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

       

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

      We recently shared that over the course of the last 12 months, home prices have appreciated by 7.0%. Over the same amount of time, interest rates have remained historically low which has allowed many buyers to enter the market.

      As a seller, you will likely be most concerned about ‘short-term price’ – where home values are headed over the next six months. As a buyer, however, you must not be concerned about price, but instead about the ‘long-term cost’ of the home.

      The Mortgage Bankers Association (MBA), Freddie Mac, and Fannie Mae all project that mortgage interest rates will increase by this time next year. According to CoreLogic’s most recent Home Price Index Report, home prices will appreciate by 4.7% over the next 12 months.

      What Does This Mean as a Buyer?

      If home prices appreciate by 4.7% over the next twelve months as predicted by CoreLogic, here is a simple demonstration of the impact that an increase in interest rate would have on the mortgage payment of a home selling for approximately $250,000 today:

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

      Bottom Line

      If buying a home is in your plan for 2018, doing it sooner rather than later could save you thousands of dollars over the terms of your loan.

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      3 Tips for Making Your Dream Home a Reality [INFOGRAPHIC]

       

      3 Tips for Making Your Dream Home a Reality [INFOGRAPHIC] | MyKCM

      Some Highlights:

      • Realtor.com shared their “5 Habits to Start Now If You Hope to Buy a Home.”
      • Setting up an automatic savings plan that saves a small amount of every check is one of the best ways to save without thinking a lot about it.
      • Living within a budget will not only help you save money for down payments but will help you pay down other debts that might be holding you back.

      Feeling ?Stuck in Place'? You Aren't Alone? And There's Hope!

      Feeling 'Stuck in Place'? You Aren't Alone... And There's Hope! | MyKCM

      Whether you are a renter who is searching for your dream home or a homeowner who feels like your only option is to renovate, you have at least one thing in common: feeling stuck in place.

      According to data from the National Association of Realtors’ Profile of Home Buyers & Sellers, the average amount of time that a family stays in their home remained at 10 years in 2017. This mark ties the highest marks set in 2014 and 2016. Back in 1985, when data was first collected on this subject, homeowners stayed in their homes for an average of only 5 years.

      There are many reasons why homeowners have decided to stay and not to sell. A recent Wall Street Journal article had this to say,

      “Americans aren’t moving in part because inventory levels have fallen near multidecade lows and home prices have risen to records. Many homeowners are choosing to stay and renovate, in turn making it more difficult for renters to enter the market.” 

      Sam Khater, Deputy Chief Economist for CoreLogic, equated the lack of inventory to “not having enough oil in your car and your gears slowly [coming] to a grind.”

      Historically, a normal market (in which prices increase at the rate of inflation) requires a 6-7 month supply of inventory. There hasn’t been that much supply since August of 2012! Over the course of the last 12 months, inventory has hovered between a 3.5 to 4.4-month supply, meaning that prices have increased and buyers are still out in force!

      Challenges in the new-home construction market have “helped create a bottleneck in the market in which owners of starter homes aren’t trading up to newly built homes, which tend to be pricier, in turn creating a squeeze for millennial renters looking to get into the market.”

      “Economists said baby boomers also aren’t in a hurry to trade in the dream homes they moved into in middle age for condominiums or senior living communities because many are staying healthy longer or want to remain near their children.”

      So, what can you do if you feel stuck & want to move on?

      Don’t give up! If you are looking to move-up to an existing luxury home, there are deals to be had in the higher-priced markets. Demand is strong in the starter and trade-up home markets which means that your house will sell quickly. Let’s work together to build in contingencies that allow you more time to find your dream home; the right buyer will wait.

      Mortgage Interest Rates Are Going Up? Should I Wait to Buy?

      Mortgage interest rates, as reported by Freddie Mac, have increased over the last several weeksFreddie Mac, along with Fannie Mae, the Mortgage Bankers Association and the National Association of Realtors, is calling for mortgage rates to continue to rise over the next four quarters.

      This has caused some purchasers to lament the fact that they may no longer be able to get a rate below 3.5%. However, we must realize that current rates are still at historic lows.

      Here is a chart showing the average mortgage interest rate over the last several decades:

      Mortgage Interest Rates Are Going Up... Should I Wait to Buy? | MyKCM

      Bottom Line

      Though you may have missed getting the lowest mortgage rate ever offered, you can still get a better interest rate than your older brother or sister did ten years ago, a lower rate than your parents did twenty years ago, and a better rate than your grandparents did forty years ago.

      Low Inventory Causes Home Prices to Maintain Fast Growth

      Low Inventory Causes Home Prices to Maintain Fast Growth | MyKCM

      The National Association of Realtors (NAR) released their latest Quarterly Metro Home Price Report last week. The report revealed that severely lacking inventory across the country drained sales growth and kept home prices rising at a steady clip in nearly all metro areas. Home prices rose 5.3% over the last quarter across all metros.

      Lawrence Yun, Chief Economist at NAR, discussed the impact of low inventory on buyers in the report:

      “Unfortunately, the pace of new listings were unable to replace what was quickly sold. Home shoppers had little to choose from, and many had to outbid others in order to close on a home. The end result was a slowdown in sales from earlier in the year, steadfast price growth and weakening affordability conditions.”

      What this means to sellers

      Rising prices are a homeowner’s best friend. As reported by the Washington Post in a recent article post:

      “The rise in median sales prices has made current homeowners much more willing to sell their home, and that willingness is one of the main drivers behind the inventory that does make it on to the market. While it hasn’t been enough to meet demand, it has made the situation much better, compared with even three or four years ago.”

      What this means to buyers

      In a market where prices are rising, buyers should take into account the cost of waiting. Obviously, they will pay more for the same house later this year or next year. However, as Construction Dive reported, the amount of cash needed to purchase that home will also increase.

      “These factors have created a situation where the market keeps moving the goalposts in terms of the down payment necessary for first-time homebuyers to get into a home.”

      Bottom Line 

      If you’re thinking of selling and moving down, waiting might make sense. If you are a first-time buyer or a seller thinking of moving up, waiting probably doesn’t make sense.

      Why Sell Now Instead of Later? The Buyers are Out Now!

      Why Sell Now instead of Later? The Buyers are Out Now | MyKCM

      Each year, most homeowners wait until the spring to sell their houses because they believe that they can get a better deal during the normal spring buyer’s market. However, recently released data suggests that a seller’s best deal may be available right now. The concept of ‘supply & demand’ reveals that the best price for an item will be 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 for over a year. A normal market requires six months of housing inventory to meet the demand. The latest report from the National Association of Realtors (NAR) revealed that there is currently only a 4.2-month supply.

      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 out looking at homes) disclosed that there are more buyers right now than at any other time in the last twelve months. This includes more buyers looking at homes right now than at any time during last year’s spring market.

      Demand is currently very high!! 

      Bottom Line

      Waiting until the spring to list your house for sale made sense in the past. This year is different. The best deal is probably available right now.

      Buying Remains Cheaper Than Renting in 39 States, including MA!

      Buying Remains Cheaper Than Renting in 39 States! | MyKCM

      In the latest Rent vs. Buy Report from Trulia, they explained that homeownership remains cheaper than renting with a traditional 30-year fixed rate mortgage in the 100 largest metro areas in the United States.

      The updated numbers show that the range is an average of 3.5% less expensive in San Jose (CA), all the way up to 50.1% less expensive in Baton Rouge (LA), and 33.1% nationwide!

      A study by GoBankingRates looked at the cost of renting vs. owning a home at the state level and concluded that in 39 states, it is actually ‘a little’ or ‘a lot’ cheaper to own (represented by the two shades of blue in the map below).

      Buying Remains Cheaper Than Renting in 39 States! | MyKCM

      One of the main reasons owning a home has remained significantly cheaper than renting is the fact that interest rates have remained at or near historic lows. Freddie Mac reports that the current interest rate on a 30-year fixed rate mortgage is 3.91%.

      Nationally, rates would have to reach 9.1%, a 128% increase over today’s average of 4.0%, for renting to be cheaper than buying. Rates haven’t been that high since January of 1995, according to Freddie Mac.

      Bottom Line

      Buying a home makes sense socially and financially. If you are one of the many renters who would like to evaluate your ability to buy this year, let’s get together and find you your dream home.

      More Than Half of All Buyers Are Surprised by Closing Costs

      More Than Half of All Buyers Are Surprised by Closing Costs | MyKCM

      According to a survey conducted by ClosingCorp, over half of all homebuyers are surprised by the closing costs required to obtain their mortgage.

      After surveying 1,000 first-time and repeat homebuyers, the results revealed that 17% of homebuyers were surprised that closing costs were required at all, while another 35% were stunned by how much higher the fees were than expected.

      “Homebuyers reported being most surprised by mortgage insurance, followed by bank fees and points, taxes, title insurance and appraisal fees.”

      Bankrate.com gathered closing cost data from lenders in every state and Washington, D.C. in order to share the average costs in each state. The map below was created using the closing costs on a $200,000 mortgage with a 20% down payment.

      More Than Half of All Buyers Are Surprised by Closing Costs | MyKCM

      Keep in mind that if you are in the market for a home above this price range, your costs could be significantly greater. According to Freddie Mac,

      “Closing costs are typically between 2 and 5% of your purchase price.”

      Bottom Line

      Speak with your lender and agent early and often to determine how much you’ll be responsible for at closing. Finding out that you’ll need to come up with thousands of dollars right before closing is not a surprise anyone is ever looking forward to.

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      Why Are So Few Homes for Sale?

      Why Are So Few Homes for Sale? | MyKCM

      There is no doubt that the largest challenge in today’s housing market is a lack of housing inventory for sale. This challenge has been defined as an “overwhelming lack of supply,” and even a “straight up inventory crisis.”

      First American just released the results of a survey which sheds light on the reasons for the current lack of supply.

      The survey asked title agents and real estate professionals to identify what they believe are the top reasons for this lack of inventory in their markets. Here are the results of the survey:

      • 47% - existing homeowners are worried that they will not be able to find a home to buy
      • 5% - first-time buyer demand is absorbing a large share of available homes
      • 3% - existing homeowners’ mortgage rates are lower than the current rates
      • 6% - insufficient or negative equity in the home
      • 6% - foreign buyer demand is absorbing a large share of available homes

      As the survey revealed, there is a shortage of current homeowners willing to put their homes on the market for one of three reasons (see numbers 1, 3 and 4 above).

      Is this an opportunity for some homeowners?

      The report on the survey explains:

      “The crowd has spoken, and it seems in many markets home buyers and sellers alike are ‘imprisoned’ by the lack of housing inventory."

      That leaves a tremendous opportunity for every homeowner not facing these concerns. If you can put your home on the market today, you are subject to far less competition than at any time in recent history. That will result in your home selling quickly and for the highest possible price.

      Bottom Line

      While many homeowners are feeling imprisoned for multiple reasons, those who are not handcuffed by these concerns have a once in a lifetime opportunity to sell their houses at a peak selling time.

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