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      Blog :: 12-2015

      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.

       
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