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      Blog :: 07-2021

      Home Sellers: There Is an Extra Way To Welcome Home Our Veterans

      Home Sellers: There Is an Extra Way To Welcome Home Our Veterans | MyKCM
       

      Some veterans are finding it difficult to obtain a home in today’s market. According to the National Association of Realtors (NAR):

      “Conventional conforming mortgages (mortgages that conform to guidelines set by Fannie Mae and Freddie Mac), accounted for 74% of mortgages obtained by homebuyers in May 2021, an increase from about 65% during 2018 through 2019…The share of VA-guaranteed loans has also decreased to 7% in May 2021 from about 10% in past years.”

      Recent data in the latest Origination Insight Report from Ellie Mae sheds light on the continuation of this trend. Below, we can see just how small of a share of total financing VA loans made up in June of 2021, according to that Ellie Mae report:Home Sellers: There Is an Extra Way To Welcome Home Our Veterans | MyKCM 

      The drop in VA loan usage can be attributed to the difficulties veterans continue to face when buying a home. The NAR article elaborates:

      "It is extremely difficult for FHA/VA buyers to get accepted in a multiple offer situation. They are on the bottom of the hierarchy."

      One contributing factor is that buyers with VA loans can’t waive certain contingencies. However, just because a certain contingency must be present for a particular buyer doesn’t mean that buyer’s offer shouldn’t be considered.

      What Should Sellers Do To Help Create a Level Playing Field?

      As a seller, it’s important to consider every offer in front of you regardless of loan type. If you’re selecting an offer because some contingencies are waived, keep in mind that it doesn’t always mean the offer is what’s best for you.

      Buyers who can’t waive specific contingencies may adjust other terms in their offer to make it more appealing to sellers. This may depend on several factors, including their loan type and location, but a motivated buyer and their agent will do everything they can to present an offer that’s as appealing to you as possible.

      Ultimately, you should make sure you take time to really understand the terms of their offer and see the big picture. Working with a driven buyer who’s motivated to purchase your house may provide a better opportunity for you to reach your overall best option and what’s most important to you.

      Bottom Line

      If you’re ready to sell, let’s connect. Together, we can make sure you understand the terms of all offers so you can give each one fair consideration, including those buyers using a VA loan. Our veterans sacrifice so much for our country. They’ve earned our gratitude and should have the same opportunity to obtain the home of their dreams.

      Today's Real Estate Market Explained Through 4 Key Trends

      Todays Real Estate Market Explained Through 4 Key Trends | MyKCM
       

      As we move into the second half of the year, one thing is clear: the current real estate market is one for the record books. The exact mix of conditions we have today creates opportunities for both buyers and sellers. Here’s a look at four key components that are shaping this unprecedented market.

      A Shortage of Homes for Sale

      Earlier this year, the number of homes available for sale fell to an all-time low. In recent months, however, inventory levels are starting to trend up. The latest Monthly Housing Market Trends Report from realtor.com says:

      “In June, newly listed homes grew by 5.5% on a year-over-year basis, and by 10.9% on a month-over-month basis. Typically, fewer newly listed homes appear on the market in the month of June compared to May. This year, growth in new listings is continuing later into the summer season, a welcome sign for a tight housing market.”

      This is good news for buyers who crave more options. But even though we’re experiencing small gains in the number of available homes for sale, inventory remains a challenge in most states. That’s why it’s still a sellers’ market, giving homeowners immense leverage when they decide to make a move.

      Buyer Competition and Bidding Wars

      Today’s ongoing low supply, coupled with high demand, creates a market characterized by high buyer competition and bidding wars. Buyers are going above and beyond to make sure their offer stands out from the crowd by offering over the asking price, all cash, or waiving some contingencies. The number of offers on the average house for sale broke records this year – and that’s great news for sellers.The latest Confidence Index from the National Association of Realtors (NAR) says the average home for sale receives five offers (seTodays Real Estate Market Explained Through 4 Key Trends | MyKCM 

      For buyers, the best way to put a compelling offer together is by working with a local real estate professional. That agent can act as your trusted advisor on what terms are best for you and what’s most appealing to the seller.

      Home Price Appreciation

      The competition among buyers is driving prices up. Over the past year, we’ve seen home price appreciation rise across the country. According to the most recent Home Price Index (HPI) from CoreLogic, national home prices increased 15.4% year-over-year in May:

      “The May 2021 HPI gain was up from the May 2020 gain of 4.2% and was the highest year-over-year gain since November 2005. Low mortgage rates and low for-sale inventory drove the increase in home prices.”

      Rising home values are a big part of why real estate remains one of the top sought-after investments for Americans. For potential sellers, it also means it’s a great time to list your house to maximize the return on your investment.

      A Rise in Home Values and Equity

      The equity in a home doesn’t just grow when a homeowner pays their mortgage – it also grows as the home’s value appreciates. Thanks to the jump in price appreciation, homeowners across the country are seeing record-breaking gains in home equity. CoreLogic recently reported:

      “…homeowners with mortgages (which account for roughly 62% of all properties) have seen their equity increase by 19.6% year over year, representing a collective equity gain of over $1.9 trillion, and an average gain of $33,400 per borrower, since the first quarter of 2020.”

      That’s a major perk for households to leverage. Homeowners can use that equity to accomplish major life goals or move into their dream homes.

      Bottom Line

      If you’re thinking about buying or selling, there’s no time like the present. Let’s connect to talk about how you can take advantage of the conditions we’re seeing today to meet your homeownership goals.

      3 Charts That Show That This Isn't a Housing Bubble

       

      3 Charts That Show This Isnt a Housing Bubble | MyKCM
       

      With home prices continuing to deliver double-digit increases, some are concerned we’re in a housing bubble like the one in 2006. However, a closer look at the market data indicates this is nothing like 2006 for three major reasons.

      1. The housing market isn’t driven by risky mortgage loans.

      Back in 2006, nearly everyone could qualify for a loan. The Mortgage Credit Availability Index (MCAI) from the Mortgage Bankers’ Association is an indicator of the availability of mortgage money. The higher the index, the easier it is to obtain a mortgage. The MCAI more than doubled from 2004 (378) to 2006 (869). Today, the index stands at 130. As an example of the difference between today and 2006, let’s look at the volume of mortgages that originated when a buyer had less than a 620 credit score.

      3 Charts That Show This Isnt a Housing Bubble | MyKCM 

      Dr. Frank Nothaft, Chief Economist for CoreLogic, reiterates this point:

      “There are marked differences in today’s run up in prices compared to 2005, which was a bubble fueled by risky loans and lenient underwriting. Today, loans with high-risk features are absent and mortgage underwriting is prudent.”

      2. Homeowners aren’t using their homes as ATMs this time.

      During the housing bubble, as prices skyrocketed, people were refinancing their homes and pulling out large sums of cash. As prices began to fall, that caused many to spiral into a negative equity situation (where their mortgage was higher than the value of the house).

      Today, homeowners are letting their equity build. Tappable equity is the amount available for homeowners to access before hitting a maximum 80% combined loan-to-value ratio (thus still leaving them with at least 20% equity). In 2006, that number was $4.6 billion. Today, that number stands at over $8 billion.

      Yet, the percentage of cash-out refinances (where the homeowner takes out at least 5% more than their original mortgage amount) is half of what it was in 2006.

       

      .3 Charts That Show This Isnt a Housing Bubble | MyKCM

      3. This time, it’s simply a matter of supply and demand.

      FOMO (the Fear Of Missing Out) dominated the housing market leading up to the 2006 housing bubble and drove up buyer demand. Back then, housing supply more than kept up as many homeowners put their houses on the market, as evidenced by the over seven months’ supply of existing housing inventory available for sale in 2006. Today, that number is barely two months.

      Builders also overbuilt during the bubble but pulled back significantly over the next decade. Sam Khater, VP and Chief Economist, Economic & Housing Research at Freddie Macexplains that pullback is the major factor in the lack of available inventory today:

      “The main driver of the housing shortfall has been the long-term decline in the construction of single-family homes.”

      Here’s a chart that quantifies Khater’s remarks:3 Charts That Show This Isnt a Housing Bubble | MyKCM 

      Today, there are simply not enough homes to keep up with current demand.

      Bottom Line

      This market is nothing like the run-up to 2006. Bill McBride, the author of the prestigious Calculated Risk blog, predicted the last housing bubble and crash. This is what he has to say about today’s housing market:

      “It’s not clear at all to me that things are going to slow down significantly in the near future. In 2005, I had a strong sense that the hot market would turn and that, when it turned, things would get very ugly. Today, I don’t have that sense at all, because all of the fundamentals are there. Demand will be high for a while because Millennials need houses. Prices will keep rising for a while because inventory is so low.”

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