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      Blog :: 10-2018

      Happy Halloween! I hope you have a fun day today.

      DID YOU KNOW? Year-over-year gains in home prices fell below 6%, according to the latest S&P CoreLogic Case-Shiller National Home Price NSA Index. The index rose 5.8% from August 2017 to August 2018, down from last month’s annual gain of 6%. Yet home-price gains remain WELL above wage gains. (CNBC)

      DID YOU KNOW? The number of new and existing houses and condominiums sold in Southern California during September dropped nearly 18% compared with 2017, the slowest September pace since 2007, mostly attributed to rising prices and interest rates. Sales fell 22% in September compared with August. (Sales usually fall about 10% from August to September.) Sales of newly built (Higher priced)homes were 47% below the September average dating back to 1988, while sales of existing homes were 22% below their long-term average. While the median sale price was up 3.6% year over year in September, the principal and interest mortgage payment on the median-priced home was up 14.2% because mortgage rates increased about 0.8 percentage point over that period. (CNBC)

      "I don't expect a sharp turn in the housing market at this point." - Robert Shiller, Case-Shiller Index

      DID YOU KNOW? Apple product prices are going up. Airlines are paying about 40% more for fuel than a year ago and raising fares. Trucking costs are up 7% annually. U.S. manufacturers are paying roughly 8% more for aluminum, 38% more for steel. 15% more for Chinese-made quartz countertops, 10% more for imported cabinets because of tariffs, than a year ago. Paint supplier Sherwin-Williams raised prices in its own stores up to 6% in October. A Big Mac costs 4.7% more and a Domino's Pizza 5.9%more. "They" say inflation is around 2%. Hmmmmm...... (WSJ)

      "There are only 3 times you should rent a home instead of buy: 1) If you plan to move in 3 years or less  2) If you're not sure about your job  3) You plan to have kids or will need more space." - David Bach, AE Wealth Managment

      Still Think You Need 15-20% Down to Buy a Home? Think Again!

      Still Think You Need 15-20% Down to Buy a Home? Think Again! | MyKCM

      According to a new study from Urban Institute, there are over 19 million millennials in 31 cities who are not only ready and willing to become homeowners, but are able to as well!

      Now that the largest generation since baby boomers has aged into prime homebuying age, there will no doubt be an uptick in the national homeownership rate. The study from Urban Institute revealed that nearly a quarter of this generation has the credit and income needed to purchase a home.

      Surprisingly, the largest share of mortgage-ready millennials lives in expensive coastal cities. These cities often attract highly skilled workers who demand higher salaries for their expertise.

      So, what’s holding these mortgage-ready millennials back from buying?

      Myths About Down Payment Requirements! 

      Most of the millennials surveyed for the study believe that they need at least a 15% down payment in order to buy a home when, in reality, the median down payment in the US in 2017 was just 5%, and many programs are available for even lower down payments!

      The study goes on to point out that:

      “Despite limited awareness, every state has programs that provide grants and loans to make homeownership more attainable, with average assistance in various states ranging from $2,436 to $21,171.”

      Bottom Line

      With so many young families now able to buy a home in today’s market, the demand for housing will continue for years to come. If you are one of the many millennials who have questions about their ability to buy in today’s market, let’s get together so we can assist you along your journey!

      Compass Contemplations for Monday

      DID YOU KNOW? 2020 could be the big year for electric big rigs. Truck makers are accelerating their electric truck projects toward launches in 2020, while TESLA told investors in June production of their Semi freight hauler should begin in the first half of 2020.  In China, regulators are considering a long-term plan to replace 1 million diesel big rigs with cleaner trucks, including electric models, and some Chinese ports and cities are banning diesel trucks, which could significantly boost sales. Electric trucks could decrease road noise and air pollution dramatically (many trucks are diesel powered) and could elevate valuations of properties abutting highways and busy roads.... (Reuters)


      DID YOU KNOW? One car-related event draws many of my wealthiest clients and now The Mille Miglia is coming to America. One of the most famous car races in the world, the original Mille Miglia was held quasi-annually in the 30 years between 1927 and 1957 on a 1000-mile circuit that formed a unique shaped loop between Brescia, Bologna, Rome, and Milan. A foreshortened (150-mile) version will be held in the U.S. from Oct. 25-27 celebrating American vehicles in the horse country of Virginia and Maryland surrounding Washington, D.C. A gala party will be held at the Italian Ambassador’s residence, Villa Firenze, a mansion in Rock Creek Park, a home formerly belonging to the Guggenheim family. (Bloomberg)

      Compass Contemplations for Friday

      Good morning,

       

      DID YOU KNOW?  Amazon re-visited 5 cities as it narrows its search for a 2nd $5 billion headquarters.....The visits over the past couple of months include New York City, Newark, N.J., Chicago, Miami, and Washington DC.....Amazon appears to be favoring an urban site with the capacity to hire up to 50,000 employees. (WSJ)

      DID YOU KNOW?  5% of the entire US population is housed in just three cities:  New York, Los Angeles and Chicago.

      DID YOU KNOW?  The Texas population has grown by 12.6% (to 28.4 million people, larger than all of Australia) since 2010, more than double the population growth rate of the entire USA. Texas population has doubled since 1980. Texas is the second largest US state by GDP, population and area.

      DID YOU KNOW?  China's GDP growth slowed to 6.5%....yikes:  imagine if the USA's economy was growing at 6.5%! (CNBC)

       

      Compass Contemplations for Thursday

       

      DID YOU KNOW? Housing starts fell 5.3% in September from the prior month to a seasonally adjusted annual rate of 1.201 million, according to the Commerce Department. Residential building permits, which can signal how much construction is in the pipeline, also fell, declining 0.6% from August to an annual pace of 1.241 million last month. Housing-starts data are volatile from month to month and can be subject to large revisions. September’s 5.3% drop for starts came with a margin of error of 11.3 percentage points. (WSJ)


      DID YOU KNOW? U.S. home-builder confidence ticked up in October after pulling back from a multi-decade high in recent months. (WSJ)

       

      DID YOU KNOW?  Household wealth in the U.S. continues to surge. China has replaced Japan in 2nd place. Aggregate global wealth rose by $14 trillion to $317 trillion in the 12 months prior to mid-year 2018, a 4.6% growth rate. Rising wealth was largely due to increases in non-financial assets owned by the middle-class. Total wealth and wealth per adult in the U.S. have grown every year since 2008, even when total global wealth suffered a reversal in 2014 and 2015. The U.S. has accounted for 40% of all increments to world wealth since 2008, and 58% of the rise since 2013. (Global Wealth Report 2018)

       

      DID YOU KNOW? Consumers filed the fewest requests for a mortgage since late 2014 last week as most home borrowing costs reached their highest levels in more than 7 years.

       

      DO YOU WANT PROOF? .....of how every "Compass experience" matters?  This summer, a Compass Agent in LA successfully and smoothly sold the home of their clients. Those clients then asked their agent if perhaps they knew a Compass agent in New York who could help sell their parents apartment on the Upper East Side. It had been on the market for quite some time with a different agent at a different firm and they felt they had such a positive experience with Compass LA they wanted to try a change ......this time with Compass New York. With the introduction to Compass NY and an agent who specializes on the Upper East Side, the home was re-listed, staged, and beautified. After just 13 days on the market, it entered into a contract and closed within 45 days. There is no better public relation for ALL of us if we ALL focus on QUALITY EXPERIENCES AND RESULTS.

      Pre-Approval: Your 1st Step in Buying a Home

      Pre-Approval: Your 1st Step in Buying a Home | MyKCM

      In many markets across the country, the number of buyers searching for their dream homes outnumbers the number of homes for sale. This has led to a competitive marketplace where buyers often need to stand out. One way to show you are serious about buying your dream home is to get pre-qualified or pre-approved for a mortgage before starting your search.

      Even if you are in a market that is not as competitive, understanding your budget will give you the confidence of knowing if your dream home is within your reach.

      Freddie Mac lays out the advantages of pre-approval in the ‘My Home’ section of their website:

      “It’s highly recommended that you work with your lender to get pre-approved before you begin house hunting. Pre-approval will tell you how much home you can afford and can help you move faster, and with greater confidence, in competitive markets.”

      One of the many advantages of working with a local real estate professional is that many have relationships with lenders who will be able to help you through this process. Once you have selected a lender, you will need to fill out their loan application and provide them with important information regarding “your credit, debt, work history, down payment and residential history.”

      Freddie Mac describes the ‘4 Cs’ that help determine the amount you will be qualified to borrow:

      1. Capacity: Your current and future ability to make your payments
      2. Capital or cash reserves: The money, savings, and investments you have that can be sold quickly for cash
      3. Collateral: The home, or type of home, that you would like to purchase
      4. Credit: Your history of paying bills and other debts on time

      Getting pre-approved is one of many steps that will show home sellers that you are serious about buying, and it often helps speed up the process once your offer has been accepted.

      Bottom Line

      Many potential homebuyers overestimate the down payment and credit scores necessary to qualify for a mortgage today. If you are ready and willing to buy, you may be pleasantly surprised at your ability to do so.

      Where Are Mortgage Interest Rates Headed In 2019?

      Where Are Mortgage Interest Rates Headed In 2019? | MyKCM

      The interest rate you pay on your home mortgage has a direct impact on your monthly payment; the higher the rate, the greater the payment will be. That is why it is important to know where rates are headed when deciding to start your home search.

      Below is a chart created using Freddie Mac’s U.S. Economic & Housing Marketing Outlook. As you can see, interest rates are projected to increase steadily over the course of the next year.

      Where Are Mortgage Interest Rates Headed In 2019? | MyKCM

      How Will This Impact Your Mortgage Payment?

      Depending on the amount of the loan that you secure, a half of a percent (.5%) increase in interest rate can increase your monthly mortgage payment significantly.

      According to CoreLogic’s latest Home Price Index, national home prices have appreciated 6.2% from this time last year and are predicted to be 5.1% higher next year.

      If both the predictions of home price and interest rate increases become a reality, families would wind up paying considerably more for their next homes.

      Bottom Line

      Even a small increase in interest rate can impact your family’s wealth, so don’t wait until next year! Let’s get together to evaluate your ability to purchase your dream home now.

      What's Going On With Home Prices?

      Whats Going On With Home Prices? | MyKCM

      According to CoreLogic’s latest Home Price Insights Report, national home prices in August were up 5.5% from August 2017. This marks the first time since June 2016 that home prices did not appreciate by at least 6.0% year-over-year.

      CoreLogic’s Chief Economist Frank Nothaft gave some insight into this change,

      “The rise in mortgage rates this summer to their highest level in seven years has made it more difficult for potential buyers to afford a home. The slackening in demand is reflected in the slowing of national appreciation, as illustrated in the CoreLogic Home Price Index.  

      National appreciation in August was the slowest in nearly two years, and we expect appreciation to slow further in the coming year.”

      One of the major factors that has driven prices to accelerate at a pace of between 6-7% over the past two years was the lack of inventory available for sale in many areas of the country. This made houses a prized commodity which forced many buyers into bidding wars and drove prices even higher.

      According to the National Association of Realtors’ (NAR) latest Existing Home Sales Report, we are starting to see more inventorycome to market over the last few months. This, paired with patient buyers who are willing to wait to find the right homes, is creating a natural environment for price growth to slow.

      Historically, prices appreciated at a rate of 3.7% (from 1987-1999). CoreLogic predicts that prices will continue to rise over the next year at a rate of 4.7%.

      Bottom Line

      As the housing market moves closer to a ‘normal market’ with more inventory for buyers to choose from, home prices will start to appreciate at a more ‘normal’ level, and that’s ok! If you are curious about home prices in your area, let’s get together to chat about what’s going on!

      2 Factors to Watch in Today's Real Estate Market Whether Buying or Selling

      2 Factors to Watch in Todays Real Estate Market Whether Buying or Selling | MyKCM

      When it comes to buying or selling a home there are many factors you should consider. Where you want to live, why you want to buy or sell, and who will help you along your journey are just some of those factors. When it comes to today’s real estate market, though, the top two factors to consider are what’s happening with interest rates & inventory.

      Interest Rates

      Mortgage interest rates have been on the rise and are now over three-quarters of a percentage point higher than they were at the beginning of the year. According to Freddie Mac’s latest Primary Mortgage Market Survey, rates climbed to 4.72% for a 30-year fixed rate mortgage last week.

      The interest rate you secure when buying a home not only greatly impacts your monthly housing costs, but also impacts your purchasing power.

      Purchasing power, simply put, is the amount of home you can afford to buy for the budget you have available to spend. As rates increase, the price of the house you can afford to buy will decrease if you plan to stay within a certain monthly housing budget.

      The chart below shows the impact that rising interest rates would have if you planned to purchase a $400,000 home while keeping your principal and interest payments between $2,020-$2,050 a month.

      2 Factors to Watch in Todays Real Estate Market Whether Buying or Selling | MyKCM

      With each quarter of a percent increase in interest rate, the value of the home you can afford decreases by 2.5% (in this example, $10,000). Experts predict that mortgage rates will be over 5% by this time next year.

      Inventory

      A ‘normal’ real estate market requires there to be a 6-month supply of homes for sale in order for prices to increase only with inflation. According to the National Association of Realtors (NAR), listing inventory is currently at a 4.3-month supply (still well below the 6-months needed), which has put upward pressure on home prices. Home prices have increased year-over-year for the last 78 straight months.

      The inventory of homes for sale in the real estate market had been on a steady decline and experienced year-over-year drops for 36 straight months (from July 2015 to May 2018), but we are starting to see a shift in inventory over the last three months.

      The chart below shows the change in housing supply over the last 12 months compared to the previous 12 months. As you can see, in June, July, and August, inventory levels have started to increase as compared to the same time last year.

      2 Factors to Watch in Todays Real Estate Market Whether Buying or Selling | MyKCM

      This is a trend to watch as we move further into the fall and winter months. If we continue to see an increase in homes for sale, we could start moving further away from a seller’s market and moving closer to a normal market.

      Bottom Line

      If you are planning to enter the housing market, either as a buyer or a seller, let’s get together to discuss the changes in mortgage interest rates and inventory and what they could mean for you. 617-901-4500.

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