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      Buyer Demand Surging as Spring Market Begins

      Buyer Demand Surging as Spring Market Begins | MyKCM

      Last fall, some predicted that the 2019 residential real estate market would be a disaster. There was even the belief that we might experience a housing crash like the one that occurred during the last decade.

      However, according to two separate reports*, buyer demand dramatically increased over the last three months, leading into this spring buyers’ market (the March data is not yet available).

      Both the ShowingTime Showing Index and the National Association of REALTORS Buyer Traffic Index show that buyer demand has increased in each of the last three months.

      Buyer Demand Surging as Spring Market Begins | MyKCM

      Why the increase in demand? Increased buying power.

      According to the National Association of Realtors’ Economists’ Outlook Blog, purchasing a home has become more affordable, which has led to increased demand.

      “Due to the combination of falling home prices and mortgage rates, the income needed to make an affordable mortgage payment (mortgage no more than 25% of income) on a median-priced home with 10% down payment and 30-year fixed rate mortgage decreased from $60,425 in June 2018 to $53,783 as of February 2019, and the difference of $6,642 represents a gain in buying power because one can afford a home purchase at a lower level of income.”

      Bottom Line

      It appears the spring buyers’ market is going to be much stronger than many had projected. Whether you are selling or buying, this is important news.

       

      *The methodology behind the indices:

      The ShowingTime Showing Index

      “The ShowingTime Showing Index® tracks the average number of buyer showings on active residential properties on a monthly basis, a highly reliable leading indicator of current and future demand trends.”

      The National Association of REALTORS® Buyer Traffic Index

      “In a monthly survey of REALTORS®, NAR asks respondents ‘Compared to the same month last year, how would you rate the past month’s traffic in neighborhood(s) or area(s) where you make most of your sales?’ NAR compiles the responses into an index, where an index above 50 indicates that more respondents reported “stronger” traffic than “weaker” traffic.”

      What are the Benefits of Becoming a Homeowner?

      What are the Benefits of Becoming a Homeowner? | MyKCM
       

      Every family has a list of important dates. We celebrate birthdays, anniversaries, pet adoptions…and the list goes on. For 64.4 percent of households in the United States, this list includes the day they became a homeowner for the first time!

      Why is this date important? Homeownership is not just a roof over your head! It represents shelter, stability, wealth, and pride! For decades, homeownership has been an important part of the American Dream!

      However, many people question if the next generations see the same benefits of homeownership as their predecessors.

      In case we have forgotten, some of those benefits are:

       

      Non-Financial Benefits

       

      1) Educational Achievement: Homeownership has a positive impact on academic achievement, including reading and math performance in children 3-12 years old.

      2) Civic Participation: “Owning a home means owning a part of the neighborhood.” Homeowners have a stronger connection to their neighborhood and are more committed to volunteer.

      3) Health Benefits: Adjusting for a range of demographic, socioeconomic and housing-related characteristics, homeowners have a substantial health advantage over renters.

      4) Public Assistance: The report shows 47% of homeowners use their home equity credit lines to help pay other debts, diminishing their need for public assistance.

      5) Property Maintenance and Improvement: A well-maintained home not only generates benefits through consumption and safety, but a high-quality structure also raises mental health.

      6) Pride of Ownership: This place is unique as it is “yours.” You can customize it according to your likes and personality.

      In addition to financial benefits, homeownership also brings significant social benefits. These not only pertain to the family, but extend to the communities, the state, and the country!

      Financial Benefits

       

      Buying a home is an investment in your future!

      1. Appreciation: On average, home prices are appreciating annually at a rate of 3.6%. This helps to create a safety net.
      2. Forced Savings: Your mortgage is like a forced savings plan! With each payment, you are reducing the principal of your loan.
      3. Home Equity: Homeownership builds equity every single month. You can later use that equity to start a business, send your children to college, etc.
      4. Net Worth: A homeowners’ net worth is 44x greater than renters! This gives you the financial freedom to invest.
      5. Stability: Rent prices increase 4% annually! A fixed mortgage payment allows you to save for future projects and guard against inflation.
      6. Tax Benefits: The government has created tax benefits to encourage customers to purchase. (Talk to your CPA to see which benefits apply to you).

      Bottom Line

      Homeownership is and will always be part of the American Dream! There are many financial and non-financial benefits to take advantage of when owning a home. If owning a home is part of your dream, contact a local real estate professional to help you with the process!

      What is the Cost of Waiting Until Next Year to Buy?

      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 it would take to buy a home if prices & interest rates were to increase over a period of time.
      • Freddie Mac predicts interest rates to rise to 5.1% by the end of 2019.
      • CoreLogic predicts home prices to appreciate by 4.8% over the next 12 months.
      • If you are ready and willing to buy your dream home, find out if you are able to!

      Selling Your Home? Make Sure the Price is Right!

      Selling Your Home? Make Sure the Price is Right! | MyKCM

      If you’ve ever watched “The Price is Right,” you know that the only way to win is to be the one to correctly guess the price of the item you want without going over! That means your guess must be just slightly under the retail price.

      In today’s shifting real estate market, where more inventory is coming to market and home values are projected to appreciate at lower rates, homeowners will not be able to price their homes as aggressively as they were able to just last year.

      They will have to employ the same strategy: be the closest without going over!

      As we have explained before, pricing your home at or slightly below market value actually increases the number of buyers who will see your home in their search!

      Over the last six months, more inventory has come to market while the months’ supply of inventory available has dropped. This means that the demand for homes to buy is still very strong throughout the country!

      Homeowners who make the mistake of overpricing their homes will eventually have to drop the price. This leaves buyers wondering if the price drop was caused by something wrong with the homes when in reality nothing was wrong, the price was just too high!

      Bottom Line

      If you are thinking about listing your home for sale this year, let’s get together to properly price your home from the start!

      Is the Recent Dip in Interest Rates Here to Stay?

      Is the Recent Dip in Interest Rates Here to Stay? | MyKCM

      Interest rates for a 30-year fixed rate mortgage climbed consistently throughout 2018 until the middle of November. After that point, rates returned to levels that we saw in August to close out the year at 4.55%, according to Freddie Mac’s Primary Mortgage Market Survey.

      After the first week of 2019, rates have continued their downward trend. As Freddie Mac’s Chief Economist Sam Khater notes, this is great news for homebuyers. He states,

      “Mortgage rates declined to start the new year with the 30-year fixed-rate mortgage dipping to 4.51 percent. Low mortgage rates combined with decelerating home price growth should get prospective homebuyers excited to buy.”

      In some areas of the country, the combination of rising interest rates and rising home prices had made some first-time buyers push pause on their home searches. But with more inventory coming to market, continued price growth, and interest rates slowing, this is a great time to get back in the market!

      Will This Trend Continue?

      According to the latest forecasts from Fannie Maethe Mortgage Bankers Associationand the National Association of Realtorsmortgage rates will increase over the course of 2019, but not at the same pace they did in 2018. You can see the forecasts broken down by quarter below.

      Is the Recent Dip in Interest Rates Here to Stay? | MyKCM

      Bottom Line

      Even a small increase (or decrease) in interest rates can impact your monthly housing cost. If buying a home in 2019 is on your short list of goals to achieve, let’s get together to find out if you are able to today.

      Where is the Housing Market Headed in 2019?

      Where is the Housing Market Headed in 2019? [INFOGRAPHIC] | MyKCM

      Some Highlights:

      • ­Interest rates are projected to increase steadily throughout 2019, but buyers will still be able to lock in a rate lower than their parents or grandparents did when they bought their homes!
      • Home prices will rise at a rate of 4.8% over the course of 2019 according to CoreLogic.
      • All four major reporting agencies believe that home sales will outpace 2018!

      The Cost of Renting vs. Buying a Home

      The Cost of Renting vs. Buying a Home [INFOGRAPHIC] | MyKCM

      Some Highlights:

      • Historically, the choice between renting or buying a home has been a tough decision.
      • Looking at the percentage of income needed to rent a median-priced home today (28.4%) vs. the percentage needed to buy a median-priced home (17.5%), the choice becomes obvious.
      • Every market is different. Before you renew your lease again, find out if you can put your housing costs to work by buying this year!

      Wage Increases Make Home Buying More Affordable

      Wage Increases Make Home Buying More Affordable | MyKCM

      Everyone knows that housing affordability has been negatively impacted by rising prices and increasing mortgage rates, but there is another piece to the affordability equation – wages.

      How much a family earns obviously impacts how easy or difficult it is for them to afford to own a home. Because of an improving economy, wages are finally beginning to increase – and that dramatically affects home affordability.

      According to the National Association of Realtors’ (NAR) September 2018 Housing Affordability Index, wages have increased in every region of the country:

      Wage Increases Make Home Buying More Affordable | MyKCM

      After applying current salaries, home prices, and mortgage rates to their Home Affordability Index equation, the index, though still lower than this time last year (160.1 to 146.7), increased over the last month (141.2 to 146.7). For the complete methodology used by NAR, click here.

      The percentage of income needed to own a home has also decreased each of the last three months. It currently sits at 17% which is substantially lower than historic numbers.

      Wage Increases Make Home Buying More Affordable | MyKCM

      Bottom Line

      If you are a first-time buyer or a move-up buyer who believes that purchasing a home is not within your budget, let’s get together to determine if that is still true.

      Today is ELECTION DAY:  Don't forget to GO OUT AND VOTE!

      DID YOU KNOW? Since 1946, there have been 18 midterm elections. Stocks were higher 12 months after every single one. Every single one. That’s 18 for 18. Even though we’ve had every possible political combination in the past 72 years. Republican president years with Democratic Congress. A democratic president with Republican Congress. A Republican president and Congress. Democratic president and Congress. Since 1946, stocks have risen an average of 17% in the year after a midterm. (Marketwatch)


      "You're gonna go a little bonkers if you work 120 hours a week." - Elon Musk

      DID YOU KNOW?  It is now rumored that Amazon will split its 'second headquarters' into TWO centers creating 25,000 jobs in each.....stay tuned. What is Amazon looking for? Skilled labor, housing, public transportation and infrastructure......and a few tax break perhaps? Amazon employs 45,000 people in Seattle alone. (WSJ)

      DID YOU KNOW? Digital Real Estate is News Corp’s fastest-growing segment, contributing 44% of the total company (Earnings before Interest, Tax, Depreciation, & Amortization) EBITDA, almost 4X those of the company’s other segments individually largely due to the relatively low-cost nature of the business. Digital Real Estate accounts for around 45% of the company’s value, especially notable since the segment only accounts for about 14% of its total revenues. News Corp owns a 61.6% interest in the REA Group (Australia and Asia) and an 80% interest in Move Inc. (realtor.com in the U.S.). (Forbes)

      Upgrade Utopia...A Great Time to Act!

       

      While many buyers in the luxury real estate markets can freeze into a 'wait-and-see' mode when pricing and sales volume drop, those willing to upgrade could experience the ultimate buying opportunity. Here is why:


      1.  Imagine you live in a $4 million home, and the market is down 20%. You'd have to sell that home for around $3,2 million, a loss of around $800,000.  Assuming you are buying a $10 million home that is also down 20%, that home should cost $2 million less, a substantive savings of around $1.2 million net.

      2.  Assume you live in a $4 million home and the markets rise 20% allowing you to sell your home for $4.8 million. Unfortunately, if the market is up 20% across the board, that $10 million home you wish to upgrade to will now cost $12 million.....it will cost you $1.2 million MORE.

      Applying BALANCE SHEET MENTALITY to your real estate needs is always wisest. Your lifetime real estate is mostly not about a single transaction. While we await election results, equity market and rising interest rates clarification, trade-war results, price-cuts, equity market roller-coasters, extreme media sensationalism 24-7 and the true results of the tax bill, opportunity always exists. Always!

       

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