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      Compass Contemplations for Friday

      DID YOU KNOW? Construction on U.S. new houses fell more than 9% in September, but a recent surge in permits suggests the decline in so-called housing starts is just a brief pause in a real estate market reinvigorated by lower mortgage rates. Housing starts slid to an annual rate of 1.26 million last month from a revised 1.39 million in August. (Marketwatch)

      DID YOU KNOW? Of the 618,000 “millennial millionaires” - those currently aged 23 - 37 years old with a net worth of over $1 million - in the USA, 44% are concentrated in California. California also has the highest percentage of business owners (23%) and the highest percentage of real estate investors. New York ranks No. 2, home to 14% of the millennial millionaire population. (CNBC)

      DID YOU KNOW? Hedge funder Ray Dalio - speaking at the IMF and World Bank annual meetings - said the global business cycle is in a “great sag” and the world’s economy holds at least two parallels to the 1930s. Here are some of his thoughts: 
      * Monetary policy, and especially interest rate reductions, were unlikely to offer much stimulus.
      * The world was also experiencing the biggest wealth gap since the 1930s and that was creating political stress. In the USA the top one-tenth of 1% of the population has a net worth that is approximately equal to the bottom 90%.
      * Like the 1930s, we have a rising power challenging an existing world power in the form of China-U.S. challenges.
      * There were four types of wars to watch for — trade, technology, currency and geopolitical.  (CNBC)

      DID YOU KNOW? Total national real estate website visits - not unique visitors - in the month of September looked like this: 
      Zillow:                  179 million
      Redfin:                 46,5 million
      Compass:             3,543 million
      Coldwell Banker:  2,9 million
      Sothebys Realty:  2,773 million
      Corcoran:             922,151
      Elliman:                390,000
      Thanks to Jeremy Schwartz from Compass SEO Analytics who provided this information.

      Compass Contemplations for Wednesday


      DID YOU KNOW? In Kaunas, Lithuania, the cost of parking is automatically deducted from a driver's bank account when they park their cars. In many cities, the timing of public buses is announced at each stop with almost perfect accuracy. And free Wi-Fi is now accessible across entire cities, from Buenos Aires, Argentina to Ramallah, Palestine. The Top 10 smartest cities of 2019 are Singapore (1st), Zurich (2nd), Oslo (3rd), Geneva (4th), Copenhagen (5th), Auckland (6th), Taipei City (7th), Helsinki (8th), Bilbao (9th) and Dusseldorf (10th). San Francisco, Washington DC, Boston, Denver, Seattle, Los Angeles, and New York made it into the Top 40. (The IMD World Competitiveness Center’s Smart City Observatory/Singapore University of Technology and Design)


      DID YOU KNOW? There are 29 cities in the world with a population of more than 10 million (including their metropolitan area), and that’s expected to grow to 43 by 2030. 

      DID YOU KNOW? Walmart is launching a new service that will deliver groceries - and put them away in your fridge - starting in Kansas City, Pittsburgh and Vero Beach today. InHome grocery delivery is a membership program that is being rolled out at an introductory price of $19.95 a month. Shoppers must purchase a $49.95 smart door lock kit or smart garage door kit, which comes with free installation and one month of free unlimited grocery delivery. (CNBC)

      DID YOU KNOW? As of June 2019, New York City, home to 65 billionaires and over 380,000 millionaires, was the world’s wealthiest city with a total wealth of $3 trillion, far ahead of Tokyo’s $2.5 trillion and San Francisco and London, which tied for 3rd place on the list, with $2.4 trillion each. A city’s total wealth refers to private wealth - including property, cash, equities, and business interests - held by all the individuals living there. Three other U.S. cities also made it to the top 20: Los Angeles ($1.4 trillion), Chicago ($980 billion), and Houston ($880 billion). (New World Wealth Report)

      DID YOU KNOW? Immigrants have driven two-thirds of U.S. economic growth since 2011. They founded 30% of U.S. firms, including more than 50% of startups valued at over $1 billion. (The Balance)

      DID YOU KNOW? Amazon has replaced PowerPoint driven presentations with a new way to hold meetings: Meetings start with each attendee sitting and silently reading a "six-page, narratively-structured memo" for about the first 30 minutes of the meeting. The memo is supposed to create the context for what will then be a good discussion based on a deep understanding of the topic/s at hand.

      DID YOU KNOW? A fundamental shift in the spending habits of U.S. millennials will have an incredible impact on the US economy, according to the CEO of Smead Capital Management. U.S. adults aged 21 to 38 years old (89 million in total!) will prioritize "necessity spending" over the next decade, coming after a 10-year period in which the same age group has lived off discretionary spending. (Thanks to John Federici for sending this via CNBC)

      DID YOU KNOW? Interest rates may be super-low, but because of generous bank rewards programs, banks are charging cardholders more to borrow. The average annual percentage rate, or APR, on interest-charging credit cards, is about 17%.... (WSJ)

      Homeownership is the Top Contributor to Your Net Worth

      Homeownership is the Top Contributor to Your Net Worth | MyKCM

      Many people plan to build their net worth by buying CDs or stocks or just having a savings account. Recently, however, Economist Jonathan Eggleston and Survey Statistician Donald Hays, both of the U.S. Census Bureau, shared the biggest determinants of wealth,

      “The biggest determinants of household wealth [are] owning a home and having a retirement account.” (Shown in the graph below):

      Homeownership is the Top Contributor to Your Net Worth | MyKCM

      This does not come as a surprise, as we often mention that homeownership can help you to increase your family’s wealth. This study reinforces that idea,

       “Net worth is an important indicator of economic well-being and provides insights into a household’s economic health.”

      Having equity in your home can help your family move in that direction, building toward substantial financial growth. According to the report noted above, people are not only creating net worth in the homes they live in, but many are also earning equity in rental property investments. (see below):

      :Homeownership is the Top Contributor to Your Net Worth | MyKCM

      John Paulson said it well,

      If you don’t own a home, buy one. If you own one home, buy another one, and if you own two homes buy a third and lend your relatives the money to buy a home.”

      Bottom Line

      There are financial and non-financial benefits of owning a home. If you would like to increase your net worth, let’s get together so you can learn all the benefits of becoming a homeowner.

      What FICO® Score Do You Need to Qualify for a Mortgage?

      While a recent announcement from CNBC shares that the average national FICO® score has reached an all-time high of 706, the good news for potential buyers is that you don’t need a score that high to qualify for a mortgage. Let’s unpack the credit score myth so you can to become a homeowner sooner than you may think.

      With today’s low-interest rates, many believe now is a great time to buy – and rightfully so! Fannie Mae recently noted that 58% of Americans surveyed say it is a good time to buy. Similarly, the Q3 2019 HOME Survey by the National Association of Realtors said 63% of people believe now is a good time to buy a home. Unfortunately, fear and misinformation often hold qualified and motivated buyers back from taking the leap into homeownership.

      According to the same CNBC article,

      “For the first time, the average national credit score has reached 706, according to FICO®, the developer of one of the most commonly used scores by lenders.”

      This is great news, as it means Americans are improving their credit scores and building toward a stronger financial future, especially after the market tumbled during the previous decade. With today’s strong economy and increasing wages, many Americans have had the opportunity to improve their credit over the past few years, driving this national average up.

      Since Americans with stronger credit are now entering the housing market, we are seeing an increase in the FICO® Score Distribution of Closed Loans (see graph below):


      :What FICO� Score Do You Need to Qualify for a Mortgage? | MyKCM

      But hang on – don’t forget that this does not mean you need a FICO® score over 700 to qualify for a mortgage. Here’s what Experian, the global leader in consumer and business credit reporting, says:

      FHA Loan: “FHA loans are ideal for those who have less-than-perfect credit and may not be able to qualify for a conventional mortgage loan. The size of your required down payment for an FHA loan depends on the state of your credit score: If your credit score is between 500 and 579, you must put 10% down. If your credit score is 580 or above, you can put as little as 3.5% down (but you can put down more if you want to).”

      Conventional Loan: “It’s possible to get approved for a conforming conventional loan with a credit score as low as 620, although some lenders may look for a score of 660 or better.”

      USDA Loan“While the USDA doesn’t have a set credit score requirementmost lenders offering USDA-guaranteed mortgages require a score of at least 640.”

      VA Loan: “As with income levels, lenders set their own minimum credit requirements for VA loan borrowers. Lenders are likely to check credit scores as part of their screening process, and most will set a minimum score, or cutoff, that loan applicants must exceed to be considered.”

      Bottom Line

      As you can see, plenty of loans are granted to buyers with a FICO® score that is lower than the national average. If you’d like to understand the next steps to take when determining your credit score, let’s get together so you can learn more.



      What Is the Cost of Waiting Until Next Year to Buy? [INFOGRAPHIC]

      What Is the Cost of Waiting Until Next Year to Buy? [INFOGRAPHIC] | MyKCM

      Some Highlights:

      • The “cost of waiting to buy” is defined as the additional funds necessary to buy a home if prices and interest rates were to increase over a period of time.
      • Freddie Mac forecasts interest rates will rise to 3.8% by Q4 2020.
      • CoreLogic predicts home prices will appreciate by 5.4% over the next 12 months.
      • If you’re ready and willing to buy your dream home, now is a great time to buy.

      Compass Contemplations for Thursday

      DID YOU KNOW? WeWork occupied more than 7 million square feet as of the end of June, about 73% more than it had a year before, CBRE data show.  Yet it is still a small fraction of the total office space in New York City which is roughly 550 million square feet.  WeWork accounted for 6.8% of Manhattan leasing activity in 2018, and 5.2% so far in 2019. Less demand from WeWork would probably lead to a modest increase in vacancies across the New York office market.

      DID YOU KNOW?  Cities with more than 500,000 people collectively lost almost 27,000 residents age 25 to 39 in 2018, the 4th consecutive year that big cities saw this population of young adults shrinks, yet HALF the number that left in 2017 (54,000).  New York, Chicago, Houston, San Francisco, Las Vegas, Washington and Portland, Ore., were among those that lost large numbers of residents in this age group. Los Angeles, Phoenix, San Antonio, San Diego, Austin, Seattle, Denver and Columbus gained large numbers of this age-group. The majority of people in these age groups who leave cities move to nearby suburbs or the suburbs of other metro areas, and there is absolutely nothing terribly new about this trend! (WSJ)

      DID YOU KNOW? A 2017 study of U.S. mayors that found that only 13% said the housing stock fit the needs of their constituents “very well” or “extremely well,” a sentiment that was true in rich and poor cities alike. (WSJ)

      DID YOU KNOW?  There were 22.8 million people worldwide with fortunes of more than $1m in 2018, an increase of 1.1% over 2017. (WEALTH-X)

      DID YOU KNOW? Retail vacancies in New York City doubled to 11 million square feet between 2007 and 2017. Empty storefronts jumped by nearly 50% to 5.8% from 4% during that same period. Rates are the highest in Staten Island at 11%. On average rents rose by 22% and the Upper West Side saw the highest hike at 68%.  (Good Day New York)

      DID YOU KNOW? Lower demand for US lumber due to 25% China tariffs has pushed prices down 20% in August from a year earlier, one rare upside to the US-CHINA trade war. Could this fuel lower building costs?


      4 Reasons to Sell This Fall

      4 Reasons to Sell This Fall [INFOGRAPHIC] | MyKCM

      Some Highlights:

      • Buyers are active in the market and often competing with one another for available listings.
      • Housing inventory is still under the 6-month supply found in a normal housing market.
      • Homes are still selling relatively quickly, averaging 31 days on the market.

      Compass Contemplations for Sunday


      DID YOU KNOW? According to a 2018 report from the Pew Research Center, 19% of American adults live in “upper-income households.” The median income of that group was $187,872 in 2016. The share of U.S. adults considered upper-class varies depending on where you live, Pew noted: In affluent metropolitan areas, it’s much higher than 19%. The metropolitan areas with the largest shares of adults in upper-income households are mostly in the coastal areas of the Northeast and California and tend to be in high-tech corridors, such as Boston-Cambridge-Newton, MA-NH, or in financial and commercial centers, such as Hartford-West Hartford-East Hartford, CT. The metro with the highest share was San Jose-Sunnyvale-Santa Clara, CA, where 32% of adults were considered upper-income. (CNBC)


      "Narratives that can periodically surge into epidemics are capable of changing the economy’s direction or of turning small booms and recessions into big ones. The probability that a recession will come soon — or be severe when it does — depends in part on the state of ever-changing popular narratives about the economy. These are stories that provide a framework for piecing together the seemingly random bits of information that one picks up from friends, the news or social media." - Robert Schiller, NYT 


      DID YOU KNOW? Here are some interesting stats from the NAPLES, Florida area via NABOR (Naples Area Board of Realtors) (Thanks to Yasmin Saad).

      * Collier County Florida 2017 Population: 372,880

      * # of licensed brokers/agents who are members:  Brokers: 689, Agents: 6,375

      * 96% of users logged in at least once to the SunshineMLS in the last 12 months.

      * # of homes sold in the last 12 months (buyer or seller side):  6,574 Single Family homes closed had a Naples agent on the Listing Side

      914 Land sales closed that had a Naples agent on the Listing Side

      * The total number of sales in the last 12 months: 14,130 closed.

      Everybody Calm Down! This Is NOT 2008

      Everybody Calm Down! This Is NOT 2008 | MyKCM

      Last week realtor.com released the results of a survey that produced three major revelations:

      1. 53% of home purchasers (first-time and repeat buyers) currently in the market believe a recession will occur this year or next.
      2. 57% believe the next recession will be as bad or worse than 2008.
      3. 55% said they would cancel plans to move if a recession occurred.

      Since we are currently experiencing the longest-ever economic expansion in American history, there is reason to believe a recession could occur in the not-too-distant future. And, it does make sense that buyers and sellers remember the horrors of 2008 when they hear the word “recession.”

      Ali Wolf, Director of Economic Research at the real estate consulting firm Meyers Research, addressed this point in a recent interview:

      “With people having PTSD from the last time, they’re still afraid of buying at the wrong time.”

      Most experts, however, believe if there is a recession, it will not resemble 2008. This housing market is in no way the same as it was just over a decade ago.

      Zillow Economist, Jeff Tucker, explained the difference in a recent article, Recessions Typically Have Limited Effect on the Housing Market:

      “As we look ahead to the next recession, it’s important to recognize how unusual the conditions were that caused the last one, and what’s different about the housing market today. Rather than abundant homes, we have a shortage of new home supply. Rather than risky borrowers taking on adjustable-rate mortgages, we have buyers with sterling credit scores taking out predictable 30-year fixed-rate mortgages. The housing market is simply much less risky than it was 15 years ago.”

      George Ratiu, Senior Economist at realtor.com, also weighed in on the subject:

      “This is going to be a much shorter recession than the last one, I don’t think the next recession will be a repeat of 2008…The housing market is in a better position.”

      In the past 23 years, there have been two national recessions – the dot-com crash in 2001 and the Great Recession in 2008. It is true that home values fell 19.7% during the 2008 recession, which was caused by a mortgage meltdown that heavily impacted the housing market. However, while stock prices fell almost 25% in 2001, home values appreciated 6.6%. The triggers of the next recession will more closely mirror those from 2001 – not those from 2008.

      Bottom Line

      No one can accurately predict when the next recession will occur, but expecting one could possibly take place in the next 18-24 months is understandable. It is, however, important to realize that the impact of a recession on the housing market will in no way resemble 2008.



      5 Reasons to Sell This Fall

      5 Reasons to Sell This Fall | MyKCM

      Below are 5 compelling reasons listing your home for sale this fall makes sense.

      1. Demand Is Strong

      The latest Buyer Traffic Report from the National Association of Realtors (NAR) shows that buyer demand remains strong throughout the vast majority of the country. These buyers are ready, willing, and able to purchase…and are in the market right now. More often than not, in many areas of the country, multiple buyers are competing with each other to buy the same home.

      Take advantage of the buyer activity currently in the market.

      2. There Is Less Competition Now

      Housing inventory is still under the 6-month supply that is needed for a normal market. This means that in the majority of the country, there are not enough homes for sale to satisfy the number of buyers.

      Historically, a homeowner would stay an average of six years in his or her home. Since 2011, that number has hovered between nine and ten years. There is a pent-up desire for many homeowners to move as they were unable to sell over the last few years due to a negative equity situation. As home values continue to appreciate, more and more homeowners will be given the freedom to move.

      Many homeowners were reluctant to list their homes over the last couple years, for fear that they would not find a home to move to. That is all changing now as more homes come to market at the higher end. The choices buyers have will continue to increase. Don’t wait until additional inventory comes to market before you decide to sell.

      3. The Process Will Be Quicker

      Today’s competitive environment has forced buyers to do all they can to stand out from the crowd, including getting pre-approved for their mortgage financing. This makes the entire selling process much faster and simpler, as buyers know exactly what they can afford before shopping for a home. According to Ellie Mae’s latest Origination Insights Report, the time needed to close a loan is 43 days.

      4. There Will Never Be a Better Time to Move Up

      If your next move will be into a premium or luxury home, now is the time to move up. There is currently ample inventory for sale at higher price ranges. This means if you’re planning on selling a starter or trade-up home and moving into your dream home, you’ll be able to do that in the luxury or premium market.

      According to CoreLogic, prices are projected to appreciate by 5.2% over the next year. If you’re moving to a higher-priced home, it will wind up costing you more in raw dollars (both in down payment and mortgage) if you wait.

      5. It’s Time to Move on with Your Life

      Look at the reason you decided to sell in the first place and determine whether it is worth waiting. Is money more important than being with family? Is money more important than having the freedom to go on with your life the way you think you should?

      Only you know the answers to these questions. You have the power to take control of the situation by putting your home on the market. Perhaps the time has come for you and your family to move on and start living the life you desire.

      That is what is truly important.


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