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      A Lack of Inventory Continues to Impact the Housing Market

      A Lack of Inventory Continues to Impact the Housing Market | MyKCM

      The housing crisis is finally in the rear-view mirror as the real estate market moves down the road to a complete recovery. Home values are up and distressed sales (foreclosures and short sales) have fallen to their lowest point in years. The market will continue to strengthen in 2019.

      However, there is one thing that may cause the industry to tap the brakes: a lack of housing inventory! Buyer demand naturally increases during the summer months, but supply has not kept up.

      Here are the thoughts of a few industry experts on the subject:

      Lawrence Yun, Chief Economist at National Association of Realtors

      “Further increases in inventory are highly desirable to keep home prices in check, the sustained steady gains in home sales can occur when home price appreciation grows at roughly the same pace as wage growth.”

      Jessica Lautz, Vice President of NAR

      “There’s a supply-demand mismatch… More inventory is needed at the lower end and a price reduction may be needed at the upper end.”

      Danielle Hale, Chief Economist of Realtor.com

      “Heading into spring, U.S. prices are expected to continue to rise and inventory is expected to continue to increase, but at a slower pace than we’ve seen the last few months as fewer sellers want to contend with this year’s more challenging conditions… A buyer’s experience will vary notably depending on the market and price point they’re targeting.”

      Bottom Line

      If you are thinking of selling, now may be the time! Demand for your house will be strong at a time when there is very little competition. That could lead to a quick sale for a really good price!

       

      « A Tale of Two Markets [INFOGRAPHIC]

       

      The information contained, and the opinions expressed, in this article are not intended to be construed as investment advice. Keeping Current Matters, Inc. does not guarantee or warrant the accuracy or completeness of the information or opinions contained herein. Nothing herein should be construed as investment advice. You should always conduct your own research and due diligence and obtain professional advice before making any investment decision. Keeping Current Matters, Inc. will not be liable for any loss or damage caused by your reliance on the information or opinions contained herein.

      Home Buyers are Optimistic About Homeownership!

      Home Buyers are Optimistic About Homeownership! | MyKCM

      When we consider buying an item, we naturally go through a research process prior to making our decision. We ask our friends and family members who have made similar purchases about their experience, we get opinions and insights, and we read reviews online. There’s no difference when considering a home purchase!

      Most home buyers start by listening to the news to hear what is being said about the real estate market. They check with family and friends about their experience. They spend time online reading reviews about their desired neighborhood.

      The challenge is that comments from the news and those closest to us can contradict the data and reports. One source says one thing, while another source says something completely different.

      There is a group of homebuyers that are not allowing comments about an upcoming recession to interfere with their decision to buy a home. According to a survey by realtor.com®,

      Nearly 70 percent of home shoppers this spring think the U.S. will enter a recession in the next three years, but that hasn’t stopped them from trying to close on a home…Despite the fact that they foresee an economic downturn, they generally expressed confidence that a future recession will be better than 2008 for the housing market.”

      The report provides more insights from the survey:

      • Nearly 30% of the active home shoppers* surveyed expect the next recession to begin sometime in 2020.
      • 56% of shoppers believe home prices have hit their peak.
      • 41% believe housing will fare better than in 2008.
      • 45% of home shoppers feel at least slightly more optimistic about homeownership.
      • 33% reported no impact on their feelings about homeownership.

      Homebuyers are aware and making decisions with their eyes wide-open. As the report mentioned,

      “The fact that some [36%] home shoppers expect the next recession to be harder on the housing market than the last recession suggests that they are buying homes with eyes wide-open and very sober, if not slightly pessimistic, views of the housing market.

      This is a stark contrast to the years leading up to the last recession when ‘irrational exuberance’ was more common and yet another reason to expect that the next downturn will be very different for the housing market than the last.”

      Bottom Line

      If you are considering buying a home, let’s get together to help you understand our local market and determine if buying a home is the right choice for you now.

      *Active home shoppers are those consumers who responded that they plan to purchase their next home in 1 year or less.

      How to Put Your Housing Cost to Work for You

      How to Put Your Housing Cost to Work for You | MyKCM

      There has been a lot written about the benefits of homeownership. One benefit that continues to rise to the top is the added wealth homeowners gain simply by paying their mortgage while their home increases in value over time.

      The National Association of Realtors (NAR) recently broke down the equity gained from price appreciation and principal payments in their Economists Outlook Blog. Homeowners who purchased their homes five years ago have already gained almost $80,000 in equity over that time with 80% of the gains coming from price appreciation.

      For a homeowner who purchased their home 30 years ago, they have gained nearly $250,000 in equity with 70% coming from price increases. The full results can be seen in the chart below.

      How to Put Your Housing Cost to Work for You | MyKCM

      According to the Home Price Expectation Survey, a family who purchased a median priced home this January can expect to gain more than $42,000 over the next five years simply from price appreciation alone.

      Bottom Line

      Your home is one of the only investments you can live inside as you pay it off over time. If you are ready to use your housing costs to build wealth, let’s get together to discuss how to make your dream a reality.

      Hallways in Your Home

      Hallways

      Often I am amazed at how overlooked some hallways are. These are the hallways within homes and as well as those that lead up to apartments. Too often a hallway is treated like a neglected cousin, and in doing so a tremendous opportunity may be overlooked.

       

      Yesterday while approaching an apartment I noticed the hallway from the elevator to the apartment was simply bland at best. Maybe this was part of the architect's 'vision', and maybe this may read well in a publication, but from a human perspective I found the experience somewhat depressing..... and a lost opportunity. That 'lead-up' that a hallway provides to an entry or the transition to another room or set of rooms has the ability to set a tone or build up excitement of what is to come. Hallways should be viewed as (mostly) narrower rooms, not wasted space.

       

      So what can be done to enhance a hallway? Smaller art pieces are perfectly suited to this setting, the kind that you'd like to view close-up. A collection of family/friend photos works well too, especially artfully displayed. Take note of the flooring, the lighting, maybe a wall covering that sets a more intimate and inviting message? Maybe a wider internal hallway has the capacity to house a small home office? Hallways are decorating opportunities, not unusable annoyances. They can be decorated beautifully and also engineered to accommodate specific uses.

       

      Look closely at all hallways, especially those that lead up to a home: they often set the tone for a showing as the rooms are revealed. First impressions matter. Pauses between rooms matter too.

       

      Have a terrific Tuesday!

      Happy Halloween! I hope you have a fun day today.

      DID YOU KNOW? Year-over-year gains in home prices fell below 6%, according to the latest S&P CoreLogic Case-Shiller National Home Price NSA Index. The index rose 5.8% from August 2017 to August 2018, down from last month’s annual gain of 6%. Yet home-price gains remain WELL above wage gains. (CNBC)

      DID YOU KNOW? The number of new and existing houses and condominiums sold in Southern California during September dropped nearly 18% compared with 2017, the slowest September pace since 2007, mostly attributed to rising prices and interest rates. Sales fell 22% in September compared with August. (Sales usually fall about 10% from August to September.) Sales of newly built (Higher priced)homes were 47% below the September average dating back to 1988, while sales of existing homes were 22% below their long-term average. While the median sale price was up 3.6% year over year in September, the principal and interest mortgage payment on the median-priced home was up 14.2% because mortgage rates increased about 0.8 percentage point over that period. (CNBC)

      "I don't expect a sharp turn in the housing market at this point." - Robert Shiller, Case-Shiller Index

      DID YOU KNOW? Apple product prices are going up. Airlines are paying about 40% more for fuel than a year ago and raising fares. Trucking costs are up 7% annually. U.S. manufacturers are paying roughly 8% more for aluminum, 38% more for steel. 15% more for Chinese-made quartz countertops, 10% more for imported cabinets because of tariffs, than a year ago. Paint supplier Sherwin-Williams raised prices in its own stores up to 6% in October. A Big Mac costs 4.7% more and a Domino's Pizza 5.9%more. "They" say inflation is around 2%. Hmmmmm...... (WSJ)

      "There are only 3 times you should rent a home instead of buy: 1) If you plan to move in 3 years or less  2) If you're not sure about your job  3) You plan to have kids or will need more space." - David Bach, AE Wealth Managment

      Compass Contemplations for Thursday

       

      DID YOU KNOW? Housing starts fell 5.3% in September from the prior month to a seasonally adjusted annual rate of 1.201 million, according to the Commerce Department. Residential building permits, which can signal how much construction is in the pipeline, also fell, declining 0.6% from August to an annual pace of 1.241 million last month. Housing-starts data are volatile from month to month and can be subject to large revisions. September’s 5.3% drop for starts came with a margin of error of 11.3 percentage points. (WSJ)


      DID YOU KNOW? U.S. home-builder confidence ticked up in October after pulling back from a multi-decade high in recent months. (WSJ)

       

      DID YOU KNOW?  Household wealth in the U.S. continues to surge. China has replaced Japan in 2nd place. Aggregate global wealth rose by $14 trillion to $317 trillion in the 12 months prior to mid-year 2018, a 4.6% growth rate. Rising wealth was largely due to increases in non-financial assets owned by the middle-class. Total wealth and wealth per adult in the U.S. have grown every year since 2008, even when total global wealth suffered a reversal in 2014 and 2015. The U.S. has accounted for 40% of all increments to world wealth since 2008, and 58% of the rise since 2013. (Global Wealth Report 2018)

       

      DID YOU KNOW? Consumers filed the fewest requests for a mortgage since late 2014 last week as most home borrowing costs reached their highest levels in more than 7 years.

       

      DO YOU WANT PROOF? .....of how every "Compass experience" matters?  This summer, a Compass Agent in LA successfully and smoothly sold the home of their clients. Those clients then asked their agent if perhaps they knew a Compass agent in New York who could help sell their parents apartment on the Upper East Side. It had been on the market for quite some time with a different agent at a different firm and they felt they had such a positive experience with Compass LA they wanted to try a change ......this time with Compass New York. With the introduction to Compass NY and an agent who specializes on the Upper East Side, the home was re-listed, staged, and beautified. After just 13 days on the market, it entered into a contract and closed within 45 days. There is no better public relation for ALL of us if we ALL focus on QUALITY EXPERIENCES AND RESULTS.

      Rent or Buy: Either Way You're Paying A Mortgage!

      Rent or Buy: Either Way Youre Paying A Mortgage! | MyKCM

      There are some people who have not purchased homes because they are uncomfortable taking on the obligation of a mortgage. Everyone should realize, however, that unless you are living with your parents rent-free, you are paying a mortgage – either yours or your landlord’s.

      As Entrepreneur Magazine, a premier source for small business explained in their article, “12 Practical Steps to Getting Rich”:

      “While renting on a temporary basis isn’t terrible, you should most certainly own the roof over your head if you’re serious about your finances. It won’t make you rich overnight, but by renting, you’re paying someone else’s mortgage. In effect, you’re making someone else rich.”

      With home prices rising, many renters are concerned about their house-buying power. Mark Fleming, Chief Economist at First Americanexplained:

      “Over the last three years, renter house-buying power has increased fast enough to keep pace with house price appreciation, so the share of homes that a renter can afford to buy has remained the same since 2015.

      Although mortgage rates are expected to rise, they are still low by historic standards, and real household incomes are the highest they have ever been. Assuming this trend continues, our measure of affordability, which takes into account income, interest rates, and house prices, indicates thathomeownership is still within reach for renters.”

      As an owner, your mortgage payment is a form of ‘forced savings’ which allows you to build equity in your home that you can tap into later in life. As a renter, you guarantee the landlord is the person building that equity.

      Interest rates are still at historic lows, making it one of the best times to secure a mortgage and make a move into your dream home. Freddie Mac’s latest report shows that rates across the country were at 4.51% last week.

      Bottom Line

      Whether you are looking for a primary residence for the first time or are considering a vacation home on the shore, now may be the time to buy.

      4 REAL Reasons Why We Buy A Home!

      4 REAL Reasons Why We Buy A Home! | MyKCM

      We often talk about why it makes financial sense to buy a home, but more often than not, the emotional reasons are the more powerful or compelling ones.

      No matter what shape or size your living space is, the concept and feeling of home can mean different things to different people. Whether it’s a certain scent or a favorite chair, the emotional reasons why we choose to buy our own homes are typically more important to us than the financial ones.

      1. Owning your home offers you the stability to start and raise a family

      Between the best neighborhoods and the best school districts, even buyers without children at the time of purchase may have these things in mind as major reasons for choosing the locations of the homes that they purchase.

      2. There’s no place like home

      Owning your own home offers you not only safety and security, but also a comfortable place that allows you to relax after a long day!

      3. You have more space for you and your family

      Whether your family is expanding, an older family member is moving in, or you need to have a large backyard for your pets, you can take this all into consideration when buying your dream home!

      4. You have control over renovations, updates, and style

      Looking to actually try one of those complicated wall treatments that you saw on Pinterest? Tired of paying an additional pet deposit in your apartment building? Or maybe you want to finally adopt that puppy or kitten you’ve seen online 100 times? Who’s to say that you can’t do just that in your own home?

      Bottom Line

      Whether you are a first-time homebuyer or a move-up buyer who wants to start a new chapter in your life, now is a great time to reflect on the intangible factors that make a house a 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.

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