.

      Look for members of your team who will be honest and trustworthy; after all, you will be trusting them to help you make one of the biggest financial decisions of your life.

      Whether this is your first or fifth time buying a home, you want to make sure that you have an agent who is going to have the tough conversations with you, not just the easy ones. If your offer isn’t accepted by the seller, or they think that there may be something wrong with the home that you’ve fallen in love with, you would rather know what they think than make a costly mistake.

      According to the Home Buyer and Seller Generational Trends Report:

      Buyers from all generations primarily wanted their agent’s help to find the right home to purchase. Buyers were also looking for help to negotiate the terms of sale and to help with price negotiations.” Additionally, “Help understanding the purchase process was most beneficial to buyers 37 years and younger at 75 percent.”

      Look for someone to invest in your family’s future with you. You want an agent who isn’t focused on the transaction but is instead focused on helping you understand the process while helping you find your dream home.

      Bottom Line

      In this world of Google searches, where it seems like all the answers are just a mouse-click away, you need an agent who is going to educate you and share the information that you need to know before you even know you need it.

      99% of Experts Agree: Home Prices Will Increase

      99% of Experts Agree: Home Prices Will Increase | MyKCM

      Some believe that the combined effects of the new tax code and rising mortgage rates will have an adverse impact on residential real estate prices in 2018. However, the clear majority of recently surveyed housing experts believe that home values will continue to rise this year.

      What is the Home Price Expectation Survey?

      Each quarter, Pulsenomics surveys a nationwide panel of economists, real estate experts and investment & market strategists. Those surveyed include experts such as:

      • Daniel Bachman, Senior Manager, U.S. Economics at Deloitte Services, LP
      • Kathy Bostjancic, Head of U.S. Macro Investors Service at Oxford Economics
      • David Downs, Real Estate Finance Professor at VCU
      • Edward Pinto, Resident Fellow at American Enterprise Institute
      • Albert Saiz, Director at MIT Center for Real Estate

      Where do these experts see home values headed in 2018?

      Here is a breakdown of where they see home values twelve months from now:

      • 21.6% believe prices will appreciate by 6% or more
      • 71.6% believe prices will appreciate between 3 and 5.99%
      • 5.7% believe prices will appreciate between 0 and 2.99%
      • Only 1.1% believe prices will depreciate

      Bottom Line

      Almost ninety-nine percent of the top experts studying residential real estate believe that prices will appreciate this year, and over 93% believe home values will appreciate by at least 3%.

      7 Factors to Consider When Choosing A Home to Retire In

      7 Factors to Consider When Choosing A Home to Retire In | MyKCM

      As more and more baby boomers enter retirement age, the question of whether or not to sell their homes and move will become a hot topic. In today’s housing market climate, with low available inventory in the starter and trade-up home categories, it makes sense to evaluate your home’s ability to adapt to your needs in retirement.

      According to the National Association of Exclusive Buyers Agents (NAEBA), there are 7 factors that you should consider when choosing your retirement home.

      1. Affordability

      “It may be easy enough to purchase your home today but think long-term about your monthly costs. Account for property taxes, insurance, HOA fees, utilities – all the things that will be due whether or not you have a mortgage on the property.

      Would a move to a complex with homeowner association fees actually be cheaper than having to hire all the contractors you would need to maintain your home, lawn, etc.? Would your taxes go down significantly if you relocated? What is your monthly income going to be like in retirement?

      2. Equity

      “If you have equity in your current home, you may be able to apply it to the purchase of your next home. Maintaining a healthy amount of home equity gives you a source of emergency funds to tap, via a home equity loan or reverse mortgage.”

      The equity you have in your current home may be enough to purchase your retirement home with little to no mortgage. Homeowners in the US gained an average of over $14,000 in equity last year.

      3. Maintenance

      “As we age, our tolerance for cleaning gutters, raking leaves and shoveling snow can go right out the window. A condominium with low-maintenance needs can be a literal lifesaver, if your health or physical abilities decline.”

      As we mentioned earlier, would a condo with an HOA fee be worth the added peace of mind of not having to do the maintenance work yourself?

      4. Security

      “Elderly homeowners can be targets for scams or break-ins. Living in a home with security features, such as a manned gate house, resident-only access and a security system can bring peace of mind.”

      As scary as that thought may be, any additional security and an extra set of eyes looking out for you will always add to peace of mind.

      5. Pets

      “Renting won’t do if the dog can’t come too! The companionship of pets can provide emotional and physical benefits.”

      Evaluate all of your options when it comes to bringing your ‘furever’ friend with you to a new home. Will there be necessary additional deposits if you are renting or in a condo? Is the backyard fenced in? How far are you from your favorite veterinarian?

      6. Mobility

      “No one wants to picture themselves in a wheelchair or a walker, but the home layout must be able to accommodate limited mobility.”

      Sixty is the new 40, right? People are living longer and are more active in retirement, but that doesn’t mean that down the road you won’t need your home to be more accessible. Installing handrails and making sure your hallways and doorways are wide enough may be a good reason to look for a home that was built to accommodate these needs.

      7. Convenience

      “Is the new home close to the golf course, or to shopping and dining? Do you have amenities within easy walking distance? This can add to home value!”

      How close are you to your children and grandchildren? Would relocating to a new area make visits with family easier or more frequent? Beyond being close to your favorite stores and restaurants, there are a lot of factors to consider.

      Bottom Line

      When it comes to your forever home, evaluating your current house for its ability to adapt with you as you age can be the first step to guaranteeing your comfort in retirement. If after considering all these factors you find yourself curious about your options, let’s get together to evaluate your ability to sell your house in today’s market and get you into your dream retirement home!

      Dreaming of a Luxury Home? Now's the Time!

      Dreaming of a Luxury Home? Now's the Time! | MyKCM

      If your house no longer fits your needs and you are planning on buying a luxury home, now is a great time to do so! Recently, the Institute for Luxury Home Marketing released its Luxury Market Report which showed that in today’s premium home market, buyers are in control.

      The inventory of homes for sale in the luxury market far exceeds the number of people searching to purchase these properties in many areas of the country. This means that homes are often staying on the market longer or can be found at a discount.

      Those who have a starter or trade-up home to sell will find buyers competing, and often entering bidding wars, to be able to call their house their new home.

      The sale of your starter or trade-up house will help you come up with a larger down payment for your new luxury home. Even a 5% down payment on a million-dollar home is $50,000.

      But not all who are buying luxury properties have a home to sell first.

      A recent Bloomberg article gave some insight into what many millennials are choosing to do:

      “A new generation of affluent homebuyers powered by a surge in inherited wealth is driving the luxury-home market, demanding larger spaces and fancier finishes, according to a report heralding ‘the rise of the new aristocracy.’”

      Bottom Line

      The best time to sell anything is when demand is high, and supply is low. If you are currently in a starter or trade-up house that no longer fits your needs and you are looking to step into a luxury home, now’s the time to list your house for sale and make your dreams come true.

      4 Reasons Spring is a Great Time to Buy a Home!

      4 Reasons Spring is a Great Time to Buy a Home! | MyKCM

      Here are four great reasons to consider buying a home today instead of waiting.

      Prices Will Continue to Rise

      CoreLogic’s latest Home Price Index reports that home prices have appreciated by 6.6% over the last 12 months. The same report predicts that prices will continue to increase at a rate of 4.3% over the next year.

      The bottom in home prices has come and gone. Home values will continue to appreciate for years. Waiting no longer makes sense.

      Mortgage Interest Rates Are Projected to Increase

      Freddie Mac’s Primary Mortgage Market Survey shows that interest rates for a 30-year mortgage hovered close to 4.0% in 2017. Most experts predict that rates will rise over the next 12 months. The Mortgage Bankers Association, Fannie Mae, Freddie Mac and the National Association of Realtors are in unison, projecting that rates will increase by nearly a full percentage point by this time next year.

      An increase in rates will impact YOUR monthly mortgage payment. A year from now, your housing expense will increase if a mortgage is necessary to buy your next home.

      Either Way, You Are Paying a Mortgage

      There are some renters who have not yet purchased a home because they are uncomfortable taking on the obligation of a mortgage. Everyone should realize that unless you are living with your parents rent-free, you are paying a mortgage – either yours or your landlord’s.

      As an owner, your mortgage payment is a form of ‘forced savings’ that allows you to have equity in your home that you can tap into later in life. As a renter, you guarantee your landlord is the person with that equity.

      Are you ready to put your housing cost to work for you?

      It’s Time to Move on with Your Life

      The ‘cost’ of a home is determined by two major components: the price of the home and the current mortgage rate. It appears that both are on the rise.

      But what if they weren’t? Would you wait?

      Look at the actual reason you are buying and decide if it is worth waiting. Whether you want to have a great place for your children to grow up, you want your family to be safer, or you just want to have control over renovations, maybe now is the time to buy.

      If the right thing for you and your family is to purchase a home this year, buying sooner rather than later could lead to substantial savings.

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