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      Compass Contemplations for Monday

      Good morning,

      Wishing all of those in California, particularly in our Compass family,  well,  who are experiencing a heatwave and wildfires. Death Valley near the border of Nevada recorded a temperature of 130 degrees! 

      DID YOU KNOW? More than 25% of U.S. colleges plan to begin fall instruction fully or mostly online, but many are still opening up their dorms. Some are limiting space to those students with housing insecurity or other hardships. Some, like Washington State University in Pullman, Wash., plan to offer housing to students who fit into a number of defined categories, such as veterans or those with on-campus jobs. Other online-only campuses, like the University of California, Berkeley, say they’re still accepting housing applications. Some may change plans at the 11th hour, as the University of Massachusetts, Amherst, did less than 3 weeks before classes were to begin, with an announcement that it would no longer allow students whose classes are held remotely to move into the dorms. (NY TIMES)

      DID YOU KNOW? Fewer Floridians filed for unemployment last week than any other week since mid-March, a hopeful sign. Leisure and hospitality accounts for 40% of the USA’s long term pandemic unemployment. Destinations Florida showed tourism revenue was down more than 80%. Tourism is roughly a little under 3% of US GDP.....but in Florida, it's closer to 10%. Tourism generated roughly $26 billion in tax receipts in 2018 in Florida which helps fund schools, improve healthcare and supports other government services.

      DID YOU KNOW? Commercial real-estate loans make up around 22% of U.S. banks’ total loans. 
      For the 5 years preceding the beginning of the pandemic, global commercial real-estate investment ran to around $1 trillion a year. We might all wish for a return to the office for this reason alone..... (WSJ)

      DID YOU KNOW? In Hong Kong, CBRE expects a fall of more than 15% in top-tier office rents this year. The combination of political unrest and COVID are driving this. (WSJ)

      Where Did All The People Go?

       

      As I walk the streets of Manhattan, a question I hear asked repeatedly is: "Where are all the people?" This same question is being asked around the globe in larger towns and cities, more so in some areas than others. So I did a little research to help explain this highly unusual moment.....and this is what I discovered:


      1.  Big Cities are often NOT mostly locals.  Most bigger cities attract vast numbers of tourists and visitors, domestic and international. New York City attracts around 60 million people annually......that's around 5 million per month or 160,000-400,000 per day.  Cities like Chicago, Atlanta, Los Angeles, San Francisco, etc also attract huge numbers of visitors and tourists. Miami attracts over 23 million per year. That's a lot of people and most of them cannot or don't want to travel right now.

      2.  Big Cities attract tons of daily commuters. Manhattan alone attracts about 1.6 million workers per day. Many come from outside the city. Most larger cities don't house the majority of workers and these days many are working remotely.

      3.  Big Cities have big colleges and schools......most are shut right now for the Summer and COVID-19 precautions.

      4.  Big City dwellers house many residents with second homes or those who escape for a few weeks in the Summer. They are also out of cities right now.


      Add up the above and it's easier to understand why larger cities around the globe are not quite the same right now. But this will change. It's a matter of time. Not if, but when. Some say things will never be the same again, and I agree with that to a certain degree: Chances are we'll never again take for granted those (sometimes annoying) throngs of visitors, tourists, students, etc that are a critically important part of the fabric of the places we call home.....they are the VOLUME that drives commerce, jobs, growth and LIFE!


      Have a Magnificent Monday!

      Want to Make a Move? Homeowner Equity is Growing Year-Over-Year

      Want to Make a Move? Homeowner Equity is Growing Year-Over-Year | MyKCM

      One of the bright spots of the 2020 real estate market is the growth in equity homeowners are experiencing across the country. According to the recently released Homeowner Equity Insights Report from CoreLogic, in nearly every state there was a year-over-year first-quarter equity increase, averaging out to a 6.5% overall gain.

      The report notes:

      “CoreLogic analysis shows U.S. homeowners with mortgages (roughly 63% of all properties) have seen their equity increase by a total of nearly $590 billion since the first quarter of 2019, an increase of 6.5%, year over year.” (See map below):

      Want to Make a Move? Homeowner Equity is Growing Year-Over-Year | MyKCM

      This means that In the first quarter of 2020, the average homeowner gained approximately $9,600 in equity during the past year.”

      That’s a huge win for homeowners, especially for those looking to sell their houses and make a move this summer. Having equity to re-invest in your next home is a major force that can make moving a reality, especially while buyers are expressing such a high demand for homes to purchase.

      Below, Frank Martell, President, and CEO of CoreLogic addresses the potential long-term outlook, and how homeowners will likely fare much more positively through the current recession than many did during the last one:

      “Many homeowners will experience a recession during their lifetime, and it is reasonable to compare the current recession to those in the past. But the comparison is not apples to apples — every recession is different. Primary drivers of the Great Recession were an overbuilt housing stock, risky mortgages and the collapse of home prices, creating a massive increase in negative equity that proved difficult to recover from. Today’s housing environment has low vacancy and delinquency rates and a large home equity cushion.”

      Bottom Line

      Now is a great time to consider leveraging your equity and making a move, especially while buyer interest is high. Let’s connect to explore your equity position and make your next move a reality.

       

      COMPASS Contemplations for Wednesday

      DID YOU KNOW?  In celebration of Pride Month, Robert will be chatting with the Executive Director of GLSEN Eliza Byard TODAY at 4pm ET and their conversation will be live-streamed in the Compass Workplace group. GLSEN is an organization recognized worldwide as a pioneering leader in the fight for educational equity and in making sure that LGBTQ students are able to learn and grow in a school environment free from bullying. Thank you to Elizabeth Ann Stribling-Kivlan, OUT at Compass and Compass Cares for pulling together this event!

       

      DID YOU KNOW? Russian President Vladimir Putin now has a “disinfection tunnel” installed at one of his official residences to protect him from contracting the coronavirus. Could this become the next X-RAY machine we have become so accustomed to at airports?

       

      DID YOU KNOW? Mortgage applications to purchase a home rose 4% last week from the previous week and were a remarkable 21% higher than a year ago, the 9th consecutive week of gains and the highest volume in more than 11 years!  The average interest rate for a 30 year fixed-rate mortgage decreased to 3.30% from 3.38%  (CNBC)

       

      DID YOU KNOW? Retail sales, a measure of purchases at stores, at restaurants and online, increased a seasonally adjusted 17.7% in May from a month earlier. Expect more GOOD NEWS headlines like this over the next few weeks and months after weeks/months of bad headlines. While the higher you climb the further you can fall is true.....so too is it true that when you have fallen to a deep low, chances are it's up, up, up from there! (WSJ)

       

      DID YOU KNOW? Builder sentiment jumped a striking 21 points in June to 58, the largest monthly increase ever in the National Association of Home Builders/Wells Fargo Housing Market Index. Any reading above 50 indicates a positive market. In April, it plunged a record 42 points to 30. Of the index’s three components, current sales conditions jumped 21 points to 63. Sales expectations in the next six months rose 22 points to 68. Buyer traffic more than doubled from May to June, from 22 to 43.

       

      “The dollar is going to fall very, very sharply,” - Steven Roach, Yale University, citing growing debt and diminished savings. If this happens, could it spur a new wave of foreign buyers? Again, this is just one of many predictions/opinions.

       

      DID YOU KNOW?  The total of new COVID-19 cases from the top 5 states in the USA is 2.5X that of the next 5 states, to put things into perspective.  The top 5 states have a total population of around 108 million, while the next five have almost 47 million people. So the top 5 have a ratio of 78.7 new cases per million inhabitants. The next 5 have 71.7 new cases per million inhabitants. A cheap and widely-used steroid called dexamethasone has become the first drug shown to be able to save lives among COVID-19 patients in what scientists said is a “major breakthrough” in the coronavirus pandemic.

       

      DID YOU KNOW? Housing starts that measure how many single-family homes builders break ground on probably will fall to 770,000 this year, the lowest level since 2015, according to the NAR. The 1.47 million properties on the market at the end of April was the lowest ever recorded for the month, according to NAR data. Americans created 11.4 million households in the 10 years through 2019, according to Census data. Builders sold 5.2 million single-family homes in the same period. In the prior decade, they sold 10.4 million new houses. Supply disruptions and the COVID-19 lock downs that ensued have made the situation worse. (Housingwire)

      COMPASS Contemplations for Tuesday

      DID YOU KNOW? American biotech company Novavax has started the first human study of its experimental Coronavirus vaccine and expects initial results on safety and immune responses in July. Last week, Moderna reported positive development on its vaccine trial: all 45 participants had developed coronavirus antibodies. Merck plans to work alongside IAVI, a non-profit scientific research organization, to develop a potential vaccine against the Coronavirus. (CNBC)

      DID YOU KNOW? Lumber prices for July delivery are up 46% from a low on April 1 and 15% higher than a year ago, indicating a rebound in construction demand. With trade tensions with China worsening, don't expect construction costs to go down: the exact opposite is possible. (WSJ)

      DID YOU KNOW? Current cash levels are above a historical average dating back to 2005. Cash allocations have risen to nearly 14% for Bank of America clients. Over $1 Trillion could enter the markets soon..... the S&P 500 is up more than 35% since March 23. (CNBC)

      DID YOU KNOW? French GDP fell 5.8% in the three months to March, while Italy’s GDP contracted by 4.7%. In the previous quarter, their GDP fell by 0.1% and 0.3% respectively. GDP in Germany and the U.K. was down by around 2%, with GDP for the entire European Union shrinking by 3.3%. U.S. GDP fell by 1.2% in the first quarter, compared to 0.5% in the previous quarter. The second quarter could be as bad, if not worse as shutdowns extended. The World Bank has forecast a worldwide GDP contraction of 5% this year.....although I think we should always judge a year at the END of the year! After a big fall.....expect big rises!  I am optimistic!  (CNBC)

      DID YOU KNOW? Mortgage availability has tightened sharply as lenders impose tougher income, credit-score and down-payment conditions and drop some loan types altogether, such as home-equity lines of credit. If you have any clients seeking to buy now or over the next few months, be certain to evaluate their credit scores early and connect them with a 'credit clean-up' consultant ASAP to improve their score.but a strong credit score alone may not be enough, so pre-approving buyers early may be more important now than ever. JP Morgan Chase said it wouldn’t make loans without a 20% down payment or a credit score of 700 or above. Wells Fargo stopped allowing cash-out refinancing loans. (WSJ)

      6 Reasons Why Selling Your House on Your Own Is a Mistake

      6 Reasons Why Selling Your House on Your Own Is a Mistake | MyKCM

      There are many benefits to working with a real estate professional when selling your house. During challenging times like the one we face today, it becomes even more important to have an expert help guide you through the process. If you’re considering selling on your own, known in the industry as a For Sale By Owner or FSBO, please consider the following:

      1. Your Safety Is a Priority

      During this pandemic, your family’s safety comes first. When you FSBO, it is incredibly difficult to control entry into your home. A real estate professional will have the proper protocols in place to protect not only your belongings, but your family’s health and well-being too. From regulating the number of people in your home at one time to ensuring proper sanitization during and after a showing, and even facilitating virtual tours for buyers, agents are equipped to follow the latest industry standards recommended by the National Association of Realtors (NAR) to help protect you and your family.

      2. A Powerful Online Strategy Is a Must to Attract a Buyer

      Recent studies have shown that, even before COVID-19, the first step 44% of all buyers took when looking for a home was to search online. Throughout the process, that number jumped to 93%. Today, those numbers have grown exponentially. Most real estate agents have developed a strong Internet and social media strategy to promote the sale of your house. Have you?

      3. There Are Too Many Negotiations

      Here are just a few of the people you’ll need to negotiate with if you decide to FSBO:

      • The buyer, who wants the best deal possible
      • The buyer’s agent, who solely represents the best interest of the buyer
      • The inspection companies, which work for the buyer and will almost always find challenges with the house
      • The appraiser, if there is a question of value

      As part of their training, agents are taught how to negotiate every aspect of the real estate transaction and how to mediate the emotions felt by buyers looking to make what is probably the largest purchase of their lives.

      4. You Won’t Know if Your Purchaser Is Qualified for a Mortgage

      Having a buyer who wants to purchase your house is the first step. Making sure they can afford to buy it is just as important. As a FSBO, it’s almost impossible to be involved in the mortgage process of your buyer. A real estate professional is trained to ask the appropriate questions and, in most cases, will be intimately aware of the progress that’s being made toward a purchaser’s mortgage commitment. Further complicating the situation is how the current mortgage market is rapidly evolving because of the number of families out of work and in mortgage forbearance. A loan program that was there yesterday could be gone tomorrow. You need someone who is working with lenders every day to guarantee your buyer makes it to the closing table.

      5. FSBOing Has Become More Difficult from a Legal Standpoint

      The documentation involved in the selling process has increased dramatically as more and more disclosures and regulations have become mandatory. In an increasingly litigious society, the agent acts as a third-party to help the seller avoid legal jeopardy. This is one of the major reasons why the percentage of people FSBOing has dropped from 19% to 8% over the last 20+ years.

      6. You Net More Money When Using an Agent

      Many homeowners believe they’ll save the real estate commission by selling on their own. Realize that the main reason buyers look at FSBOs is because they also believe they can save the real estate agent’s commission. The seller and buyer can’t both save the commission. A study by Collateral Analytics revealed that FSBOs don’t actually save anything by forgoing the help of an agent. In some cases, the seller may even net less money from the sale. The study found the difference in price between a FSBO and an agent-listed home was an average of 6%. One of the main reasons for the price difference is effective exposure:

      “Properties listed with a broker that is a member of the local MLS will be listed online with all other participating broker websites, marketing the home to a much larger buyer population. And those MLS properties generally offer compensation to agents who represent buyers, incentivizing them to show and sell the property and again potentially enlarging the buyer pool.”

      The more buyers that view a home, the greater the chance a bidding war will take place.

      Bottom Line

      Listing on your own leaves you to manage the entire transaction yourself. Why do that when you can hire an agent and still net the same amount of money? Before you decide to take on the challenge of selling your house alone, let’s connect to discuss your options.

      #1 Financial Benefit of Homeownership: Family Wealth

       

      #1 Financial Benefit of Homeownership: Family Wealth | MyKCM

      While growing up, we were taught by our parents and grandparents that owning a home is a financially savvy move. They explained how a mortgage is like a “forced savings plan.” When you pay rent, that money is lost forever. When you make a mortgage payment, much of that money accumulates as equity in the home. So, what exactly is equity? The equity in your home is the amount of money you can sell it for minus what you still owe on the mortgage. Every month you make a mortgage payment, and every month a portion of what you pay reduces the amount you owe. That reduction of your mortgage every month increases your equity. A recent study by CoreLogic explained that homeowners gained substantial equity over the last twelve months, and are essentially sitting on large sums of cash in their homes. In the study, Frank Nothaft, Chief Economist for CoreLogic explained:
      “The CoreLogic Home Price Index recorded a quickening of home price gains during the fourth quarter of 2019, helping to boost home equity wealth. The average family with a mortgage had a $7,300 gain in home equity during the past year, and a total of $177,000 in home equity wealth.”
      For most families, their home is their largest financial asset. This increase in equity drives the net worth, or family wealth, of the homeowner. Renters are not earning that benefit. Instead, they’re building the net worth of their landlord.

      Bottom Line

      Home price growth will moderate during the pandemic. But once a cure is available, most experts agree that home values will again begin to appreciate at levels similar to what we’ve seen over the last several years. In the long run, our family elders will be proven correct: owning a home is a savvy financial move.

      Will the Housing Market Turn Around This Year?

       

      Will the Housing Market Turn Around This Year? | MyKCM
       

      Today, many people are asking themselves if they should buy or sell a home in 2020. Some have shifted their plans or put them on hold over the past couple of months, and understandably so. Everyone seems to be wondering if the market is going to change and when the economy will turn around. If you’re trying to figure out what’s going to happen and how to play your cards this year, you’re not alone.

      This spring in the 2020 NAR Flash Survey: Economic Pulse, the National Association of Realtors (NAR) has been tracking the behavior changes of homebuyers and sellers. In a reaction to their most recent survey, Lawrence Yun, Chief Economist at NAR, noted the beginnings of a turn in the market:

      “After a pause, home sellers are gearing up to list their properties with the reopening of the economy…Plenty of buyers also appear ready to take advantage of record-low mortgage rates and the stability that comes with these locked-in monthly payments into future years.”

      What does the survey indicate about sellers?

      Sellers are positioning themselves to make moves this year. More than 3 in 4 potential sellers are preparing to sell their homes once stay-at-home orders are lifted and they feel more confident, which means more homes will start to be available for interested buyers.Will the Housing Market Turn Around This Year? | MyKCM

      Just this week, Zillow also reported an uptick in listings, which is great news for the health of the market:

      “The number of new for-sale listings overall has shown improvement, up 5.9% last week from the previous week. New listings of the most-expensive homes…are now seeing the biggest resurgence, up 8%. The uptick is likely a sign sellers are feeling more confident because of improving buyer demand, as newly pending sales have also jumped up during the same period.”

      What does the survey note about buyers?

      The recent pandemic has clearly impacted buyer preferences, showing:

      • 5% of the respondents said buyers are shifting their focus from urban to suburban areas.
      • 1 in 8 Realtors report changes in desired home features, with home offices, bigger yards, and more space for their families becoming increasingly important.
      • Only 17% said buyers stopped looking due to concerns about their employment or loss of a job.

      As we’ve mentioned before, buyer demand is strong right now, and many are simply waiting for more inventory to become available so they can make a move, especially as the country begins to reopen.

      Bottom Line

      If you’re thinking about putting your house on the market, let’s connect today. There’s a good chance an eager buyer is looking for a home just like yours.

      How Technology is Helping Buyers Navigate the Home Search Process

      How Technology is Helping Buyers Navigate the Home Search Process [INFOGRAPHIC] | MyKCM

      Some Highlights:

      • A recent realtor.com survey revealed that buyers are still considering moving forward with the homebuying process, even if they can’t see the home in-person.
      • While they still prefer to physically see a home, virtual home tours and accurate listing information top the list of tech specs buyers find most helpful in today’s process.
      • Let’s connect today to determine how technology can help power your home search.

      Compass Contemplations for Tuesday

      Good morning,

      DID YOU KNOW?  Not unlike prior crises, expect the government to step in with numerous stimulus measures today and over the next few days to offset potential economic damage from the Coronavirus. As of today, I would expect the number of cases to rise rather dramatically as much wider testing gets implemented. Till this weekend, the capacity to test was very limited. This does NOT necessarily mean the virus is spreading more as much as it means that with testing, we will have a much better data of who has the virus and who does not.

      "We are like Home Depot during a hurricane.” - Matt Weaver, Cross Country Mortgage, as the demand for refinancing and new mortgages soars.

      DID YOU KNOW? I thought this economic update from Rothschild Bank was worth repeating: "The economic damage is being done by the response to the virus, not the virus itself. Meanwhile, contagion in China (if we believe the WHO's data from that source) has followed the typical epidemic's "S"-shaped logistic curve and has now slowed markedly. There is no reason why contagion in the West should not eventually follow suit and do so in a matter of weeks rather than months."

      DID YOU KNOW? You can give as much as $15,000 to as many individuals as you wish (and your spouse can, too) without triggering any gift taxes. What’s more, the lifetime exemption from gift and estate taxes increases to $11.58 million in 2020 from $11.4 million in 2019. Often this is a source of first-time buyer down-payments! (WSJ)
       

      DID YOU KNOW? Affluent Americans who marry are more likely to pool six-figure incomes, buy homes and watch their assets grow. Among people aged 25 - 34, the median wealth of married couples is four times that of couples who live together but aren’t married. (WSJ)

      DID YOU KNOW?  if you really wish to take paranoia to an entirely new level, check out this site on daily and annual stats:  worldometers.info. Scary stuff, but maybe a good place to help you put everything into perspective.

      DID YOU KNOW?  Want to ZOLVE an appliance issue? Nearly 70% of homeowners try to fix or troubleshoot home products themselves when they break, according to a Centriq survey of 1,000 homeowners. More than half said they wanted information directly from manufacturers when they need to solve a problem, so they don't have to seek online themselves.  Zolve's database includes information from retailers and manufacturers on how to operate, fix and maintain products. The app will also alert you if the product you scan has an outstanding safety recall with the Consumer Products Safety Commission, or if one comes up in the future for any of the products you've added. Thanks to Payton Stiewe in San Francisco for sharing this! Maybe a good closing item?

       

      ANOTHER REMINDER:  Here is a checklist of things-to-do during this virus spread (most should be practiced all year round, anytime!):
      1. If you feel sick, stay home. Check for fever. Alert your physician. Get tested. 
      2. Wash your hands frequently and thoroughly.
      3. Don't touch your face. (I know, I know, it's not easy!)
      4. If you are above the age of 60 or have a compromised immune system, take extra precautions to protect yourself.
      5.  Eat well, sleep well, remain hydrated, exercise. Cover your mouth and nose when coughing or sneezing.

      Compass Contemplations for Friday

      DID YOU KNOW? There is a stress hormone called CORTISOL that is concentrated in your tears. You literally cry out your stress... (Thanks to Linda Feinstein from COMPASS in Hinsdale for sharing!)

       

      DID YOU KNOW? Regardless of advances in the world's ability to collect data, the World Uncertainty Index, which has been measuring economic uncertainty in 143 countries since 1996, had a reading of 371.24, the highest in the history of this index. It was 130.41 in the last quarter of 2015. (World Uncertainty Index)

       

      DID YOU KNOW? Two-thirds of investors believed that geopolitics, rather than fundamentals, were driving equity markets. (UBS)

      "There is often a disconnect between what people are worrying about and what the data is actually showing." - David Bailin, Chief Investment Officer, Citi Private Bank

      DID YOU KNOW? The concept of ownership, once at the center point of luxury consumption, has evolved from owning luxury to experiencing luxury ownership. Consignment stores, rental or subscription models are not completely new but their sharp rise supported by technology is highlighting some key questions around this phenomenon once seen by luxury houses as weakening their brand value and fuelling the counterfeit market.  (Altiant)

      DID YOU KNOW?  How do those worth $30-million-plus allocate their assets? According to a recent Knight Frank survey of 620 private bankers and wealth advisors who between them manage US$3.3 trillion of private client wealth, 27% goes to investment property, 23% to equities, 17% to bonds and fixed income, 11% cash/currencies, 8% private equity, 5% collectibles and 3,5% to precious metals.

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