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      Blog :: 03-2017

      Renting or Buying? Either Way You're Paying a Mortgage

      Renting or Buying… Either Way You’re Paying a Mortgage | MyKCM

      There are some people who have not purchased homes because they are uncomfortable taking on the obligation of a mortgage. Everyone should realize that, unless you are living with your parents rent-free, you are paying a mortgage - either yours or your landlord’s.

      As Entrepreneur Magazine, a premier source for small business, explained this month in their article, “12 Practical Steps to Getting Rich”:

      While renting on a temporary basis isn't terrible, you should most certainly own the roof over your head if you're serious about your finances. It won't make you rich overnight, but by renting, you're paying someone else's mortgage. In effect, you're making someone else rich.”

      Christina Boyle, Senior Vice President and head of the Single-Family Sales & Relationship Management organization at Freddie Mac, explains another benefit of securing a mortgage vs. paying rent:

      “With a 30-year fixed rate mortgage, you’ll have the certainty & stability of knowing what your mortgage payment will be for the next 30 years – unlike rents which will continue to rise over the next three decades.”

      As an owner, your mortgage payment is a form of ‘forced savings’ which allows you to build equity in your home that you can tap into later in life. As a renter, you guarantee the landlord is the person with that equity.

      Interest rates are still at historic lows, making it one of the best times to secure a mortgage and make a move into your dream home. Freddie Mac’s latest report shows that rates across the country were at 4.23% last week.

      Bottom Line

      Whether you are looking for a primary residence for the first time or are considering a vacation home on the shore, now may be the time to buy.

      Consumer Confidence in Economy & Housing is Soaring

      Consumer Confidence in Economy & Housing is Soaring | MyKCM

      The success of the housing market is strongly tied to the consumer’s confidence in the overall economy. For that reason, we believe 2017 will be a great year for real estate. Here is just a touch of the news coverage on the subject.

      HousingWire:

      “Consumers’ faith in the housing market is stronger than it’s ever been before, according to a newly released survey from Fannie Mae.”

      Bloomberg:

      “Americans’ confidence continued to mount last week as the Bloomberg Consumer Comfort Index reached the highest point in a decade on more-upbeat assessments about the economy and buying climate.”

      Yahoo Finance:

      “Confidence continues to rise among America’s consumers…the latest consumer sentiment numbers from the University of Michigan showed that in March confidence rose again.”

      MarketWatch:

      “U.S. consumers are the most confident in the U.S. economy in 15 years, buoyed by the strongest job market since before the Great Recession. The survey of consumer confidence rose…according to the Conference Board, the private company that publishes the index. That’s the highest level since July 2001.”

      Ivy Zelman, in her recent Z Report, probably best capsulized the reports:

      "The results were incredibly strong and…offer one of the most positive consumer takes on housing since the recovery started.”

      Looking to Move-Up to a Luxury Home? Now's the Time!

       

      Looking to Move-Up to a Luxury Home? Now’s the Time! | MyKCM

      If your house no longer fits your needs and you are planning on buying a luxury home, now is a great time to do so! We recently shared data from Trulia’s Market Mismatch Study which showed that in today’s premium home market, buyers are in control.

      The inventory of homes for sale in the luxury market far exceeds those searching to purchase these properties in many areas of the country. This means that homes are often staying on the market longer, or can be found at a discount.

      Those who have a starter or trade-up home to sell will find buyers competing, and often entering bidding wars, to be able to call your house their new home.

      The sale of your starter or trade-up house will aid in coming up with a larger down payment for your new luxury home. Even a 5% down payment on a million-dollar home is $50,000.

      But not all who are buying luxury properties have a home to sell first.

      In a recent Washington post article, Daryl Judy, an associate broker with Washington Fine Properties, gave some insight into what many millennials are choosing to do:

      “Some high-earning millennials save money until they are in their early 30s to buy a place and just skip over that starter-home phase. They’ll stay in an apartment until they can afford to pay for the place they want.”

      Bottom Line

      The best time to sell anything is when demand is high and supply is low. If you are currently in a starter or trade-up house that no longer fits your needs, and are looking to step into a luxury home… Now’s the time to list your house for sale and make your dreams come true.

      What Are the Experts Saying about Mortgage Rates?

      What Are the Experts Saying about Mortgage Rates?

      What Are the Experts Saying about Mortgage Rates? | MyKCM

      Mortgage interest rates have risen over the last few months and projections are that they will continue their upswing throughout 2017. What impact will this have on the housing market? Here is what the experts are saying:

      Laurie Goodman, Co-director of the Urban Institute’s Housing Finance Policy Center:

      “In 1984, 1994, 2000, and 2013, every time we have rate increases, we have increases in nominal home prices. We expect this to be more pronounced, as there is a big demand-and-supply gap at the present time.”

      Scott Anderson, Chief Economist for Bank of the West:

      “The tightening labor market, rising wage growth, high levels of consumer confidence and a millennial generation with a pent-up demand for housing should allow the housing market to weather the storm of gradually rising interest rates.”

      Ivy Zelman in her latest â€‹“Z” Report:

      “Although we strongly believe that the housing supply-demand imbalance for single-family homes will continue to drive above-average home price appreciation, just as falling mortgage rates aided pricing power on the margin in recent months, we expect the opposite effect to become evident in the coming months. As such, we project year-end home price inflation of 4.8% for 2017 and 4.1% for 2018.”

      Bob Walters, President & COO of retail mortgage lender Quicken Loans:

      “A modest increase in mortgage rates won’t have much of an effect on home purchases. A buyer may need to slightly re-evaluate which homes they can afford, but it’s not likely to make an impact on qualifying, in most cases.”

      First American Chief Economist Mark Fleming:

      "Our survey data shows that mortgage rates would have to be significantly higher to have any meaningful impact. The house buying power that borrowers have, even with rates below five percent, still remains historically strong."

      A Tale of Two Markets: Inventory Mismatch Paints a More Detailed Picture

       

      A Tale of Two Markets: Inventory Mismatch Paints a More Detailed Picture | MyKCM

      The inventory of existing homes for sale in today’s market was recently reported to be at a 3.6-month supply according to the National Association of Realtors latest Existing Home Sales Report. Inventory is now 7.1% lower than this time last year, marking the 20th consecutive month of year-over-year drops.

      Historically, inventory must reach a 6-month supply for a normal market where home prices appreciate with inflation. Anything less than a 6-month supply is a sellers’ market, where the demand for houses outpaces supply and prices go up.

      As you can see from the chart below, the United States has been in a sellers’ market since August 2012, but last month’s numbers reached a new low.

      A Tale of Two Markets: Inventory Mismatch Paints a More Detailed Picture | MyKCM

      Recently Trulia revealed that not only is there a shortage of homes on the market in general, but the homes that are available for sale are not meeting the needs of the buyers that are searching.

      Homes are generally bucketed into three groups by price range: starter, trade-up, and premium.

      Trulia’s market mismatch score measures the search interest of buyers against the category of homes that are available on the market. For example: “if 60% of buyers are searching for starter homes but only 40% of listings are starter homes, [the] market mismatch score for starter homes would be 20.”

      The results of their latest analysis are detailed in the chart below.

      A Tale of Two Markets: Inventory Mismatch Paints a More Detailed Picture | MyKCM

      Nationally, buyers are searching for starter and trade-up homes and are coming up short with the listings available, leading to a highly competitive seller’s market in these categories. Ninety-two of the top 100 metros have a shortage in trade-up inventory.

      Premium homebuyers have the best chance of less competition and a surplus of listings in their price range with an 11-point surplus, leading to more of a buyer’s market.

      “It leaves Americans who are in the market for a home increasingly chasing too fewer options in lower price ranges, and sellers of premium homes more likely to be left waiting longer for a buyer.”

       Lawrence Yun, NAR’s Chief Economist doesn’t see an end to this coming any time soon: 

      “Competition is likely to heat up even more heading into the spring for house hunters looking for homes in the lower- and mid-market price range.”

      Bottom Line

      Real estate is local. If you are thinking about buying OR selling this spring, let’s get together to discuss the exact market conditions in your area.

      Over Half of All Buyers Are Surprised by Closing Costs

      Over Half of All Buyers Are Surprised by Closing Costs

      Over Half of All Buyers Are Surprised by Closing Costs | MyKCM

      According to a recent survey conducted by ClosingCorp, over half of all homebuyers are surprised by the closing costs required to obtain their mortgage.

      After surveying 1,000 first-time and repeat homebuyers, the results revealed that 17% of homebuyers were surprised that closing costs were required at all, while another 35% were stunned by how much higher the fees were than expected.

      “Homebuyers reported being most surprised by mortgage insurance, followed by bank fees and points, taxes, title insurance and appraisal fees.”

      Bankrate.com recently gathered closing cost data from lenders in every state and Washington, D.C. to be able to share the average costs in each state. The map below was created using the closing costs on a $200,000 mortgage with a 20% down payment.

      Over Half of All Buyers Are Surprised by Closing Costs | MyKCM

      Keep in mind that if you are in the market for a home above this price range. your costs could be significantly more. According to Freddie Mac,

      “Closing costs are typically between 2 and 5% of your purchase price.”

      Bottom Line

      Speak with your lender and agent early and often to determine how much you’ll be responsible for at closing. Finding out that you’ll need to come up with thousands of dollars right before closing is not a surprise anyone is ever looking forward to.

       

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