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      Supply & Demand Will Determine Future Home Values

      Supply & Demand Will Determine Future Home Values | MyKCM

      Will home values continue to appreciate throughout 2018? The answer is simple: YES! – as long as there are more purchasers in the market than there are available homes for them to buy. This is known as 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. Every month this year, demand (buyer traffic) has increased as compared to last year and for the first five months of 2018, supply (the number of available listings) had decreased as compared to last year. However, a recent report by the National Association of Realtors (NAR) revealed the first year-over-year increase in supply in three years.

      Here are the numbers for supply and demand as compared to last year since the beginning of 2018:

      Supply & Demand Will Determine Future Home Values | MyKCM

      The increase in the June numbers doesn’t mean that prices won’t continue to appreciate. In that same report, Lawrence Yun, NAR’s Chief Economist, explained:

      “It’s important to note that despite the modest year-over-year rise in inventory, the current level is far from what’s needed to satisfy demand levels.

      Furthermore, it remains to be seen if this modest increase will stick, given the fact that the robust economy is bringing more interested buyers into the market, and new home construction is failing to keep up.”

      Bottom Line

      The reason home prices are still rising is that 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.

      5 Reasons to Hire a Real Estate Professional Before Entering the Market!

      5 Reasons to Hire a Real Estate Professional Before Entering the Market! | MyKCM

      Whether you are buying or selling a home, it can be quite the adventure. In this world of instant gratification and internet searches, many sellers think that they can ‘For Sale by Owner’ or ‘FSBO,’ but it’s not as easy as it may seem. That’s why you need an experienced real estate professional to guide you on the path to achieving your ultimate goal!

      The 5 reasons you need a real estate professional in your corner haven’t changed but have rather been strengthened by the projections of higher mortgage interest rates and home prices as the market continues to pick up steam.

      1. What do you do with all this paperwork?

      Each state has different regulations regarding the contracts required for a successful sale, and these regulations are constantly changing. A true real estate professional is an expert in his or her market and can guide you through the stacks of paperwork necessary to make your dream a reality.

      2. So you found your dream house, now what?

      There are over 230 possible steps that need to take place during every successful real estate transaction. Don’t you want someone who has been there before, someone who knows what these actions are, to ensure you achieve your dream?

      3. Are you a good negotiator?

      So maybe you’re not convinced that you need an agent to sell your home. After looking at the list of parties that you will need to be prepared to negotiate with, you’ll soon realize the value in selecting a real estate professional. From the buyers (who want the best deals possible), to the home inspection companies, all the way to the appraisers, there are at least 11 different people who you will need to be knowledgeable of, and answer to, during the process.

      4. What is the home you’re buying/selling really worth?

      It is important for your home to be priced correctly from the start in order to attract the right buyers and shorten the amount of time that it’s on the market. You need someone who is not emotionally connected to your home to give you its true value. According to a recent article by the National Association of Realtors, FSBOs achieve prices significantly lower than the prices of similar properties sold by real estate agents:

      “FSBOs earn an average of $60,000 to $90,000 less on the sale of their home than sellers who work with a real estate agent.”

      Get the most out of your transaction by hiring a professional!

      5. Do you know what’s really going on in the market?

      There is so much information out there on the news and on the internet about home sales, prices, and mortgage rates; how do you know what’s going on specifically in your area? Who do you turn to in order to competitively and correctly price your home at the beginning of the selling process? How do you know what to offer on your dream home without paying too much, or offending the seller with a lowball offer?

      Dave Ramsey, the financial guru, 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.”

      Hiring an agent who has his or her finger on the pulse of the market will make your buying or selling experience an educated one. You need someone who is going to tell you the truth, not just what they think you want to hear.

      Bottom Line

      You wouldn’t replace the engine in your car without a trusted mechanic, so why would you make one of the most important financial decisions of your life without hiring a real estate professional?

      Are Lending Standards Propping Up Home Prices?

      Are Lending Standards Propping Up Home Prices? | MyKCM

      Back in 2005, Federal Reserve Chairman Alan Greenspan described the dramatic increases in residential real estate values as a “froth in housing markets.” Greenspan went on to say:

      “The increase in the prevalence of interest-only loans and the introduction of more-exotic forms of adjustable-rate mortgages are developments of particular concern…some households may be employing these instruments to purchase homes that would otherwise be unaffordable, and consequently their use could be adding to pressures in the housing market.”

      Greenspan was warning that the loosening of lending standards could lead to disaster. And it did.

      With home prices again appreciating at percentages well above historic norms, many are wondering whether the market is again becoming “frothy.” Mortgage standards are much stricter now, however, than they were in 2005.

      The Urban Institute’s Housing Finance Policy Center issues a monthly index which measures the percentage of home purchase loans that are likely to default. A lower score indicates that lenders are unwilling to tolerate defaults and are imposing tighter lending standards. A higher score indicates that lenders are willing to tolerate defaults and are taking more risks.

      Their July Housing Credit Availability Index revealed credit availability rose to 5.9%. For context, they went on to explain:

      “Significant space remains to safely expand the credit box. If the current default risk was doubled across all channels, risk would still be well within the pre-crisis standard of 12.5 percent from 2001 to 2003 for the whole mortgage market.”

      Here is a graph depicting the Urban Institute’s findings:

      Are Lending Standards Propping Up Home Prices? | MyKCM

      Bottom Line

      Though it may be slightly easier to get a mortgage today than it was a year ago, lending standards are nowhere near where they were during the build-up to the housing bubble.

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      Americans Rank Real Estate Best Investment for 5 Years Running! [INFOGRAPHIC]

      Americans Rank Real Estate Best Investment for 5 Years Running! [INFOGRAPHIC] | MyKCM

      Some Highlights:

      • Real estate has outranked stocks/mutual funds, gold, savings accounts/CDs, and bonds as the best long-term investment among Americans for the last 5 years!
      • The generations agree! Real estate is the best investment!
      • Generation X leads the way with 37% believing in real estate as the top investment.

      The information contained, and the opinions expressed, in this article are not intended to be construed as investment advice. Keeping Current Matters, Inc. does not guarantee or warrant the accuracy or completeness of the information or opinions contained herein. Nothing herein should be construed as investment advice. You should always conduct your own research and due diligence and obtain professional advice before making any investment decision. Keeping Current Matters, Inc. will not be liable for any loss or damage caused by your reliance on the information or opinions contained herein.

      Will Your Current House Fit Your Needs in Retirement?

      Will Your Current House Fit Your Needs in Retirement? | 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

      1. Affordability

      “It may be easy enough to afford 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 moving to a complex with homeowner association (HOA) 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 $16,300 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 in knowing that you do not have 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, always adds to your 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 moving into 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. Having to install handrails and make sure that 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!

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        4 REAL Reasons Why We Buy A Home!

        4 REAL Reasons Why We Buy A Home! | MyKCM

        We often talk about why it makes financial sense to buy a home, but more often than not, the emotional reasons are the more powerful or compelling ones.

        No matter what shape or size your living space is, the concept and feeling of home can mean different things to different people. Whether it’s a certain scent or a favorite chair, the emotional reasons why we choose to buy our own homes are typically more important to us than the financial ones.

        1. Owning your home offers you the stability to start and raise a family

        Between the best neighborhoods and the best school districts, even buyers without children at the time of purchase may have these things in mind as major reasons for choosing the locations of the homes that they purchase.

        2. There’s no place like home

        Owning your own home offers you not only safety and security, but also a comfortable place that allows you to relax after a long day!

        3. You have more space for you and your family

        Whether your family is expanding, an older family member is moving in, or you need to have a large backyard for your pets, you can take this all into consideration when buying your dream home!

        4. You have control over renovations, updates, and style

        Looking to actually try one of those complicated wall treatments that you saw on Pinterest? Tired of paying an additional pet deposit in your apartment building? Or maybe you want to finally adopt that puppy or kitten you’ve seen online 100 times? Who’s to say that you can’t do just that in your own home?

        Bottom Line

        Whether you are a first-time homebuyer or a move-up buyer who wants to start a new chapter in your life, now is a great time to reflect on the intangible factors that make a house a home.

        Homes are More Affordable in 44 out of 50 States...MA!

        Homes are More Affordable in 44 out of 50 States | MyKCM

        While both home prices and mortgage rates are increasing this year, many are concerned about a family’s ability to purchase a major part of the American Dream – its own home. However, if we compare housing affordability today to the average affordability prior to the housing boom and bust, we are in much better shape than most will believe.

        In Black Knight’s latest monthly Mortgage Monitor they revealed that in the vast majority of the country, it is actually more affordable to purchase a home today than it was between 1995 to 2003 when looking at mortgage payments (determined by price and interest rate) as compared to incomes. Home prices are up compared to 1995-2003, but mortgage rates are still much lower now than at that time. Today, they stand at about 4.5%. Here are the average mortgage rates for each of the years mentioned:

        • 1995 – 7.93%
        • 1996 – 7.81%
        • 1997 – 7.6%
        • 1998 – 6.94%
        • 1999 – 7.44%
        • 2000 – 8.05%
        • 2001 – 6.97%
        • 2002 – 6.54%
        • 2003 – 5.83%

        On the other hand, wages have risen over the last twenty years.

        Black Knight’s research revealed that, when comparing “the share of median income required to buy the median-priced home” today, to the average between 1995 to 2003, it is currently more affordable to purchase a home in 44 of 50 states.

        Here is a state map of the percentage change in the price-to-payment ratio. Positive numbers indicate that it is less affordable to buy while negative numbers indicate that it is more affordable.

        Homes are More Affordable in 44 out of 50 States | MyKCM

        Bottom Line

        Whether you are moving up to the home of your dreams or purchasing your first house, it is a great time to buy when looking at historic affordability data.

        Parents Say Kids' Opinions Matter Big When Buying a Home

        Parents Say Kids Opinions Matter Big When Buying a Home | MyKCM

        A recent survey conducted by Harris Poll and released by SunTrust Mortgage found that “55% of homeowners with a child under the age of 18 at the time when they purchased their home said that the opinion of their offspring played a major role in their home buying decision.”

        When the results were broken down by the parent’s age, millennials (those 18-36) led the way with 74% of homeowners saying that their child’s opinion was a factor in choosing which home to buy. Eighty-three percent of renters believe that their child’s opinion would be a deciding factor when looking to purchase a home.

        So what features in a home are most important to kids?

        Parents Say Kids Opinions Matter Big When Buying a Home | MyKCM

        Coming in at 57%, it should come as no surprise that gaining their own bedrooms was the top most-desirable feature of any home for kids, followed by a large back yard to play in at 34%.

        Todd Chamberlain, Head of Mortgage Banking at SunTrust explained the reasoning behind the survey,

        “As a parent of two kids, I know from experience that including children in the home buying process is not only fun for the whole family, but also educational for our homebuyers of tomorrow.”

        Bottom Line

        If you’re thinking about selling your home this year, make sure to highlight all the kid-friendly features your home has to offer so that you can sway the real decision mak

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        Top Reasons to Own Your Home

        Top Reasons to Own Your Home [INFOGRAPHIC] | MyKCM

        Some Highlights:

        • June is National Homeownership Month!
        • Now is a great time to reflect on the many benefits of homeownership that go way beyond the financial.
        • What reasons do you have to own your own home?

        Millennials Are Skipping Starter Homes for Their Dream Homes

        Millennials Are Skipping Starter Homes for Their Dream Homes | MyKCM

        A new trend has begun to emerge. With home prices skyrocketing in the starter home category, many first-time homebuyers are skipping the traditional starter homes and moving right into their dream homes.

        What’s a Starter Home?

        According to the National Association of Realtors (NAR), simply put, a starter home is a one or two-bedroom home (sometimes even a small, three bedroom). “Prices vary widely by each market but starters on average cost $300,000 to $350,000 while trade-up and premium homes cost upwards of $400,000.”

        Finding Their Forever Homes Now

        A recent CNBC article revealed that there are many factors that delayed older millennials (ages 25-35) from buying a home earlier in their lives. The aftereffects of the Great Recession teaming up with larger education costs forced many to either remain living in their parent’s homes or to rent.

        With the economy continuing to improve, many millennials have been able to break into better-paying jobs which has helped spur down payment savings. As the dream of homeownership comes closer to reality, many millennials are saving for their forever homes.

        According to the latest statistics from NAR, 30% of millennials bought homes for $300,000 or more this year (up from 14% in 2013). Diane Swonk, Chief Economist at Grant Thornton weighed in saying, “They rented for longer. Now they’re going to where they want to stay.”

        More and more millennials are settling down, getting married, and starting families, which is a huge factor driving them to look for larger homes.

        Increased competition in the starter home market has also been a driving force in waiting to afford their dream homes. Inventory in the starter home market is down 14.2% from last year, according to research from Trulia. This has driven prices up and has led to bidding wars.

        Many first-time buyers who were originally looking for starter homes are realizing that for just a little bit more of an investment, they could afford trade-up or premium homes instead.

        Bottom Line

        If you plan on purchasing your first home this year, let’s get together to determine how much house you can afford. You may be pleasantly surprised.

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