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      Blog :: 04-2015

      This Advice on Home Ownership Hasn't Changed in 200 Years

      Last month, we reported that billionaire John Paulson believes in the financial advantages of homeownership. He has often repeated:

      "I think, from an individual perspective, the best deal investment you can make is to buy a primary residence that you're the owner-occupier of.”

      However, he has not been the only billionaire to give such advice. As a matter of fact, that same advice has been given by people of wealth throughout the history of our nation.

      Here is a quote often attributed to Theodore Roosevelt, 26th President of the United States and billionaire real estate developer:

      “Every person who invests in well-selected real estate … adopts the surest and safest method of becoming independent, for real estate is the basis of wealth.”

      Andrew Carnegie, one of the richest entrepreneurs in American history said:

       

      “90% of all millionaires became so through owning real estate.”

      Bottom Line

      If the same advice has been given by the wealthiest people in each era of our country’s history, perhaps we should take it.

      Existing Home Sales: Fastest Pace in 18 Months

      Existing home sales in March leaped to their fastest pace in 18 months, making a well-timed upturn at the start of the peak spring buying season.

      Sales rose 6.1% -- the largest increase since December 2010 -- to a seasonally adjusted annual rate of 5.19 million, the National Association of Realtors said Wednesday.

      Economists' median forecast for March sales' rate was 5.03 million, according to Action Economics' survey.

      Monthly sales last topped a 5 million annual rate in December, and March's rate was the highest since October's 5.16 million.

      NAR's figures cover completed transactions on single-family homes, town homes, condominiums and co-ops.

      Total inventory at the end of March rose 5.3% to 2 million existing homes available for sale, and 2% above a year ago, NAR said. Unsold inventory is at a 4.6 months' supply, down slightly from 4.7 months in February.

      That indicates the supply of homes for sale is still tight. A six-month supply is considered a market balanced between buyers and sellers.

      Other recent signs have pointed to a pick-up in sales. The NAR's seasonally adjusted pending home sales index hit its highest level since June 2013 in February. The index tracks signings of contracts to buy homes and is an indicator of future sales one or two months later.

      Sales of previously owned homes fell 2.9% last year from 2013, but prices also rose more slowly -- at 5.7%, about half the rate in the previous year. NAR predicts average prices will rise a similar amount this year.

      NAR's report Wednesday showed median prices rose 7.8% from March 2014, accelerating from a 2.6% rate in February to its fastest pace in a year, TD Economics' Michael Dolega said in a research note Wednesday morning. Single-family homes led the price gains; values increased 8.7% from the previous year, he said.

      "The report was an uplifting one, especially after months of disappointments during the harsh winter," Dolega said.

      He predicts existing home sales will see their best year of the economic recovery in 2015, rising to nearly a 5.5 million rate later this year.

      A separate report from the Federal Housing Finance Agency Wednesday said U.S. house prices rose 0.7% in February on a seasonally adjusted basis from January. FHFA's housing price index was 2.9% below its March 2007 peak and about the same as in January 2006.

      FHFA's index is based on mortgages sold to or guaranteed by Fannie Mae and Freddie Mac, which FHFA regulates.

      Mortgage rates also are still near their lows for the year. The average interest rate on a fixed, 30-year mortgage was 3.67% last week, down from 4.27% a year ago, according to Freddie Mac's latest weekly survey.

      Comments

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        We Need You!

        We Need You(r House)!! | Keeping Current MattersThough the real estate market has improved, we still have one item holding it back from a full recovery - a robust supply of homes for sale. Demand has increased dramatically. At the same time, housing inventory is decreasing especially at the lower price points.

        The National Association of Realtors (NAR) recently revealed that there is a pent-up seller demand caused by the uncertainty created by the housing crisis of the last decade.

        What does that mean to you?

        Houses listed today sell quickly. With prices still below peak values of 2007 in many parts of the country and mortgage interest rates at historic lows, this may be the perfect time for your family to make the move to the dream house you always wanted - whether that's a larger home or that vacation/retirement home you have been looking at.

        What does that mean to the economy?

        Housing has always been an essential part of the U.S. economy. As we have reported before, real estate not only provides housing for families. It is often the greatest source of wealth and savings for many. The recent increase in real estate sales has led to an increase in real estate prices. This has increased the value of everyone's' home, whether they are selling or not. This leads to an increase in consumer confidence which in turn leads to an increase in consumer spending. Plus, each home sale automatically puts money into the economy.

        NAR compiled data from research conducted by the Bureau of Economic Analysis & Macroeconomic Advisors on the economic impact of a home purchase.

        After reviewing the data, they concluded that the total economic impact of a typical home sale in the United States is an astonishing $52,205.

        The more homes that sell, the better the economy.

        Bottom Line

        In order for the U.S. economy to get better, we need to sell more homes. Perhaps, it makes sense for one of those homes to be yours.

        If you have considered selling but are still a little nervous, now might be the time to sit down with a real estate professional familiar with your market and see what your options truly are.

        Selling Your House? Price it Right Up Front

        Selling Your House? Price it Right Up Front | Keeping Current MattersIn today's market, where demand is outpacing supply in many regions of the country, pricing a house is one of the biggest challenges real estate professionals face. Sellers often want to price their home higher than recommended, and many agents go along with the idea to keep their clients happy. However, the best agents realize that telling the homeowner the truth is more important than getting the seller to like them.

        There is no "later"

        Sellers sometimes think, "If the home doesn't sell for this price, I can always lower it later." However, research proves that homes that experience a listing price reduction sit on the market longer, ultimately selling for less than similar homes.

        John Knight, recipient of the University Distinguished Faculty Award from the Eberhardt School of Business at the University of the Pacific, actually did research on the cost (in both time and money) to a seller who priced high at the beginning and then lowered the their price. In his article, "Listing Price, Time on Market and Ultimate Selling Price" published in Real Estate Economics revealed:

        "Homes that underwent a price revision sold for less, and the greater the revision, the lower the selling price. Also, the longer the home remains on the market, the lower its ultimate selling price."

        Additionally, the "I'll lower the price later" approach can paint a negative image in buyers' minds. Each time a price reduction occurs, buyers can naturally think, "Something must be wrong with that house." Then when a buyer does make an offer, they low-ball the price because they see the seller as "highly motivated." Pricing it right from the start eliminates these challenges.

         

        Don't build "negotiation room" into the price

        Many sellers say that they want to price their home high in order to have "negotiation room." But, what this actually does is lower the number of potential buyers that see the house. And we know that limiting demand like this will negatively impact the sales price of the house.

        Not sure about this? Think of it this way: when a buyer is looking for a home online (as they are doing more and more often), they put in their desired price range. If your seller is looking to sell their house for $400,000, but lists it at $425,000 to build in "negotiation room," any potential buyers that search in the $350k-$400k range won't even know your listing is available, let alone come see it!

        A better strategy would be to price it properly from the beginning and bring in multiple offers. This forces these buyers to compete against each other for the "right" to purchase your house.

        Look at it this way: if you only receive one offer, you are set up in an adversarial position against the prospective buyer. If, however, you have multiple offers, you have two or more buyers fighting to please you. Which will result in a better selling situation?

        The Price is Right

        Great pricing comes down to truly understanding the real estate dynamics in your neighborhood. Look for an agent that will take the time to simply and effectively explain what is happening in the housing market and how it applies to your home. You need an agent that will tell you what you need to know rather than what you want to hear. This will put you in the best possible position.

        3 Questions to Ask Yourself Before Buying a Home in Boston

        If you are debating purchasing a home right now, you are surely 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 real estate. Let’s look at whether or not now is actually a good time for you to buy a home.

        There are 3 questions you should ask before purchasing in today’s market:

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

        This truly is 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 finances.

        A study by the Joint Center for Housing Studies at Harvard University reveals that the four major reasons people buy a home have nothing to do with money:

        • 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 the space

        What non-financial benefits will you and your family derive 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?

        When looking at future housing values, Home Price Expectation Survey provides a fair assessment. Every quarter, Pulsenomics surveys a nationwide panel of over 100 economists, real estate experts and investment & market strategists about where prices are headed over the next five years. They then average the projections of all 100+ experts into a single number.

        Here is what the experts projected in the latest survey:

        • Home values will appreciate by 4.4% in 2015.
        • The cumulative appreciation will be 19.3% by 2019.
        • Even the experts making up the most bearish quartile of the survey still are projecting a cumulative appreciation of over 11.7% by 2019.

        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 an increase in mortgage rates.

        The Mortgage Bankers Association (MBA), the National Association of Realtors andFreddie Mac have all projected that mortgage interest rates will increase by approximately one full percentage over the next twelve months.

        Bottom Line

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

        Boston Area Housing Market is The Healthiest in Years

        Housing Market is Healthiest in Years! | Keeping Current Matters

        According to Nationwide’s recently unveiled, Health of Housing Market (HoHM) Report, the US housing market is at it’s healthiest levels since the index’s creation in 2001.

        The index analyzes the health of the housing market across the country and in 373 metro areas every quarter. Using the data that they have collected over the past 15 years, Nationwide will look to give a “data-driven view of the near-term performance of housing markets based upon current health indicators.”

        The fourth quarter of 2014 ended with the highest indicator score in over 15 years of data analyzed by the study at 109.8. The report explains:

        “An index value over 100 suggests that the national housing market is healthy, with lower chances of a housing downturn over the next year as the index moves increasingly above the 100 breakeven value.”

        Employment, demographics, the mortgage market, and housing prices are all used to evaluate the health of each market. The top 10 healthiest housing markets according to the index are:

        1. Pittsburgh, PA
        2. Cleveland-Elyria, OH
        3. Philadelphia, PA
        4. Rockford, Ill.
        5. Burlington, NC
        6. Scranton-Wilkes-Barre, PA
        7. Fayetteville-Springdale, AR
        8. Idaho Falls, ID
        9. Tulsa, OK
        10. Kennewick-Richland, WA

        The two ‘least healthy’ markets were Bismark, ND and Atlantic City, NJ who received“just slightly negative performance rankings”.

        David Berson, Nationwide’s Chief Economist and Senior Vice President, says “the quarterly report should serve as a resource to gauge how healthy housing markets are today but, perhaps more important, what to expect in the future and why.”

        Bottom Line

        The housing market continues to recover and surpass recent history. Meet with an agent in your local market to determine if you are able to take advantage of the opportunities available in real estate today.

        Selling Your Boston Area House? Price it Correctly Up Front

        Selling Your House? Price it Right Up Front | Keeping Current Matters

        In today's market, where demand is outpacing supply in many regions of the country, pricing a house is one of the biggest challenges real estate professionals face. Sellers often want to price their home higher than recommended, and many agents go along with the idea to keep their clients happy. However, the best agents realize that telling the homeowner the truth is more important than getting the seller to like them.

        There is no "later."

        Sellers sometimes think, "If the home doesn't sell for this price, I can always lower it later." However, research proves that homes that experience a listing price reduction sit on the market longer, ultimately selling for less than similar homes.

        John Knight, recipient of the University Distinguished Faculty Award from the Eberhardt School of Business at the University of the Pacific, actually did research on the cost (in both time and money) to a seller who priced high at the beginning and then lowered the their price. In his article, Listing Price, Time on Market and Ultimate Selling Pricepublished in Real Estate Economics revealed:

        "Homes that underwent a price revision sold for less, and the greater the revision, the lower the selling price. Also, the longer the home remains on the market, the lower its ultimate selling price."

        Additionally, the "I'll lower the price later" approach can paint a negative image in buyers' minds. Each time a price reduction occurs, buyers can naturally think, "Something must be wrong with that house." Then when a buyer does make an offer, they low-ball the price because they see the seller as "highly motivated." Pricing it right from the start eliminates these challenges.

        Don't build "negotiation room" into the price.

        Many sellers say that they want to price their home high in order to have "negotiation room." But, what this actually does is lower the number of potential buyers that see the house. And we know that limiting demand like this will negatively impact the sales price of the house.

        Not sure about this? Think of it this way: when a buyer is looking for a home online (as they are doing more and more often), they put in their desired price range. If your seller is looking to sell their house for $400,000, but lists it at $425,000 to build in "negotiation room," any potential buyers that search in the $350k-$400k range won't even know your listing is available, let alone come see it!

        A better strategy would be to price it properly from the beginning and bring in multiple offers. This forces these buyers to compete against each other for the "right" to purchase your house.

        Look at it this way: if you only receive one offer, you are set up in an adversarial position against the prospective buyer. If, however, you have multiple offers, you have two or more buyers fighting to please you. Which will result in a better selling situation?

        The Price is Right

        Great pricing comes down to truly understanding the real estate dynamics in your neighborhood. Look for an agent that will take the time to simply and effectively explain what is happening in the housing market and how it applies to your home. You need an agent that will tell you what you need to know rather than what you want to hear. This will put you in the best possible position.

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