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      Thinking of Selling? The Market Needs Your Listing!

      The housing market is really heating up and buyer demand is dramatically increasing as we enter the spring season. However, one challenge to the current market is a major shortage of inventory. Below are a few comments made in the last month by industry experts.

      Lawrence Yun, Chief Economist of NAR

      "Looking ahead, the key for sustained momentum and more sales than last spring is a continuous stream of new listings quickly replacing what's being scooped up by a growing pool of buyers. Without adequate supply, sales will likely plateau."

      Jonathan Smoke, Chief Economist of Realtor.com

      "Low inventories and tight credit will limit the gains we will see in 2016. However, given the level of pent-up demand evident in web activity and stated buyer intentions for 2016, we should see this spring materialize as the busiest season of sales since 2006."

      Rick Sharga, Ten-X's EVP

      "Inventory is too low to support much higher sales. There's virtually no inventory available at the entry level, and single family housing starts and permits continue to languish at levels far below where they should be at this point of the recovery."

      David Crowe, Chief Economist of the National Assoc. of Home Builders

      "Many sellers may not have an absolute decision as to whether to buy an existing home or a new home. So the low inventory of existing homes is locking them in place."

      Freddie Mac

      "Challenges remain, with low housing supply and declining affordability being a key concern in many markets."

       

      91.5% of Homes in th USA Have Positive Equity

      CoreLogic's latest Equity Report revealed that one million borrowers regained equity in their homes in 2015. The outlook for 2016 remains positive as well, as an additional 850,000 properties would regain equity if home prices rose another 5% this year. 

      The study also revealed:

      • 95% of homes valued over $200,000 now have a positive equity position
      • 87% of homes valued under $200,000 have entered a positive position
      • The 11.5% growth in home equity in Q4 marked the 13th consecutive quarter of double digit gains

      Below is a map showing the percentage of homes with a mortgage, in each state, that have positive equity. (The states in gray have insufficient data to report.)

      91.5% of Homes in the US have Positive Equity | Keeping Current Matters

      Significant Equity Is On The Rise

      Anand Nallathambi, President & CEO of CoreLogic, believes this is great news for the"long-term health of the U.S. economy." He went on to say:

      "The number of homeowners with more than 20% equity is rising rapidly. Higher prices driven largely by tight supply are certainly a big reason for the rise, but continued population growth, household formation and ultralow interest rates are also factors."

      Of the 91.5% of homeowners with positive equity in the US, 72.6% have significant equity (defined as more than 20%). This means that nearly three out of four homeowners with a mortgage could use the equity in their current home to purchase a new home now.

      The map below shows the percentage of homes with a mortgage, in each state, with significant equity.

      91.5% of Homes in the US have Positive Equity | Keeping Current Matters

      Bottom Line

      If you are one of the many homeowners who is unsure of how much equity you have in your home and are curious about your ability to move, meet with a local real estate professional who can help evaluate your situation.

       

      How to Make The Most Money When Selling Your House

      Every homeowner wants to make sure they maximize their financial reward when selling their home. But how do you guarantee that you receive maximum value for your house? Here are two keys to ensuring you get the highest price possible.

      1. Price it a LITTLE LOW

      This may seem counterintuitive. However, let's look at this concept for a moment. Many homeowners think that pricing their home a little OVER market value will leave them room for negotiation. In actuality, this just dramatically lessens the demand for your house (see chart below).

      How To Get The Most Money When Selling Your House | Simplifying The Market

      Instead of the seller trying to 'win' the negotiation with one buyer, they should price it so that demand for the home is maximized. In that way, the seller will not be fighting with a buyer over the price, but instead will have multiple buyers fighting with each other over the house.

      Realtor.com, gives this advice:

      "Aim to price your property at or just slightly below the going rate. Today's buyers are highly informed, so if they sense they're getting a deal, they're likely to bid up a property that's slightly underpriced, especially in areas with low inventory."

      2. Use a Real Estate Professional

      This too may seem counter intuitive. The seller may think they would net more money if they didn't have to pay a real estate commission. With this being said, studies have shown that homes typically sell for more money when handled by a real estate professional.

      Research posted by the Economists' Outlook Blog revealed that:

      "The median selling price for all FSBO homes was $210,000 last year. When the buyer knew the seller in FSBO sales, the number sinks to the median selling price of $151,900. However, homes that were sold with the assistance of an agent had a median selling price of $249,000 - nearly $40,000 more for the typical home sale."

      How To Get The Most Money When Selling Your House | Simplifying The Market

      Bottom Line

      Price your house at or slightly below the current market value and hire a professional. That will guarantee you maximize the price you get for your house.

       
       

       

      Home Prices: Where Are They Headed Over The Next 5 Years?

      Today, many real estate conversations center on housing prices and where they may be headed. That is why we like the Home Price Expectation Survey.

      Every quarter, Pulsenomics surveys a nationwide panel of over one hundred economists, real estate experts and investment & market strategists about where they believe prices are headed over the next five years. They then average the projections of all 100+ experts into a single number.

      The results of their latest survey:

      Home values will appreciate by 3.9% by the end of 2015, 3.4% in 2016 and 3.1% in each of the following four years (as shown below). That means the average annual appreciation will be 3.2% over the next 5 years.

      Projected Mean Appreciation | Keeping Current Matters

      The prediction for cumulative appreciation rose from 18.1% to 21.6% by 2020. Even the experts making up the most bearish quartile of the survey still are projecting a cumulative appreciation of 13.8%.

      Cumulative House Appreciation | Keeping Current Matters

      Bottom Line

      Individual opinions make headlines. We believe the survey is a fairer depiction of future values.

      Buy vs Rent: What Really Creates Family Wealth?

      There has been recent press regarding whether or not it makes better financial sense to rent rather than buy in today’s housing market. As an example, the recently released June Summary of the BH&J Buy vs. Rent Index reported:

      “…as of the end of the first quarter of 2015, the housing market in the U.S. and all cities in the index are trending either closer to renting being the superior option or strictly favoring renting over purchasing a home.”

      The summary goes on to explain that:

      “The index conducts a “horse race” comparison between an individual that is buying a home and an individual that rents a similar quality home andreinvests all monies otherwise invested in homeownership.”(emphasis added)

      Though the math may be correct, we are not as sure of the conclusion. Even if you check the methodology offered by the BH&J report itself, you will find that they realize:

      “…any extra savings from renting might be spent on non-wealth enhancing goods resulting in any benefits from renting versus owning disappearing in a cloud of consumption spending rather than savings.”

      The Concept of ‘Forced Savings’ and Wealth Accumulation

      Many believe the wealth accumulation of homeowners is tied into the concept of “forced savings”. The New York Times late last year published an editorial entitled,Homeownership and Wealth Creation, which discussed this conceptThe article explained:

      “Homeownership requires potential buyers to save for a down payment, and forces them to continue to save by paying down a portion of the mortgage principal each month.”

      “Even in instances where renters have excess cash, saving a substantial amount is difficult without a near-term goal, like a down payment. It is also difficult to systematically invest each month in stocks, bonds or other assets without being compelled to do so.”

      Many of the points that were made in the article are on track with the research done by the Joint Center for Housing Studies at Harvard University which agrees that “forced savings” is a major advantage of homeownership. In a paper, The Dream Lives On: the Future of Homeownership in America, they concluded:

      “Since many people have trouble saving and have to make a housing payment one way or the other, owning a home can overcome people’s tendency to defer savings to another day.”

      The Truth is in the Historical Data

      Edwards Deming once said: “Without data, you’re just another person with an opinion.”

      Let’s look at the data on this subject. The Federal Reserve has conducted a study titled:Survey of Consumer Finances. The study found that the average net worth of a homeowner ($194,500) is 36 times greater than that of a renter ($5,400).

      Bottom Line

      The New York Times editorial articulated it best:

      “Homeownership long has been central to Americans’ ability to amass wealth; even with the substantial decline in wealth after the housing bust, the net worth of homeowners over time has significantly outpaced that of renters, who tend as a group to accumulate little if any wealth…As a means to building wealth, there is no practical substitute for homeownership.”

      If you are a renter who is considering making a purchase, sit with a local real estate professional who can explain the benefits of signing a contract to purchase over renewing your lease!

      Beyond Comfort...Choosing Your Boston Area Realtor

      When it comes time to put your home on the market, one key early decision is which real estate company will be your sales partner. Of course, you will choose someone you feel comfortable working with, but there are further hard-nosed criteria that can help guide your choice:

       

      Experience in Our Market

      There’s nothing wrong with giving a brand new real estate school graduate a try, but especially if it’s important to sell quickly, you’ll want to work with a professional with demonstrated local experience. For openers, those agents know more about the history and direction of home sales in this area—they’ve been participants! That’s first-hand knowledge that will be vital in helping you arrive at a smart asking price. You’ll find that the experienced agents also have a smart phone loaded with the kind of established connections that help accelerate any sale.

      But your agent isn’t a one-person show. A lot of hard work goes into selling a property—from creating the listing on MLS directories to maintaining a web experience and promoting your property through the maze of marketing channels. The real estate company that’s your agent’s home base will determine the efficiency with which it all gets done.

       

      Membership in the National Association of Realtors

      One thing you will notice in your search for a realty company is that not all real estate agents are NAR members. Choosing an active member means working with a pro who is bound by the strict NAR Code of Ethics, who is also a member of the local Real Estate Board—with the accompanying connections and resources that bestows. 

       

      Proven Track Record

      It’s also a good idea to aim for an agent with a history representing properties in your price range. A Realtor whose experience is confined to homes sold at the $250-300K price point may never have dealt with luxury properties. If that’s your market, you will want an agent—and a real estate company—with that kind of track record.

      Finding a real estate agent to represent your home is just one of many steps that will lead to the successful sale of your property. I welcome the opportunity to meet to explore whether we are the right fit to get you top dollar for your home!  Call us for a free Competitive Market Analysis (CMA) to get started in the right direction.  617-536-8000.

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