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      Are Home Values Really Overinflated?

      Are Home Values Really Overinflated? | MyKCM

      Last week, the National Association of Realtors (NAR) released their most recent Existing Home Sales Report. According to the report:

      “The median existing-home price for all housing types in January was $240,500, up 5.8 percent from January 2017 ($227,300). January’s price increase marks the 71st straight month of year-over-year gains.”

      Seventy-one consecutive months of price increases may have some concerned that current home values may be overinflated.

      However, at the same time, Zillow issued a press release which revealed:

      “If the housing bubble and bust had not happened, and home values had instead appreciated at a steady pace, the median home value would be higher than its current value.”

      Here are two graphs that help show why home prices are exactly where they should be.

      The first graph shows actual median home sales prices from 2000 through 2017.

      Are Home Values Really Overinflated? | MyKCM

      By itself, this graph could heighten concerns as it shows home values rose in the early 2000s, came tumbling down and are now headed up again. It gives the feel of a rollercoaster ride that is about to take another turn downward.

      However, if we also include where prices would naturally be, had there not been a boom & bust, we see a different story.

      Are Home Values Really Overinflated? | MyKCM

      The blue bars on this graph represent were prices would be if they had increased by the normal annual appreciation rate (3.6%). By adding 3.6% to the actual 2000 price and repeating that for each subsequent year, we can see that prices were overvalued during the boom, undervalued during the bust, and a little bit LOWER than where they should be right now.

      Bottom Line

      Based on historic appreciation levels, we should be very comfortable that current home values are not overinflated.

      Is Now a Good Time to Rent?

      Is Now a Good Time to Rent? | MyKCM

      People often ask if now is a good time to buy a home, but nobody ever asks when it’s a good time to rent. Regardless, we want to make certain that everyone understands that today is NOT a good time to rent.

      The Census Bureau recently released their 2017 fourth quarter median rent numbers. Here is a graph showing rent increases from 1988 until today:

      Is Now a Good Time to Rent? | MyKCM

      As you can see, rents have steadily increased and are showing no signs of slowing down. If you are faced with making the decision of whether or not you should renew your lease, you might be pleasantly surprised at your ability to buy a home of your own instead.

      Bottom Line

      One way to protect yourself from rising rents is to lock in your housing expense by buying a home. If you are ready and willing to buy, let’s meet to determine if you are able to today!


      Calm Down! The Real Estate Market is NOT Falling Apart


      Calm Down! The Real Estate Market is NOT Falling Apart | MyKCM

      There has been tremendous volatility in certain markets over the last few weeks (for example, the stock and currency markets). When this happens, some tend to lump all of their investments together and create an almost ‘Armageddon’ scenario where everything loses value quickly and dramatically. Real estate is an investment that can get caught up in this hysteria. Does the concern about the current housing market have merit?

      Financial advisors have been warning us for months that the stock market was ripe for a “correction.”

      Experts have been questioning the value of alternative currencies for over a year.

      In contrast, here are the opinions of three major players in the residential housing market:

      Ralph DeFranco, Chief Economist, Arch Capital Services Inc.

      “It’s premature to worry about a housing bubble. The typical warning signs – excessive debt levels, poor quality loans, exponentially increasing home prices, rising vacancy rates and/or poor affordability compared to the past, and a high number of internet searches on house flipping – are not present.”

      Liu-Down, Genworth Chief Economist

      “My thoughts on many recent discussions of ‘housing bubble’ – the bar for a housing bubble is higher than just prices being above some fundamental value. There must be widespread behavior change as well such as higher levels of fraud and speculation.”

      Fitch Report

      “US home prices are on track for a 5% nominal gain for the 4th consecutive year, returning national prices to their highest level since 2007. The growth has been driven by historically low mortgage rates and unemployment plus solid population and personal income growth rates…a meaningful correction should only be triggered by an unexpected economic shock.”

      Bottom Line

      Speculation has driven certain markets over the last year. However, it has not been speculation, but instead people’s desire for homeownership, that has driven the real estate market.


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      Which Comes First? Marriage or Mortgage?


      Which Comes First... Marriage or Mortgage? | MyKCM

      According to the National Association of REALTORS most recent Profile of Home Buyers & Sellers, married couples once again dominated the first-time homebuyer statistics in 2017 at 57% of all buyers. It is no surprise that having two incomes to save for down payments and contribute to monthly housing costs makes buying a home more attainable.

      But, many couples are also deciding to buy a home before spending what would be a down payment on a wedding, as unmarried couples made up 16% of all first-time buyers last year.

      If you’re single, don’t fret! Single women made up 18% of first-time buyers in 2017, while single men accounted for 7% of buyers. A recent report pointed to a sense of responsibility and commitment that drives many single women to want to own their own homes rather than rent someone else’s.

      Here is the breakdown of all first-time homebuyers in 2017 by percentage of all buyers, income, and age:

      Which Comes First... Marriage or Mortgage? | MyKCM

      Bottom Line

      You may not be that much different than those who have already purchased their first homes. Let’s get together to determine if your dream home is already within your grasp!


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      Where Are Mortgage Interest Rates Headed in 2018?

      Where Are Mortgage Interest Rates Headed in 2018? | MyKCM

      The interest rate you pay on your home mortgage has a direct impact on your monthly payment. The higher the rate the greater the payment will be. That is why it is important to know where rates are headed when deciding to start your home search.

      Below is a chart created using  Freddie Mac’s U.S. Economic & Housing Marketing Outlook.  As you can see, interest rates are projected to increase steadily over the course of the next 12 months.

      Where Are Interest Rates Headed? | MyKCM

      How Will This Impact Your Mortgage Payment?

      Depending on the amount of the loan that you secure, a half of a percent (.5%) increase in interest rate can increase your monthly mortgage payment significantly.

      According to CoreLogic’s latest Home Price Index, national home prices have appreciated 7.0% from this time last year and are predicted to be 4.2% higher next year.

      If both the predictions of home price and interest rate increases become reality, families would wind up paying considerably more for their next home.

      Bottom Line 

      Even a small increase in interest rate can impact your family’s wealth. Let’s get together to evaluate your ability to purchase your dream home

      Buying or Selling in 2018? 5 Reasons to Resolve to Hire a Pro [INFOGRAPHIC]

      Buying or Selling in 2018? 5 Reasons to Resolve to Hire a Pro [INFOGRAPHIC] | MyKCM

      Some Highlights:

      • As we usher in the new year, one thing is for certain… if you plan to buy or sell a house this year, you need a real estate professional on your team!
      • There are many benefits to using a local professional!
      • Pick a professional who knows your local market and can help you achieve your dreams!


      Home Prices Up 6.54% Across the Country! [INFOGRAPHIC]

      Home Prices Up 6.54% Across the Country! [INFOGRAPHIC] | MyKCM

      Some Highlights:

      • The Federal Housing Finance Agency (FHFA) recently released their latest Quarterly Home Price Index report.
      • In the report, home prices are compared both regionally and by state.
      • Based on the latest numbers, if you plan on relocating to another state, waiting to move may end up costing you more!
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