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      Blog :: 02-2017

      Where Are the Home Prices Heading in the Next 5 Years?

      Where Are the Home Prices Heading in the Next 5 Years?

      Where Are the Home Prices Heading in the Next 5 Years? | MyKCM

      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 4.4% over the course of 2017, 3.4% in 2018, 2.8% in 2019, 2.7% in 2020, and 2.8% in 2021. That means the average annual appreciation will be 3.22% over the next 5 years.

      Where Are the Home Prices Heading in the Next 5 Years? | MyKCM

      The prediction for cumulative appreciation fell from 21.4% to 17.3% by 2021. The experts making up the most bearish quartile of the survey are projecting a cumulative appreciation of 6.3%.

      Where Are the Home Prices Heading in the Next 5 Years? | MyKCM

      Bottom Line

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

      US Housing Market Is Moving into 'Buy Territory'!

      US Housing Market Is Moving into 'Buy Territory'!

      US Housing Market Is Moving into 'Buy Territory'! | MyKCM

      According to the Beracha, Hardin & Johnson Buy vs. Rent (BH&J) Index, the U.S. housing market has continued to move deeper into buy territory, supporting the belief that housing markets across the country remain a sound investment.

      The BH&J Index is a quarterly report that attempts to answer the question:

      In today’s housing market, is it better to rent or buy a home?

      The index examines the entire US housing market and then isolates 23 major cities for comparison. The researchers “measure the relationship between purchasing property and building wealth through a buildup in equity versus renting a comparable property and investing in a portfolio of stocks and bonds.” 

      While most of the metropolitan markets examined moved further into buy territory (16 of the 23), markets like Dallas, Denver, and Houston are currently deep into rent territory. In these three markets, it is estimated that renting will top homeownership 7 out of 10 times.

      Due to a lack of inventory, the home prices in the Dallas, Denver, and Houston areas have increased by 11.6%8.3%, and 6.6% respectively. Home prices in these areas will begin to return to more normal levels once residents realize that renting is not the best option, therefore bringing home affordability back as well.

      Bottom Line

      The majority of the country is strongly in buy territory. Buying a home makes sense socially and financially, as rents are predicted to increase substantially in the next year. Protect yourself from rising rents by locking in your housing cost with a mortgage payment now.

      To Find Out More About the Study: The BH&J Index and other FAU real estate activities are sponsored by Investments Limited of Boca Raton. The BH&J Index is published quarterly and is available online at http://business.fau.edu/buyvsrent.

      Are You 1 of the 59 Million Planning to Buy This Year?

      Are You 1 of the 59 Million Planning to Buy This Year?

      Are You 1 of the 59 Million Planning to Buy This Year? | MyKCM

      According to a survey conducted by Bankrate.com, one in four Americans are considering buying a home this year. If this statistic proves to be true, that means that 59 million people will be looking to enter the housing market in 2017.

      The survey also revealed 3 key takeaways:

      1. Those most likely to buy are ‘Older Millennials’ (ages 27-36) or ‘Generation X’ (ages 37-52)
      2. Minorities, particularly African-Americans, were twice as likely to respond that they were considering purchasing a home this year than white respondents.
      3. Many potential buyers believe they need to put 20% down and need to have perfect credit to own and are unaware of programs that would allow them to buy now.

      Holden Lewis, a mortgage analyst for Bankrate.com, pointed to one big reason why many Americans are starting to consider homeownership:

      “Having kids and raising a family is a primary reason why Americans take the leap into homeownership—many consider it a key component of the American dream.”

      Bottom Line

      If buying a home is a part of your dream for 2017, let’s get together to determine if you are able to

      3 Questions to Ask If You Want to Buy Your Dream Home

      3 Questions to Ask If You Want to Buy Your Dream Home

      3 Questions to Ask If You Want to Buy Your Dream Home | MyKCM

      If you are debating purchasing a home right now, you are probably 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 the real estate market.

      Ask yourself the following 3 questions to help determine if now is a good time for you to buy in today’s market.

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

      This is truly 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 money.

      For example, a survey by Braun showed that over 75% of parents say “their child’s education is an important part of the search for a new home.”

      This survey supports a study by the Joint Center for Housing Studies at Harvard University which revealed that the top four reasons Americans buy a home have nothing to do with money. They are:

      • 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 that space

      What does owning a home mean to you? What non-financial benefits will you and your family gain 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?

      According to the latest Existing Home Sales Report from the National Association of Realtors (NAR), the median price of homes sold in December (the latest data available) was $232,200, up 4.0% from last year. This increase also marks the 58th consecutive month with year-over-year gains.

      If we look at the numbers year over year, CoreLogic forecasted a rise by 4.7% from December 2016 to December 2017. On a home that costs $250,000 today, that same home will cost you an additional $11,750 if you wait until next year.

      What does that mean to you?

      Simply put, with prices increasing each month, it might cost you more if you wait until next year to buy. Your down payment will also need to be higher in order to account for the higher price of the home you wish to buy.

      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 even a small increase in mortgage rates.

      The Mortgage Bankers Association (MBA), the National Association of Realtors, and Fannie Mae have all projected that mortgage interest rates will increase over the next twelve months, as you can see in the chart below:

      3 Questions to Ask If You Want to Buy Your Dream Home | MyKCM

      Bottom Line

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

      First Comes Love? Then Comes Mortgage?

      First Comes Love… Then Comes Mortgage?

      First Comes Love… Then Comes 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 2016 at 58% 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 14% of all first-time buyers last year.

      If you’re single, don’t fret! Single women made up 18% of first-time buyers in 2016, while single men accounted for 8% of buyers. One recent article pointed to a sense of responsibility and commitment that drives many single women to want to own their home, rather than rent.

      Here is the breakdown of all first-time homebuyers in 2016 by percentage of all buyers, income, and age:

      First Comes Love… Then Comes 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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        Listing in the Winter Attracts More Serious Buyers

        Listing in the Winter Attracts More Serious Buyers

        Listing in the Winter Attracts More Serious Buyers | MyKCM

        A recent study of more than 7 million home sales over the past four years revealed that the season in which a home is listed may be able to shed some light on the likelihood that the home will sell for more than asking price, as well as how quickly the sale will close.

        It’s no surprise that listing a home for sale during the spring saw the largest return, as the spring is traditionally the busiest season for real estate. What is surprising, though, is that listing during the winter came in second!

        “Among spring listings, 18.7 percent of homes fetched above asking, with winter listings not far behind at 17.5 percent. While 48.0 percent of homes listed in spring sold within 30 days, 46.2 percent of homes in winter did the same.”

        The study goes on to say that:

        “Buyers [in the winter] often need to move, so they’re much less likely to make a lowball offer and they’ll often want to close quickly — two things that can make the sale much smoother.” 

        Bottom Line

        If you are debating listing your home for sale in 2017, keep in mind that the spring is when most other homeowners will decide to list their homes as well. Listing your home this winter will ensure that you have the best exposure to the serious buyers who are out looking now!

        Lack of Homes for Sale Slowing Down the Housing Market

        The housing crisis is finally in the rear-view mirror as the real estate market moves down the road to a complete recovery. Home values are up. Home sales are up. Distressed sales (foreclosures and short sales) have fallen dramatically. It seems that 2017 will be the year that the housing market races forward again.

        However, there is one thing that may cause the industry to tap the brakes: a lack of housing inventory. While buyer demand looks like it will remain strong throughout the winter, supply is not keeping up.

        Here are the thoughts of a few industry experts on the subject:

        National Association of Realtors

        “Total housing inventory at the end of December dropped 10.8%...which is the lowest level since NAR began tracking the supply of all housing types in 1999. Inventory has fallen year-over-year for 19 straight months and is at a 3.6-month supply at the current sales pace.”

        Jonathan Smoke, Chief Economist for Realtor.com

        “More than two-thirds of the markets are seeing less inventory now compared to a year ago.”

        Lawrence Yun, Chief Economist at NAR:

        “The dismal number of listings in the affordable price range is squeezing prospective first-time buyers the most. As a result, young households are missing out on the wealth gains most homeowners have accrued from the 41% cumulative rise in existing home prices since 2011.”

        Sam Khater, Deputy Chief Economist at CoreLogic

        “The lack of affordable supply is really driving up home prices.”

        Peter Muoio, Chief Economist at Auction.com

        “Tight housing inventory remains a constraining factor limiting stronger sales growth…

        We expect further price growth to entice more homeowners to list their homes, particularly as existing homeowners have greater equity.”

        Bottom Line 

        If you are thinking of selling, now may be the time. Demand for your house will be strong at a time when there is very little competition. That could lead to a quick sale for a really good price.

        Buyer Demand Is Outpacing the Supply of Homes for Sale

        Buyer Demand Is Outpacing the Supply of Homes for Sale

        The price of any item is determined by the supply of that item, as well as the market demand. The National Association of REALTORS (NAR) surveys “over 50,000 real estate practitioners about their expectations for home sales, prices and market conditions” for their monthly REALTORS Confidence Index.

        Their latest edition sheds some light on the relationship between Seller Traffic (supply) and Buyer Traffic (demand).

        Buyer Demand

        The map below was created after asking the question: “How would you rate buyer traffic in your area?”

        Buyer Demand Is Outpacing the Supply of Homes for Sale | MyKCM

        The darker the blue, the stronger the demand for homes in that area. Only six states had a weak demand level.

        Seller Supply

        The Index also asked: “How would you rate seller traffic in your area?”

        As you can see from the map below, the majority of the country has weak Seller Traffic, meaning there are far fewer homes on the market than what is needed to satisfy the buyers who are out looking for their dream homes.

        Buyer Demand Is Outpacing the Supply of Homes for Sale | MyKCM

        Bottom Line

        Looking at the maps above, it is not hard to see why prices are appreciating in many areas of the country. Until the supply of homes for sale starts to meet the buyer demand, prices will continue to increase. If you are debating listing your home for sale, let’s get together to help you capitalize on the demand in the market now!

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