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      Blog :: 10-2019

      Compass Contemplations for Halloween

      HAPPY HALLOWEEN!  (be careful out there today......)


      DID YOU KNOW? Yesterday the Federal Reserve cut interest rates for the third time this year and began to downplay expectations of further cuts for now. The policy statement signaled a potentially higher bar for rate reductions after the latest move, which will drop the target for the federal funds rate to a range between 1.5% and 1.75%.

      DID YOU KNOW? Vancouver-based Westbank Corp. has landed $450 million in construction financing for a planned 47-story downtown tower -- replete with a cantilevered rooftop pool, gardens and apple orchard. (BLOOMBERG)

      DID YOU KNOW? Seattle's economy grew at three times the rate of the median U.S. city last year—8.4%, or 7% net of inflation. It’s home to not only Amazon but also to Boeing, Costco, Nordstrom, and Starbucks.


      DID YOU KNOW? Last month, the median home price inside the Austin city limits leaped 11.9% to $406,000, an all-time high for any September. The number of single-family home sales inside the city limits increased by almost 15% to 798 sales. (Austin Board of Realtors)

      DID YOU KNOW? Chicago's Mayor Lori Lightfoot is proposing a transfer tax in Chicago: .55% for sales under $500,000; .95% for sales between $500,000 -$1 million; 1.5% for sales of $1-3 million and 2.55 % for sales over $10 million. Be careful Chicago: Manhattan raised mansion/transfer taxes in July of this year and market activity plummetted! (Chicago Tribune)

      Compass Contemplations for Wednesday

      DID YOU KNOW? Wall Street is bracing for what seems almost assuredly to be a third interest rate cut in as many meetings of the Federal Reserve this afternoon. (Marketwatch)


      DID YOU KNOW? The other night I attended a very civilized agent soiree at a chic listing of Steve Dawson. The guest speaker was Robert Couturier, one of the great interior designers to the super-wealthy. Here were some key takeaways:
      * The very wealthy used to spend MUCH more on their furnishings relative to the cost of the property compared to today.
      * Quality furniture costs have come down sharply, especially with less emphasis on antiques that used to cost a fortune.
      * Interiors are and always have been fashionable.
      * Building dining rooms is an old concept that has come back: in the old grand buildings of Manhattan, most had smaller kitchens and a dining hall. Some had TINY kitchens.
      * People should decorate for themselves, not for visitors: chances are you will never please your visitors! Surround yourself with things you love, that work for you and your lifestyle.
      *Very tall ceilings in small rooms can deliver an effect similar to being stuck in a well.
      * Be aware that when you have a gorgeous view of a large body of water during the day, at night that view could be a sea of black.

      DID YOU KNOW? In 2010, average Chinese workers saved 39 cents of every dollar of income. Today, it is 33 cents. Many young Chinese save nothing at all. Household bank balances have soared more than 1000% since 2000, faster than the nearly 800% expansion in GDP during that period—a wealth accumulation unmatched by any country in modern times. Households will owe 68 cents per dollar of GDP by 2024. U.S. consumer debt is 78 cents per dollar. (WSJ)

      DID YOU KNOW? An estimated 3,788,235 people born in the USA in 2018, a 2% decrease from 2017 and the lowest number of births in any year since 1986, according to a report published by the National Center for Health Statistics. The birthrate among women in their early 20s declined 5% in 2018 and has dropped an average of 4% each year since 2007. It is now 1,728 births per 1,000 women (similar to England, but 15% higher than in Canada). Without immigration, the US population size would be in decline.  (NY TIMES)

      Buying a home can be SCARY…Until you know the FACTS

      Buying a home can be SCARYUntil you know the FACTS [INFOGRAPHIC] | MyKCM

      Some Highlights:

      Many potential homebuyers believe they need a 20% down payment and a 780 FICO® score to qualify to buy a home. This stops many people from even trying to jump into homeownership! Here are some facts to help take the fear out of the process:

      • 71% of buyers who purchased homes have put down less than 20%.
      • 78.1% of loan applications were approved last month.
      • In September, the average credit score for approved loans was 737.

      4 Reasons to Buy a Home This Fall

      4 Reasons to Buy a Home This Fall | MyKCM

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

      1. Prices Will Continue rising

      CoreLogic’s latest Home Price Insights Report shows that home prices have appreciated by 3.6% over the last 12 months. The same report predicts prices will continue to increase at a rate of 5.8% 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.

      2. Mortgage Interest Rates Are Projected to Increase Next Year

      The Primary Mortgage Market Survey from Freddie Mac indicates that interest rates for a 30-year mortgage have recently hovered just above 3.5%. This is great news for buyers in the market right now, because low-interest rates increase your purchasing power – but don’t wait! Most experts predict 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 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 needed to buy your next home.

      3. Either Way, You Are Paying a Mortgage 

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

      As an owner, your mortgage payment is a form of ‘forced savings’ that allows you to have equity in your home 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 costs to work for you?

      4. 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 both are on the rise.

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

      Look at the actual reason you’re 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 custom renovations, maybe now is the time to buy.

      Bottom Line

      Buying a home sooner rather than later could lead to substantial savings. Let’s get together to determine if homeownership is the right choice for you and your family this fall.


      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.



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