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      Blog :: 2015

      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.

      How Long Does It Take To Save a Down Payment?

      In a recent study conducted by Builder.com, researchers determined that nationwide it would take "nearly eight years" for a first-time buyer to save enough for a down payment on their dream home.

      Depending on where you live, median rents, incomes and home prices all vary. By determining the percentage a renter spends on housing in each state and the amount needed for a 10% down payment, they were able to establish how long (in years) it would take for an average resident to save.

      According to the study, residents in South Dakota are able to save for a down payment the quickest in just under 3.5 years. Below is a map created using the data for each state:

      Years Needed to Save 10% Down | Keeping Current Matters

      What if you only needed to save 3%?

      What if you were able to take advantage of one of the Freddie Mac or Fannie Mae 3% down programs? Suddenly saving for a down payment no longer takes 5 or 10 years, but becomes attainable in under two years in many states as shown in the map below.

      Years Needed to Save 3% Down | Keeping Current Matters

      Bottom Line

      Whether you have just started to save for a down payment, or have been for years, you may be closer to your dream home than you think! Meet with a local real estate professional who can help you evaluate your ability to buy today.

       

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      Buying a Home? Do You Know The Difference Between Cost & Price?

      Buying A Home? Do You Know The Difference Between Cost & Price? | Keeping Current Matters

      As a seller, you will be most concerned about 'short term price' - where home values are headed over the next six months. As a buyer, you must be concerned not about price but instead about the 'long term cost' of the home.

      The Mortgage Bankers Association (MBA), the National Association of RealtorsFannie Mae and Freddie Mac all projected that mortgage interest rates will increase by about three-quarters of a percentage point over the next twelve months.

      According to CoreLogic's most recent Home Price Index Report, home prices will appreciate by 5.2% over the next 12 months.

      What Does This Mean as a Buyer?

      Here is a simple demonstration of what impact an interest rate increase would have on the mortgage payment of a home selling for approximately $250,000 today if home prices appreciate by the 5.2% predicted by CoreLogic over the next twelve months:

      Cost of Waiting | Keeping Current Matters

      NAR Reports 2 Good Reasons to Sell This Winter

      We all realize that the best time to sell anything is when demand is high and the supply of that item is limited. The last two major reports issued by the National Association of Realtors (NAR) revealed information that suggests that now is a great time to sell your house.

      Let's look at the data covered by the latest reports:

      THE PENDING HOME SALES REPORT

      The report announced that pending home sales (homes going into contract) are up 3.9% over last year, and have increased year-over-year now for 14 consecutive months.

      Lawrence Yun, NAR's Chief Economist, expects demand to remain stable through the final two months of the year, and "forecasts existing-home sales to finish 2015 at a pace of 5.30 million - the highest since 2006." 

      Takeaway: Demand for housing will continue throughout the end of 2015 and into 2016. The seasonal slowdown often felt in the winter months hasn't started and shows little signs of being near.

      THE EXISTING HOME SALES REPORT

      The most important data point revealed in the report was not sales but instead the inventory of homes on the market (supply). The report explained:

      • Total housing inventory decreased 2.3% to 2.14 million homes available for sale
      • That represents a 4.8-month supply at the current sales pace
      • Unsold inventory is 4.5% lower than a year ago

      There were two more interesting comments made by Yun in the report:

      1. "New and existing-home supply has struggled to improve, leading to few choices for buyers and no easement of the ongoing affordability concerns still prevalent in some markets."

      In real estate, there is a guideline that often applies. When there is less than 6 months inventory available, we are in a sellers' market and we will see appreciation. Between 6-7 months is a neutral market where prices will increase at the rate of inflation. More than 7 months inventory means we are in a buyers' market and should expect depreciation in home values. As Yun notes, we are currently in a sellers' market (prices still increasing).

      2. "Unless sizeable supply gains occur for new and existing homes, prices and rents will continue to exceed wages into next year and hamstring a large pool of potential buyers trying to buy a home." As rents and prices increase, potential buyers will not able to save as much for a down payment and many may become priced out of the market.

      Takeaway: Inventory of homes for sale is still well below the 6 months needed for a normal market. Prices will continue to rise if a 'sizeable' supply does not enter the market. Take advantage of the ready willing and able buyers that are still out looking for your house.

      Bottom Line

      If you are going to sell, now may be the time.

      Prices and Mortgage Rates Going up in 2016

      Prices and Mortgage Rates Going Up in 2016 | Keeping Current Matters

      The monthly mortgage payment on a home is determined by two elements: the price of the house and the interest rate you pay on your mortgage. Recently released reports are revealing that the experts expect both elements to increase in 2016.

      HOME PRICES

      CoreLogic has projected a nationwide 5.2% home value appreciation for the next twelve months. Here is their breakdown by state:

      Pricing Forecast | Keeping Current Matters

      MORTGAGE INTEREST RATES

      All four of the entities that provide projections on mortgage interest rates agree: they're going up in 2016. Here are the predictions over the next four quarters:

      Interest Rates | Keeping Current Matters

      Bottom Line

      With both home values and interest rates projected to increase over the next twelve months, buying (or moving-up), sooner rather than later, makes sense.

       

      Selling Your Home? The Importance of Using a Real Estate Professional

      When a homeowner decides to sell their house, they obviously want the best possible price with the least amount of hassles. However, for the vast majority of sellers, the most important result is to actually get the home 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. For the past three years, 92% of all buyers have used the internet in their home search according to the National Association of Realtors' most recent Profile of Home Buyers & Sellers.

      However, the report also revealed that 95% percent of buyers that used the internet when searching for a home purchased their home through either a real estate agent/broker or from a builder or builder's agent. Only 2% purchased their home 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 actual home they will buy (53%) or negotiate the terms of the sale & price (48%) or understand the process (60%).

      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 used an agent to buy their home 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.

      Why You Should Hire a Professional When Buying a Home.

      Why You Should Hire A Professional When Buying A Home! | Keeping Current Matters

      Many people wonder whether they should hire a real estate professional to assist them in buying their dream home or if they should first try to go it on their own. In today's market: you need an experienced professional!

      You Need an Expert Guide if you are Traveling a Dangerous Path

      The field of real estate is loaded with land mines. You need a true expert to guide you through the dangerous pitfalls that currently exist. Finding a home that is priced appropriately and ready for you to move in to can be tricky. An agent listens to your wants and needs, and can sift out the homes that do not fit within the parameters of your "dream home".

      A great agent will also have relationships with mortgage professionals and other experts that you will need in securing your dream home.

      You Need a Skilled Negotiator

      In today's market, hiring a talented negotiator could save you thousands, perhaps tens of thousands of dollars. Each step of the way - from the original offer, to the possible renegotiation of that offer after a home inspection, to the possible cancellation of the deal based on a troubled appraisal - you need someone who can keep the deal together until it closes.

      Realize that when an agent is negotiating their commission with you, they are negotiating their own salary; the salary that keeps a roof over their family's head; the salary that puts food on their family's table. If they are quick to take less when negotiating for themselves and their families, what makes you think they will not act the same way when negotiating for you and your family?

      If they were Clark Kent when negotiating with you, they will not turn into Superman when negotiating with the buyer or seller in your deal.

      Bottom Line

      Famous sayings become famous because they are true. You get what you pay for. Just like a good accountant or a good attorney, a good agent will save you money...not cost you money.

      Buying a Home Remains 35% Less Expensive than Renting

      Buying a Home Remains 35% Less Expensive than Renting! | Keeping Current Matters

       

      In the latest Rent vs. Buy Report from Trulia they explained that homeownership remains cheaper than renting with a traditional 30-year fixed rate mortgage throughout the 100 largest metro areas in the United States.

      The updated numbers actually show that the range is from an average of 16% in Honolulu (HI), all the way to 55% in Sarasota (FL), and 35% Nationwide!

      The 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. "In the past year, these two trends have made homeownership even more affordable compared with renting."
      • Some markets might tip in favor of renting if home prices increase at a greater rate than rents and if - as most economists expect - mortgage rates rise, due to the strengthening economy.
      • Nationally, rates would have to rise to 10.6% for renting to be cheaper than buying - and rates haven't been that high since 1989.  

      Bottom Line

      Buying a home makes sense socially and financially. Rents are predicted to increase sustantially in the next year, lock in your housing cost with a mortgage payment now.

      4 Reasons to Buy BEFORE the Winter

      4 Reasons to Buy BEFORE Winter Hits | Keeping Current Matters

      Upcoming holidays, family get-togethers, and planning for a new year. Those who are on the fence about whether now is the right time to buy don't have to look much farther to find four great reasons to consider buying a home now, instead of waiting.

      1. Prices Will Continue to Rise

      The Home Price Expectation Survey polls a distinguished panel of over 100 economists, investment strategists, and housing market analysts. Their most recent report released recently projects appreciation in home values over the next five years to be between 10.5% (most pessimistic) and 25.5% (most optimistic).

      The bottom in home prices has come and gone. Home values will continue to appreciate for years. Waiting no longer makes sense.

      2. Mortgage Interest Rates Are Projected to Increase

      Although Freddie Mac's Primary Mortgage Market Survey shows that interest rates for a 30-year mortgage have softened recently, most experts predict that they will begin to rise later this year. The Mortgage Bankers Association, Fannie Mae, Freddie Mac and the National Association of Realtors are in unison projecting that rates will be up almost a full percentage point by the end of next year.

      An increase in rates will impact YOUR monthly mortgage payment. Your housing expense will be more a year from now if a mortgage is necessary to purchase your next home.

      3. Either Way You are Paying a Mortgage

      As a recent paper from the Joint Center for Housing Studies at Harvard University explains:

      "Households must consume housing whether they own or rent. Not even accounting for more favorable tax treatment of owning, homeowners pay debt service to pay down their own principal while households that rent pay down the principal of a landlord plus a rate of return. That's yet another reason owning often does--as Americans intuit--end up making more financial sense than renting."

      4. It's Time to Move On with Your Life

      The 'cost' of a home is determined by two major components: the price of the home and the current mortgage rate. It appears that both are on the rise.

      But, what if they weren't? Would you wait?

      Look at the actual reason you are buying and decide whether it is worth waiting. Whether you want to have a great place for your children to grow up, you want your family to be safer or you just want to have control over renovations, maybe it is time to buy.

      Bottom Line

      If the right thing for you and your family is to purchase a home this year, buying sooner rather than later could lead to substantial savings.

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