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      Buyer's Market Helps Premium Home Sales Soar

      Buyer's Market Helps Premium Home Sales Soar | MyKCM

      We previously reported how a shortage of inventory in the starter and trade-up home markets is driving prices up and causing bidding wars, creating a true seller’s market. At the same time, in the premium home market, an over-abundance of inventory has started to see prices come down and put buyers in the driver’s seat, creating the beginning of a buyer’s market.

      Last week, the National Association of Realtors released their Existing Home Sales Report which shed some additional light on the impact of inventory levels on sales in each price range.

      The chart below shows the year-over-year difference in sales at each price range.

      Buyer's Market Helps Premium Home Sales Soar | MyKCM

      The under $100K range has shown declines in recent years due to the shortage of distressed homes available for sale (just 5% of sales this past month, compared to 35% in January 2012). Sales in the next two price ranges are no doubt being hindered by low inventory as buyers compete for the same home.

      NAR’s Chief Economist, Lawrence Yun, explained:

      "Those able to close on a home last month are probably feeling both happy and relieved. Listings in the affordable price range are scarce, homes are coming off the market at an extremely fast pace and the prevalence of multiple offers in some markets are pushing prices higher."

      The biggest surprise? This is the first time in years where the $1M and up price range had the highest jump in sales when compared to last year and to all other price ranges (29.1%)! The two price ranges right underneath the $1M range were a close second and third. As the price went up, so did the sales!

      With additional inventory available in the higher price ranges, and the economy improving, many luxury buyers are finding it easier to find their dream homes. Yun commented,

      “The job market in most of the country is healthy and the recent downward trend in mortgage rates continues to keep buyer interest at a robust level.”

      Bottom Line

      If you are one of the many homeowners who is looking to sell your starter or trade up home and move up to a luxury home, now is the time!

      Buying Is Now 33.1% Cheaper Than Renting in the US

      Buying Is Now 33.1% Cheaper Than Renting in the US | MyKCM

      The results of the latest Rent VS Buy Report from Trulia show 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 actually 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!

      Other interesting findings in the report include:

      • Interest rates have remained low and, even though home prices have appreciated around the country, they haven’t greatly outpaced rental appreciation.
      • With rents & home values moving in tandem, shifts in the ‘rent vs. buy’ decision are largely driven by changes in mortgage interest rates.
      • 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 out there who would like to evaluate your ability to buy this year, let's get together to find your dream home.

       

      Gallup: Real Estate is Best Long-Term Investment 4 Years Running

      Gallup: Real Estate is Best Long-Term Investment 4 Years Running | MyKCM

      Every year, Gallup surveys  Americans to determine their choice for the best long-term investment. Respondents are given a choice between real estate, stocks/mutual funds, gold, savings accounts/CDs, or bonds.

      For the fourth year in a row, Real Estate has come out on top as the best long-term investment! This year’s results showed that 34% of Americans chose real estate, followed by stocks at 26%. The full results are shown in the chart below.

      Gallup: Real Estate is Best Long-Term Investment 4 Years Running | MyKCM

      The study makes it a point to draw attention to the contrast of the sentiment over the last four years compared to that of 2011-2012 when gold took the top slot with 34% of the votes. Real estate and stocks took second and third place, respectively, while still in recovery from the Great Recession.

      Bottom Line

      As the real estate market has recovered, so has the belief of the American people in the stability of housing as a long-term investment.

      Real Estate Mogul: Here's Why You Should Buy

       

      Real Estate Mogul: Here’s Why You Should Buy | MyKCM

      Real Estate mogul, Sean Conlon, host of The Deed: Chicago on CNBC, was recently asked the question, should you buy? Or should you rent a house?

      Conlon responded:

      “I am a true believer that you save every penny and you buy your first house… and that is still the fastest path to wealth in this country.”

      Conlon went on to suggest that first-time buyers put down 10-20% “if they can make it work,” and to remain in their home at least 4-5 years to see a return on their investment.

      Who is Sean Conlon, and why should you listen to his advice?

      Within a few years of working in the real estate industry, Conlon had established himself as one of the leading agents in the United States and has founded 3 billion-dollar brokerages dealing in residential, commercial and investment sales. Since immigrating to America from the United Kingdom in 1990, he believes very strongly in the American Dream and the role that homeownership plays in achieving it. Conlon is quoted on his website as saying:

      “I treat people the way I would like to be treated if I went in to buy a house and I work harder than anybody I know. I think if you do that in America, you will always succeed.”

      Bottom Line

      Homeownership is an investment you can leverage against in the future that not only provides shelter and safety but also helps you build your family’s wealth. If you are debating whether or not to purchase a home this year, let’s get together to discuss the opportunities available in today’s market!

      Millennials Flock to Low Down Payment Programs

      Millennials Flock to Low Down Payment Programs | MyKCM

      A recent report released by Down Payment Resource shows that 65% of first-time homebuyers purchased their homes with a down payment of 6% or less in the month of January.

      The trend continued through all buyers with a mortgage, as 62% made a down payment of less than 20%, which is consistent with findings from December.

      An article by DS News points to the new wave of millennial homebuyers:

      “It seems that the long-awaited influx of millennial home buyers is beginning. Ellie Mae reported that mortgages to millennial borrowers for new home purchases continued their ascent in January, accounting for 84 percent of closed loans.”

      Among millennials who purchased homes in January, FHA loans remained popular, making up 35% of all loans closed. Ellie Mae’s Executive Vice President of Corporate Strategy Joe Tyrrell gave some insight into why:

      “It is not surprising to see Millennial borrowers leverage FHA loans because they typically offer lower down payments and lower average FICO score requirements than conventional loans. Across the board, we're continuing to see strong interest in homeownership from this younger generation.”

      Bottom Line

      If you are one of the many millennials who is debating a home purchase this year, let's get together to help you understand your options and set you on the path to preapproval.

      The Importance of Using a Professional to Sell Your Home

      The Importance of Using a Professional to Sell Your Home | MyKCM

      When a homeowner decides to sell their house, they obviously want the best possible price for it with the least amount of hassles along the way. However, for the vast majority of sellers, the most important result is actually getting their homes sold.

      In order to accomplish all three goals, a seller should realize the importance of using a real estate professional. We realize that technology has changed the purchaser’s behavior during the home buying process. According to the National Association of Realtors’ 2016 Profile of Home Buyers & Sellers, the percentage of buyers who used the internet in their home search increased to 94%.

      However, the report also revealed that 96% of buyers who used the internet when searching for homes purchased their homes through either a real estate agent/broker or from a builder or builder’s agent.Only 2% purchased their homes directly from a seller whom the buyer didn’t know.

      Buyers search for a home online but then depend on an agent to find the home they will buy (50%), to negotiate the terms of the sale (47%) & price (36%), or to help understand the process (61%).

      The plethora of information now available has resulted in an increase in the percentage of buyers that reach out to real estate professionals to “connect the dots.” This is obvious, as the percentage of overall buyers who have used agents to buy their homes has steadily increased from 69% in 2001.

      Bottom Line

      If you are thinking of selling your home, don’t underestimate the role a real estate professional can play in the process.

       

      Renting or Buying? Either Way You're Paying a Mortgage

      Renting or Buying… Either Way You’re 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 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 this month 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.”

      Christina Boyle, Senior Vice President and head of the Single-Family Sales & Relationship Management organization at Freddie Mac, explains another benefit of securing a mortgage vs. paying rent:

      “With a 30-year fixed rate mortgage, you’ll have the certainty & stability of knowing what your mortgage payment will be for the next 30 years – unlike rents which will continue to rise over the next three decades.”

      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 with 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 4.23% 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.

      US Housing Market Is Moving into 'Buy Territory'!

      US Housing Market Is Moving into 'Buy Territory'!

      US Housing Market Is Moving into 'Buy Territory'! | MyKCM

      According to the Beracha, Hardin & Johnson Buy vs. Rent (BH&J) Index, the U.S. housing market has continued to move deeper into buy territory, supporting the belief that housing markets across the country remain a sound investment.

      The BH&J Index is a quarterly report that attempts to answer the question:

      In today’s housing market, is it better to rent or buy a home?

      The index examines the entire US housing market and then isolates 23 major cities for comparison. The researchers “measure the relationship between purchasing property and building wealth through a buildup in equity versus renting a comparable property and investing in a portfolio of stocks and bonds.” 

      While most of the metropolitan markets examined moved further into buy territory (16 of the 23), markets like Dallas, Denver, and Houston are currently deep into rent territory. In these three markets, it is estimated that renting will top homeownership 7 out of 10 times.

      Due to a lack of inventory, the home prices in the Dallas, Denver, and Houston areas have increased by 11.6%8.3%, and 6.6% respectively. Home prices in these areas will begin to return to more normal levels once residents realize that renting is not the best option, therefore bringing home affordability back as well.

      Bottom Line

      The majority of the country is strongly in buy territory. Buying a home makes sense socially and financially, as rents are predicted to increase substantially in the next year. Protect yourself from rising rents by locking in your housing cost with a mortgage payment now.

      To Find Out More About the Study: The BH&J Index and other FAU real estate activities are sponsored by Investments Limited of Boca Raton. The BH&J Index is published quarterly and is available online at http://business.fau.edu/buyvsrent.

      Are You 1 of the 59 Million Planning to Buy This Year?

      Are You 1 of the 59 Million Planning to Buy This Year?

      Are You 1 of the 59 Million Planning to Buy This Year? | MyKCM

      According to a survey conducted by Bankrate.com, one in four Americans are considering buying a home this year. If this statistic proves to be true, that means that 59 million people will be looking to enter the housing market in 2017.

      The survey also revealed 3 key takeaways:

      1. Those most likely to buy are ‘Older Millennials’ (ages 27-36) or ‘Generation X’ (ages 37-52)
      2. Minorities, particularly African-Americans, were twice as likely to respond that they were considering purchasing a home this year than white respondents.
      3. Many potential buyers believe they need to put 20% down and need to have perfect credit to own and are unaware of programs that would allow them to buy now.

      Holden Lewis, a mortgage analyst for Bankrate.com, pointed to one big reason why many Americans are starting to consider homeownership:

      “Having kids and raising a family is a primary reason why Americans take the leap into homeownership—many consider it a key component of the American dream.”

      Bottom Line

      If buying a home is a part of your dream for 2017, let’s get together to determine if you are able to

      3 Questions to Ask If You Want to Buy Your Dream Home

      3 Questions to Ask If You Want to Buy Your Dream Home

      3 Questions to Ask If You Want to Buy Your Dream Home | MyKCM

      If you are debating purchasing a home right now, you are probably getting a lot of advice. Though your friends and family will have your best interest at heart, they may not be fully aware of your needs and what is currently happening in the real estate market.

      Ask yourself the following 3 questions to help determine if now is a good time for you to buy in today’s market.

      1. Why am I buying a home in the first place? 

      This is truly the most important question to answer. Forget the finances for a minute. Why did you even begin to consider purchasing a home? For most, the reason has nothing to do with money.

      For example, a survey by Braun showed that over 75% of parents say “their child’s education is an important part of the search for a new home.”

      This survey supports a study by the Joint Center for Housing Studies at Harvard University which revealed that the top four reasons Americans buy a home have nothing to do with money. They are:

      • A good place to raise children and for them to get a good education
      • A place where you and your family feel safe
      • More space for you and your family
      • Control of that space

      What does owning a home mean to you? What non-financial benefits will you and your family gain from owning a home? The answer to that question should be the biggest reason you decide to purchase or not.

      2. Where are home values headed?

      According to the latest Existing Home Sales Report from the National Association of Realtors (NAR), the median price of homes sold in December (the latest data available) was $232,200, up 4.0% from last year. This increase also marks the 58th consecutive month with year-over-year gains.

      If we look at the numbers year over year, CoreLogic forecasted a rise by 4.7% from December 2016 to December 2017. On a home that costs $250,000 today, that same home will cost you an additional $11,750 if you wait until next year.

      What does that mean to you?

      Simply put, with prices increasing each month, it might cost you more if you wait until next year to buy. Your down payment will also need to be higher in order to account for the higher price of the home you wish to buy.

      3. Where are mortgage interest rates headed?

      A buyer must be concerned about more than just prices. The ‘long-term cost’ of a home can be dramatically impacted by even a small increase in mortgage rates.

      The Mortgage Bankers Association (MBA), the National Association of Realtors, and Fannie Mae have all projected that mortgage interest rates will increase over the next twelve months, as you can see in the chart below:

      3 Questions to Ask If You Want to Buy Your Dream Home | MyKCM

      Bottom Line

      Only you and your family will know for certain if now is the right time to purchase a home. Answering these questions will help you make that decision.

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