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      Michael Lyons

      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.

      5 Reasons Why to Sell This Summer!

      5 Reasons Why to Sell This Summer! | MyKCM

      Here are five reasons listing your home for sale this summer makes sense.

      1. Demand Is Strong

      The latest Buyer Traffic Report from the National Association of Realtors (NAR) shows that buyer demand remains very 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, 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 has declined year-over-year for the last 35 months and is still under the 6-month supply needed for a normal housing market. This means that, in the majority of the country, there are not enough homes for sale to satisfy the number of buyers in the market. This is good news for homeowners who have gained equity as their home values have increased. However, additional inventory could be coming to the market soon.

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

      The choices buyers have will continue to increase. Don’t wait until this other 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 much simpler as buyers know exactly what they can afford before home shopping. According to Ellie Mae’s latest Origination Insights Report, the average time it took to close a loan was 41 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! The inventory of homes for sale at these higher price ranges has forced these markets into a buyer’s market. This means that if you are planning on selling a starter or trade-up home, your home will sell quickly, AND you’ll be able to find a premium home to call your own!

      Prices are projected to appreciate by 5.2% over the next year, according to CoreLogic. If you are moving to a higher-priced home, it will wind up costing you more in raw dollars (both in down payment and mortgage payment) 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 your health? 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 the questions above. 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.

      Drop in Inventory Fuels Sales Slowdown [INFOGRAPHIC]

      Drop in Inventory Fuels Sales Slowdown [INFOGRAPHIC] | MyKCM

      Some Highlights:

      • Existing Home Sales are now at an annual pace of 5.46 million.
      • Inventory of existing homes for sale dropped to a 4-month supply, marking the 35th month in a row of declines.
      • The median price of homes sold in April was $257,900. This is the 74th consecutive month of year-over-year price gains.

      7 Reasons Why to buy now

      In some areas of the country - especially on the high end - buyers are in 2 camps: they want an ultra-bargain or they want to wait-and-see.....

      As we experience these BUYER JITTERS in some markets these are the most valuable reasons why buying now - possibly in a market in decline in areas - is simply smart. What if a recession is coming? Why buy now? We actually may be experiencing the ULTIMATE buyers market, one where there is more choice, pricing is down and negotiability reigns AND financing is available. Here are my TOP 7 reasons why buying now makes sense:

      1. CHOICE: In most seller's markets buyers have fewer choices and often make poor ones out of desperation. Today there are many more choices. Buying the 'best of' always makes the most sense. A-grade real estate weathers storms better and escalates further in up-markets.

      2. NEGOTIABILITY:  Most markets don't allow much - if any - negotiation during a Seller's market. Being able to negotiate a price may allow you to absorb further downward movement....if it comes. If it doesn't - or if its not as much as anticipated - you may have built in an automatic upside.

      3. FINANCING:  Interest rates may be creeping up, yet they are still near historic lows. Most importantly, financing is AVAILABLE. In recessions, people lose jobs and credit dries up and usually. it becomes much tougher to obtain financing.

      4. HATE WASTE:  Every rent check is (after tax) money you will never see again. Every mortgage payment can build equity, a form of a forced savings account.

      5. TAXES: The tax deduction is smaller but $750k is nothing to sneeze at! Yes, it may be smaller, but it's still there. There are still numerous other tax benefits from owning investment real estate.

      6. COMPOUNDED INFLATION: Inflation - especially higher inflation in larger cities - is not going away. Slowly, but certainly, just like compounding interest, this elevates valuation over time. Building materials and labor costs keep rising.

      7. QUALITY OF LIFE:  Most neighborhoods and buildings with owned properties provide a superior quality of life. if you are buying on the high end, chances are you are wealthier. Life is short: live well! Wealth is a rare gift: enjoy its fruits.

      Don't Wait to Sell Your House! Buyers Are Out Now

      Dont Wait to Sell Your House! Buyers Are Out Now | MyKCM

      Recently released data from the National Association of Realtors (NAR) suggests that a now is a great time to sell your home. The concept of ‘supply & demand’ reveals that the best price for an item is realized when the supply of that item is low and the demand for that item is high.

      Let’s see how this applies to the current residential real estate market.

      SUPPLY

      It is no secret that the supply of homes for sale has been far below the number needed to sustain a normal market for over a year at this point. A normal market requires six months of housing inventory to meet the demand. The latest report from NAR revealed that there is currently only a 3.6-month supply of houses on the market.

      Supply is currently very low!

       

      DEMAND

      A report that was just released tells us that demand is very strong. The most recent Foot Traffic Report (which sheds light on the number of buyers who are actually out looking at homes) disclosed that “foot traffic grew 10.5 points to 52.4 in March as the new season approaches.”

      Demand is currently very high!

       

      Bottom Line

      Waiting to sell will only increase the competition between you and all of the other sellers putting their houses on the market later this summer. If you are debating whether or not to list your home, let’s get together to discuss the conditions in our market.

      Moving Up to Your Dream Home? Don't Wait!

      Moving Up to Your Dream Home? Dont Wait! | MyKCM

      Mortgage interest rates have risen by more than half of a point since the beginning of the year, and many assume that if mortgage rates rise, home values will fall. History, however, has shown this not to be true.

      Where are home values today compared to the beginning of the year?

      While rates have been rising, so have home values. Here are the most recent monthly price increases reported in the Home Price Insights Report from CoreLogic:

      • January: Prices were up 0.5% over the month before.
      • February: Prices were up 1% over the month before.
      • March: Prices were up 1.4% over the month before.

      Not only did prices continue to appreciate, the level of appreciation accelerated over the first quarter. CoreLogic believes that home prices will increase by 5.2% over the next twelve months.

      How can prices rise while mortgage rates increase?

      Freddie Mac explained in a recent Insight Report:

      “In the current housing market, the driving force behind the increase in prices is a low supply of both new and existing homes combined with historically low rates. As mortgage rates increase, the demand for home purchases will likely remain strong relative to the constrained supply and continue to put upward pressure on home prices.”

      Bottom Line

      If you are thinking about moving up to your dream home, waiting until later this year and hoping for prices to fall may not be a good strategy.

      Real Estate Tops Best Investment Poll for 5th Year Running

      Real Estate Tops Best Investment Poll for 5th Year Running | MyKCM

      Every year, Gallup surveys Americans to determine their choice for the best long-term investment. Respondents are given a choice between real estate, stocks/mutual funds, gold, savings accounts/CDs, or bonds.

      For the fifth year in a row, real estate has come out on top as the best long-term investment!

      This year’s results showed that 34% of Americans chose real estate, followed by stocks at 26%. The full results are shown in the chart below.

      Real Estate Tops Best Investment Poll for 5th Year Running | MyKCM

      The study makes it a point to draw attention to the contrast in the sentiment over the last five years compared to that of 2011-2012, when gold took the top slot with 34% of the votes. Real estate and stocks took second and third place, respectively, while still in recovery from the Great Recession.

      Bottom Line

      As the real estate market has recovered, so has the belief of the American people in the stability of housing as a long-term investment.

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