Housing Market to “Spring Forward”

Housing Market to “Spring Forward” | Simplifying The Market

Just like our clocks this weekend in the majority of the country, the housing market will soon “spring forward”! Similar to tension in a spring, the lack of inventory available for sale in the market right now is what is holding back the market.

Many potential sellers believe that waiting until Spring is in their best interest, and traditionally they would have been right.

Buyer demand has seasonality to it, which usually falls off in the winter months, especially in areas of the country impacted by arctic temperatures and conditions.

That hasn’t happened this year.

Demand for housing has remained strong and is currently three times stronger than last year at this time.

The National Association of REALTORS (NAR) recently reported that the top 10 dates sellers listed their homes in 2014 all fell in April, May or June.

Those who act quickly and list now could benefit greatly from additional exposure to buyers prior to a flood of more competition coming to market in the next few months.

Bottom Line

If you are planning on selling your home in 2015, meet with a local real estate professional to evaluate the opportunities in your market.

Selling Your Home? The Importance of Using an Agent

Selling Your Home? The Importance of Using an Agent | Simplifying The Market

When a homeowner decides to sell their house, they obviously want the best possible price with the least amount of hassles. However, for the vast majority of sellers, the most important result is to actually get the home sold.

In order to accomplish all three goals, a seller should realize the importance of using a real estate professional. We realize that technology has changed the purchaser’s behavior during the home buying process. For the past two years, 92% of all buyers have used the internet in their home search according to the National Association of Realtors’ most recent Profile of Home Buyers & Sellers.

However, the report also revealed that for the second year in a row 96% percent of buyers that used the internet when searching for a home purchased their home through either a real estate agent/broker or from a builder or builder’s agent. Only 2% purchased their home directly from a seller whom the buyer didn’t know.

Buyers search for a home online but then depend on an agent to find the actual home they will buy (53%) or negotiate the terms of the sale & price (31%) or understand the process (63%).

Stephen Phillips, the Chief Operating Officer for HSF Affiliates LLC, put it best:

“Home buyers are more informed than ever with their Internet searches and ongoing research; however, there’s a critical need to transform that information into analysis and advice that helps consumers make the best home-buying and selling decisions.

The plethora of information now available has resulted in an increase in the percentage of buyers that reach out to real estate professionals to “connect the dots”. This is obvious as the percentage of overall buyers who used an agent to buy their home has steadily increased from 69% in 2001.

Bottom Line

If you are thinking of selling your home, don’t underestimate the role a real estate professional can play in the process.

Where Are Mortgage Rates Headed?

Where Are Mortgage Rates Headed? | Simplifying The Market

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 look at where rates are headed when deciding to buy now or wait until next year.

Below is a chart created using Freddie Mac’s February 2015 U.S. Economic & Housing Marketing Outlook. As you can see interest rates are projected to increase steadily over the course of 2015.

30-Year Fixed Rate Mortgage Projections | Simplifying The Market

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.

Research released by Zillow touched on this point:

“As rates rise, new home buyers will confront higher financing costs and monthly mortgage payments. For many, this will mean tightening their budgets and sacrificing some luxuries they may take for granted today.”

The experts predict that home prices will appreciate by 4.4% over the course of 2015. If both predictions become reality, families would wind up paying considerably more for their home.

Bottom Line

Even a small increase in interest rate can impact your family’s wealth. Meet with a local real estate professional to evaluate your ability to purchase your dream home.

Home Sales are NOT Collapsing!

Home Sales are NOT Collapsing! | Simplifying The Market

The National Association of REALTORS (NAR) just released their Existing Home Sales report and some have taken the results and ran with headlines like:

“Existing home sales collapse in January despite low mortgage rates”.

Let’s take a closer look at what the report really shows. There is a seasonality to home sales that happens every year, with a decline in January, (as shown in the graph below.) But in reality 200,000 more homes (3.2%) sold this January over last January.

Existing Home Sales Year-over-Year | Simplifying The Market

The demand for housing hasn’t been a challenge.

Current buyer demand, as shown in the graph below, is actually 3x greater than that of January 2014.

Buyer Activity | Simplifying The Market

NAR’s Chief Economist, Lawrence Yun points to the real issue at hand:

“Realtors® are reporting that low rates are attracting potential buyers, but the lack of new and affordable listings is leading some to delay decisions.”

Months Inventory of Homes For Sale | Simplifying The Market

Even though buyers are out looking for their dream home, they cannot find it! Inventory levels increased slightly since December, but are still below historic norms and unable to keep up with the elevated demand.

Bottom Line

If your plan for 2015 includes selling your house, waiting till the Spring may not be in your best interest. Meet with a local real estate professional in your market who can explain the opportunities available now.

Thinking of Buying? What are you waiting for?

Thinking of Buying? What Are You Waiting For? | Simplifying The Market

If you are planning on becoming a homeowner, or moving up to the home of your dreams in 2015, here are four great reasons to consider buying a home now, instead of waiting until spring.

1. Prices Will Continue to Rise

The Home Price Expectation Survey polls a distinguished panel of over 100 economists, investment strategists, and housing market analysts. Their most recent report projects appreciation in home values over the next five years to be between 11.7% (most pessimistic) and 27.5% (most optimistic).

The bottom in home prices has come and gone. Home values will continue to appreciate for years. Waiting no longer makes sense.

2. Mortgage Interest Rates Are Projected to Increase

Although Freddie Mac’s Primary Mortgage Market Survey shows that interest rates for a 30-year mortgage have softened recently, most experts predict that they will begin to rise over the next 12 months. The Mortgage Bankers Association, Fannie Mae, Freddie Mac & the National Association of Realtors are in unison projecting that rates will be up almost a full percentage point by the end of 2015.

An increase in rates will impact YOUR monthly mortgage payment. Your housing expense will be more a year from now if a mortgage is necessary to purchase your next home.

3. Either Way You are Paying a Mortgage

As a paper from the Joint Center for Housing Studies at Harvard University explains:

“Households must consume housing whether they own or rent. Not even accounting for more favorable tax treatment of owning, homeowners pay debt service to pay down their own principal while households that rent pay down the principal of a landlord plus a rate of return. That’s yet another reason owning often does—as Americans intuit—end up making more financial sense than renting.”

4. It’s Time to Move On with Your Life

The ‘cost’ of a home is determined by two major components: the price of the home and the current mortgage rate. It appears that both are on the rise.

But, what if they weren’t? Would you wait?

Look at the actual reason you are buying and decide whether it is worth waiting. Whether you want to have a great place for your children to grow up, you want your family to be safer or you just want to have control over renovations, maybe it is time to buy.

If the right thing for you and your family is to purchase a home this year, buying sooner rather than later could lead to substantial savings.

Homeownership Rates: Are They Really Crashing?

Homeownership Rates: Are They Crashing? | Simplifying The Market

The Census recently released their 2014 Homeownership Statistics, and many began to worry that Americans have taken a step back from the notion of homeownership.

Easy… Chicken Little

The national homeownership rate peaked in 2004, representing a 69.2% of Americans who bought vs. rented their primary residence. Many have noticed a decline in rate since then and taken that as a bad sign.

However, if you look at the national rate over the last 30 years (1984-2014), you can see that the current homeownership rate has returned closer to the historic norm. 2014 ended the year with a rate of 64% just under the rate in 1985 and 1995.

Homeownership Rates Historically | Simplifying The Market

Bottom Line

With interest rates and prices still below where experts predict, evaluate your ability to purchase a home with a local real estate professional.

2015: A Year of Housing Opportunity

2015: A Year of Housing Opportunity | Simplifying The Market

Many believed that when the housing market crashed, so too would the desire of American’s to own a home again. Many reports have shown that, especially among younger generations, the American Dream of homeownership is still very much alive.

Julián Castro, Secretary for HUD, recently summed up what it means to own a home in a speech at the National Press Club.

“Homeownership is still the cornerstone of the American Dream — a fact you can see in the lives of everyday folks.

It’s a source of pride. It’s a source of wealth, providing both a nest and a nest egg. And it strengthens communities and fuels growth in the overall economy.”

Castro appropriately named his speech, “2015: A Year of Housing Opportunity”, a theme that rang true throughout.

“Opportunity is not an abstract concept – it’s a path to a more prosperous life, and housing often serves as its foundation. T.S. Elliot once said that “home is where one starts from.”

“A home is often a primary source of wealth in a family… Having a home is generational way to pass that wealth on. We want people responsible enough to own a home to have that opportunity.”

Bottom Line

“Over the years-through decades of economic downturns and wars-the American people have always held on to this Dream, and always will.”

As the economy continues to improve, more and more Americans will qualify for homeownership, allowing more families to obtain the American Dream.

Either Way, You’re Paying a Mortgage

Either Way You're Paying a Mortgage | Simplifying The Market

There are some people that have not purchased a home 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 your mortgage or your landlord’s.

As a paper from the Joint Center for Housing Studies at Harvard University explains:

“Households must consume housing whether they own or rent. Not even accounting for more favorable tax treatment of owning, homeowners pay debt service to pay down their own principal while households that rent pay down the principal of a landlord plus a rate of return. That’s yet another reason owning often does—as Americans intuit—end up making more financial sense than renting.”

Also, if you purchase with a 30-year fixed rate mortgage, your ‘housing expense’ is locked in over the thirty years for the most part. If you rent, the one guarantee you will have is that your rent will increase over that same thirty year time period.

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

Bottom Line

Whether you are looking for a primary residence for the first time or are considering a vacation home on the shore, owning might make more sense than renting since home values and interest rates are still lower than projected.