Our mobile site is optimized for smaller screens.

TRY IT NO THANKS
  • Boston Condos
+ Advanced Search

      Blog :: 08-2018

      Supply & Demand Will Determine Future Home Values

      Supply & Demand Will Determine Future Home Values | MyKCM

      Will home values continue to appreciate throughout 2018? The answer is simple: YES! – as long as there are more purchasers in the market than there are available homes for them to buy. This is known as the theory of “supply and demand,” which is defined as:

      “The amount of a commodity, product, or service available and the desire of buyers for it, considered as factors regulating its price.”

      When demand exceeds supply, prices go up. Every month this year, demand (buyer traffic) has increased as compared to last year and for the first five months of 2018, supply (the number of available listings) had decreased as compared to last year. However, a recent report by the National Association of Realtors (NAR) revealed the first year-over-year increase in supply in three years.

      Here are the numbers for supply and demand as compared to last year since the beginning of 2018:

      Supply & Demand Will Determine Future Home Values | MyKCM

      The increase in the June numbers doesn’t mean that prices won’t continue to appreciate. In that same report, Lawrence Yun, NAR’s Chief Economist, explained:

      “It’s important to note that despite the modest year-over-year rise in inventory, the current level is far from what’s needed to satisfy demand levels.

      Furthermore, it remains to be seen if this modest increase will stick, given the fact that the robust economy is bringing more interested buyers into the market, and new home construction is failing to keep up.”

      Bottom Line

      The reason home prices are still rising is that there are many purchasers looking to buy but very few homeowners ready to sell. This imbalance is the reason prices will remain on the uptick.

      5 Reasons to Hire a Real Estate Professional Before Entering the Market!

      5 Reasons to Hire a Real Estate Professional Before Entering the Market! | MyKCM

      Whether you are buying or selling a home, it can be quite the adventure. In this world of instant gratification and internet searches, many sellers think that they can ‘For Sale by Owner’ or ‘FSBO,’ but it’s not as easy as it may seem. That’s why you need an experienced real estate professional to guide you on the path to achieving your ultimate goal!

      The 5 reasons you need a real estate professional in your corner haven’t changed but have rather been strengthened by the projections of higher mortgage interest rates and home prices as the market continues to pick up steam.

      1. What do you do with all this paperwork?

      Each state has different regulations regarding the contracts required for a successful sale, and these regulations are constantly changing. A true real estate professional is an expert in his or her market and can guide you through the stacks of paperwork necessary to make your dream a reality.

      2. So you found your dream house, now what?

      There are over 230 possible steps that need to take place during every successful real estate transaction. Don’t you want someone who has been there before, someone who knows what these actions are, to ensure you achieve your dream?

      3. Are you a good negotiator?

      So maybe you’re not convinced that you need an agent to sell your home. After looking at the list of parties that you will need to be prepared to negotiate with, you’ll soon realize the value in selecting a real estate professional. From the buyers (who want the best deals possible), to the home inspection companies, all the way to the appraisers, there are at least 11 different people who you will need to be knowledgeable of, and answer to, during the process.

      4. What is the home you’re buying/selling really worth?

      It is important for your home to be priced correctly from the start in order to attract the right buyers and shorten the amount of time that it’s on the market. You need someone who is not emotionally connected to your home to give you its true value. According to a recent article by the National Association of Realtors, FSBOs achieve prices significantly lower than the prices of similar properties sold by real estate agents:

      “FSBOs earn an average of $60,000 to $90,000 less on the sale of their home than sellers who work with a real estate agent.”

      Get the most out of your transaction by hiring a professional!

      5. Do you know what’s really going on in the market?

      There is so much information out there on the news and on the internet about home sales, prices, and mortgage rates; how do you know what’s going on specifically in your area? Who do you turn to in order to competitively and correctly price your home at the beginning of the selling process? How do you know what to offer on your dream home without paying too much, or offending the seller with a lowball offer?

      Dave Ramsey, the financial guru, advises:

      “When getting help with money, whether it’s insurance, real estate or investments, you should always look for someone with the heart of a teacher, not the heart of a salesman.”

      Hiring an agent who has his or her finger on the pulse of the market will make your buying or selling experience an educated one. You need someone who is going to tell you the truth, not just what they think you want to hear.

      Bottom Line

      You wouldn’t replace the engine in your car without a trusted mechanic, so why would you make one of the most important financial decisions of your life without hiring a real estate professional?

      Are Lending Standards Propping Up Home Prices?

      Are Lending Standards Propping Up Home Prices? | MyKCM

      Back in 2005, Federal Reserve Chairman Alan Greenspan described the dramatic increases in residential real estate values as a “froth in housing markets.” Greenspan went on to say:

      “The increase in the prevalence of interest-only loans and the introduction of more-exotic forms of adjustable-rate mortgages are developments of particular concern…some households may be employing these instruments to purchase homes that would otherwise be unaffordable, and consequently their use could be adding to pressures in the housing market.”

      Greenspan was warning that the loosening of lending standards could lead to disaster. And it did.

      With home prices again appreciating at percentages well above historic norms, many are wondering whether the market is again becoming “frothy.” Mortgage standards are much stricter now, however, than they were in 2005.

      The Urban Institute’s Housing Finance Policy Center issues a monthly index which measures the percentage of home purchase loans that are likely to default. A lower score indicates that lenders are unwilling to tolerate defaults and are imposing tighter lending standards. A higher score indicates that lenders are willing to tolerate defaults and are taking more risks.

      Their July Housing Credit Availability Index revealed credit availability rose to 5.9%. For context, they went on to explain:

      “Significant space remains to safely expand the credit box. If the current default risk was doubled across all channels, risk would still be well within the pre-crisis standard of 12.5 percent from 2001 to 2003 for the whole mortgage market.”

      Here is a graph depicting the Urban Institute’s findings:

      Are Lending Standards Propping Up Home Prices? | MyKCM

      Bottom Line

      Though it may be slightly easier to get a mortgage today than it was a year ago, lending standards are nowhere near where they were during the build-up to the housing bubble.

      Comments

      1. No comments. Be the first to comment.

      sign up RECEIVE THE LATEST LISTINGS & SAVE SEARCHES Already a member? Sign in here