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      Blog :: 02-2019

      Compass Contemplations for Wednesday

      Good morning,

      DID YOU KNOW?  In the mortgage business, about 70% used to be focused on re-financing and only 30% on new mortgages. As rates rise and pressure from automation and online financing options also rises, this ratio is changing fast!

       

      DID YOU KNOW? I am especially thankful that Compass has ZERO DEBT: Total US corporate debt has swelled from around $4.9 trillion in 2007 to nearly $9.1 trillion in 2018, surging 86%. Why should debt worry us? Rising interest rates make this debt more expensive to service. Several of our competitors carry enormous debt. Realogy (Coldwell Banker, Sotheby's, Corcoran, Century 21, Better Homes and Gardens, etc) has over $3.5 billion in debt. (Securities Industry and Financial Markets Association). Realogy's 20% stock plummet yesterday, may well be a barometer on the changing housing market and shifting trends in the brokerage business. As well as growing concerns about mounting corporate debt.

       

      DID YOU KNOW? Total emigration from California to other states between 2006 and 2017 was 1.24 million, according to the Census Bureau, yet only third highest in the nation behind New York and Illinois. More people are leaving New York City for California than moving in, but the ones who move either way tend to be between the ages of 18 - 34. Only 3,000 people older than 35 moved permanently from California to New York City in 2017. More than 15,000 people (6%) moved to New York City from Florida and Texas. These figures do not factor in wealthier people who may keep multiple residences. (WSJ)

       

      DID YOU KNOW? Walmart's e-commerce Q4 2018 sales rose 43% and for 2019 it's calling for internet sales to be up another 35% becoming the most potent threat to Amazon's e-tail dominance, not too shabby for a 57-year old company!

      What are the Benefits of Becoming a Homeowner?

      What are the Benefits of Becoming a Homeowner? | MyKCM
       

      Every family has a list of important dates. We celebrate birthdays, anniversaries, pet adoptions…and the list goes on. For 64.4 percent of households in the United States, this list includes the day they became a homeowner for the first time!

      Why is this date important? Homeownership is not just a roof over your head! It represents shelter, stability, wealth, and pride! For decades, homeownership has been an important part of the American Dream!

      However, many people question if the next generations see the same benefits of homeownership as their predecessors.

      In case we have forgotten, some of those benefits are:

       

      Non-Financial Benefits

       

      1) Educational Achievement: Homeownership has a positive impact on academic achievement, including reading and math performance in children 3-12 years old.

      2) Civic Participation: “Owning a home means owning a part of the neighborhood.” Homeowners have a stronger connection to their neighborhood and are more committed to volunteer.

      3) Health Benefits: Adjusting for a range of demographic, socioeconomic and housing-related characteristics, homeowners have a substantial health advantage over renters.

      4) Public Assistance: The report shows 47% of homeowners use their home equity credit lines to help pay other debts, diminishing their need for public assistance.

      5) Property Maintenance and Improvement: A well-maintained home not only generates benefits through consumption and safety, but a high-quality structure also raises mental health.

      6) Pride of Ownership: This place is unique as it is “yours.” You can customize it according to your likes and personality.

      In addition to financial benefits, homeownership also brings significant social benefits. These not only pertain to the family, but extend to the communities, the state, and the country!

      Financial Benefits

       

      Buying a home is an investment in your future!

      1. Appreciation: On average, home prices are appreciating annually at a rate of 3.6%. This helps to create a safety net.
      2. Forced Savings: Your mortgage is like a forced savings plan! With each payment, you are reducing the principal of your loan.
      3. Home Equity: Homeownership builds equity every single month. You can later use that equity to start a business, send your children to college, etc.
      4. Net Worth: A homeowners’ net worth is 44x greater than renters! This gives you the financial freedom to invest.
      5. Stability: Rent prices increase 4% annually! A fixed mortgage payment allows you to save for future projects and guard against inflation.
      6. Tax Benefits: The government has created tax benefits to encourage customers to purchase. (Talk to your CPA to see which benefits apply to you).

      Bottom Line

      Homeownership is and will always be part of the American Dream! There are many financial and non-financial benefits to take advantage of when owning a home. If owning a home is part of your dream, contact a local real estate professional to help you with the process!

      Compass Contemplations for Wednesday

       

      Good morning,

       

      And a very happy VALENTINE'S DAY to you! 

       

      DID YOU KNOW? J.P. Morgan Chase moves more than $6 trillion around the world every day for corporations in its massive wholesale payments business. In trials set to start in a few months, a tiny fraction of that will happen over something called 'JPM Coin,' the digital 'cryptocurrency' token created by engineers at the bank to instantly settle payments between clients. (CNBC)

       

      DID YOU KNOW? Signs that the Federal Reserve may be done with its yearslong campaign to raise interest rates are sending ripples through fixed-income markets, holding down interest rates for a wide swath of borrowers. Low Treasury yields are a boon for stocks because they hold down borrowing costs for companies and push some yield-seeking investors out of government bonds and into other types of assets. They also could provide a lift to the housing market. (WSJ)

       

      DID YOU KNOW?  Airbus will cease production of its monster-sized A-380.....maybe planes are not that dis-similar to houses where jumbo-sized is also waning in demand? (WSJ)

       

      DID YOU KNOW? Housing investments make up as much as 18% of the U.S. growth rate, so why is housing not faring as well as the robust US economy? Here are some reasons:

      1. Student Debt: Home buyers 36 years old and younger comprised some 34% of the market in 2016 (NAR). Millennials are the largest customer base for mortgages, but student debt continues to weigh heavily on their personal finances with 46% having a median student loan balance of $25,000. According to a survey, 49% of home buyers said that student debt prohibited them from obtaining a loan.

      2. Housing shortages: There aren’t enough houses on the market. In 2017, there were 1.25 million new homes in the country, yet the U.S. requires 1.62 million houses each year. The 370,000 shortfall puts intense upward pressure on home prices. Because of the surge in prices, home purchase sentiment has fallen - a 12% decrease in Fannie Mae’s sentiment index - home buyers aren’t as keen on purchasing a home, opting to rent instead. 

      3.  Low Interest rate addiction: home buyers enjoyed super-low-interest rates for almost 10 years. New mortgages and refinancing was more affordable. Now financing has become more expensive, and home buyers are highly attuned to the increase in their payment amounts. Add in rising operating costs due to higher inflation and higher real estate taxes..... (Marketwatch)   

       

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