Want To Keep Up With The Joneses? Now’s The Time

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Does your current house fit your needs? Does it seem like everyone else is moving up and moving on to more luxurious surroundings? Are you wondering what it would take to start living your dream life?

Market conditions around the country have presented an opportunity like no other for those who are looking to make the jump to a premium or luxury home.

The National Association of Realtors reports that national inventory levels are now at a 4.3-month supply. A normal market, where prices appreciate with inflation, has 6-7-months inventory. The national market has echoed the conditions felt in the starter and trade-up markets as inventory has declined year-over-year for 25 consecutive months.

The chart below shows the relationship between the inventory of homes for sale and prices.

Want to Keep Up with the Joneses? Now’s the Time | Keeping Current Matters

According to Trulia’s latest Inventory Report, the inventory of homes for sale in the two lower priced markets has dropped by double digit percentages over the last 12 months (16% for starter and 13% for trade-up homes). While the inventory of homes in the premium home category has dropped by only 4%.

This has created a seller’s market in the lower-priced markets, as 54% of homes were on the market for less than a month in the last Realtors Confidence Index, and a buyer’s market in the luxury market,where homes were on the market for an average of 160 days according to the Institute for Luxury Home Marketing.

Bottom Line

If you are even thinking of listing your home and moving up to a luxury home, now is the time to meet with a local real estate professional to evaluate your ability to do so. Homeowners across the country are upgrading their homes, why can’t you? Your dream home is waiting!

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More Boomerang Buyers Are About To Enter The Market

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We previously informed you about a study conducted by TransUnion titled, “The Bubble, the Burst and Now – What Happened to the Consumer?” The study revealed that 1.5 million homeowners who were negatively impacted by the housing crisis could re-enter the housing market between 2016-2019.

Recently, HousingWire analyzed data from the US Bankruptcy Courts and revealed that 6 million Americans will have their bankruptcies disappear off their credit reports over the next five years and that this could “possibly send a flood of more homebuyers into the housing market.

The chart below shows the total number of bankruptcies filed by year in the US over the last 10 years. The light blue bars represent over 3.3 million people who have already waited the 7 years necessary for their reports to no longer include their bankruptcies.

More Boomerang Buyers Are about to Enter the Market | Keeping Current Matters

How would this “send a flood of more homebuyers into the housing market”?

As the article mentioned, in 2010 the number of chapter 7 bankruptcies increased to nearly 1.14 million. Now, 7 years later, they will begin to fade from credit histories, enabling prospective buyers to become homeowners again once their credit scores improve.

As we can see from both reports, the homeownership rate has the opportunity to increase drastically over the next few years with all of these boomerang buyers returning to the market.

Bottom Line

If your family was negatively impacted by the housing bust, here is the light at the end of the tunnel! You may be able to purchase your dream home faster than you think!

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Best Small Towns to Visit in the USA

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Filled with charm and plenty of friendly locals, small towns are synonymous with life in America. To help you decide which towns are worthy of a vacation, U.S. News narrowed it down to places with a population of fewer than 100,000 that offer plenty of restaurants and attractions, plus have a unique character all their own. So ditch the big city crowds and start planning your small-town getaway, and don’t forget to vote for your favorite destination to help us determine next year’s list.

Breckenridge

#2 in Best Small Towns to Visit in the USA

Why go: Sure, you’ll find plenty of fellow powder hounds on the slopes of nearby ski resorts along with stunning mountain vistas year-round, but this Colorado town also packs a historic punch thanks to its 19th-century gold rush roots.

Breckenridge is ranked as:

See the full list here!

Why Is It Important To Use A Professional To Sell Your Home?

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When a homeowner decides to sell their house, they obviously want the best possible price for it with the least amount of hassles along the way. However, for the vast majority of sellers, the most important result is actually getting their homes 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. According to the National Association of Realtors’ 2016 Profile of Home Buyers & Sellers, the first step that “…44% of recent buyers took in the home buying process was to look online at properties for sale.

However, the report also revealed that 96% of buyers who used the internet when searching for homes purchased their homes through either a real estate agent/broker or from a builder or builder’s agent. Only 2% purchased their homes 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 home they will buy (50%), to negotiate the terms of the sale (47%) & price (36%), or to help understand the process (61%).

The plethora of information now available has resulted in an increase in the percentage of buyers who reach out to real estate professionals to “connect the dots.” This is obvious, as the percentage of overall buyers who have used agents to buy their homes 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.

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58% of Homeowners See a Drop in Home Values Coming

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After what transpired just ten years ago, we can understand the concern Americans have about the current increase in home prices. However, this market has very little in common with what happened last decade.

The two major causes of the housing crash were:

  1. A vast oversupply of housing inventory caused by home builders building at a pace that far exceeded historical norms.
  2. Lending standards that were so relaxed that unqualified buyers could easily obtain financing thus enabling them to purchase a home.

Today, housing inventory is at a 20-year low with new construction starts well below historic norms and financing a home is anything but simple in the current mortgage environment. The elements that precipitated the housing crash a decade ago do not exist in today’s real estate market.

The current increase in home prices is the result of a standard economic equation: when demand is high and supply is low, prices rise.

If you are one of the 58% of homeowners who are concerned about home values depreciating over the next two years and are hesitant to move up to the home of your dreams, take comfort in the latest Home Price Expectation Survey.

Once a quarter, a nationwide panel of over one hundred economists, real estate experts and investment & market strategists are surveyed and asked to project home values over the next five years. The experts predicted that houses would continue to appreciate through the balance of this year and in 2018, 2019, 2020 and 2021. They do expect lower levels of appreciation during these years than we have experienced over the last five years but do not call for a decrease in values (depreciation) in any of the years mentioned.

Bottom Line

If you currently own a home and are thinking of moving-up to the home your family dreams about, don’t let the fear of another housing bubble get in the way as this housing market in no way resembles the market of a decade ago.

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Mortgage Rates Dive to Another Low

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Mortgage Rates Dive to Another Low

Mortgage rates dove to another low this week, with the 30-year, fixed rate averaging 3.90 percent, down from 3.93 percent the week prior, according to Freddie Mac’s recently released Primary Mortgage Market Survey® (PMMS®). The 15-year, fixed rate averaged 3.18 percent, the same from the week prior, while the 5-year, Treasury-indexed hybrid adjustable rate averaged 3.14 percent, down from 3.15 percent the week prior.

“After holding relatively flat last week, the 10-year Treasury yield fell four basis points this week,” says Sean Becketti, chief economist at Freddie Mac. “The 30-year mortgage rate moved in tandem with Treasury yields, dropping three basis points to 3.90 percent. Earlier this week, Federal Reserve officials highlighted the influence of continued weak inflation data on rates.”

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When Disaster Strikes, Be Prepared to Meet the Needs of Your Community

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When Disaster Strikes, Be Prepared to Meet the Needs of Your Community

As a real estate agent, you’re in the middle of the action. Whether it’s a prospect asking where they can find a good cappuccino or a past client wondering if you know a reputable company to come fix their garage door, chances are, you’ll be able to point them in the right direction. But what can you do when your contacts come to you with a problem that can’t be fixed with a trip to the local coffee house or a repair recommendation? In a recent interview, California real estate agent Timothy Toye shared what the days and weeks following one of the worst forest fires in California’s history were like, as well as how his role in real estate shifted to meet his community’s needs.

Play Podcast: Natural Disaster – An Agent Survival Story | Timothy Toye | Secrets Unplugged

September 12, 2015 started as a normal day for Toye, but shifted in a moment. “I had an appointment at 2:30 to meet with a seller of mine,” Toye explained. “At 2:00, the seller called and said, ‘Don’t come over. We’re getting evacuated.’”

Before long, Toye’s office was ordered to evacuate, too. Luckily, he stored most of his data in the cloud, so all he had to do was pack up the computers and leave. Toye stressed that when deciding what to bring with you, “It depends on how urgent it is; when you’re asked to evacuate, it’s obviously urgent. The main thing is to preserve human life. Everything else comes second from that.”

Toye was evacuated for about two weeks and he noticed that “everybody immediately had a shared concern…’What’s happening to the area? What’s happening to my house, your house, our neighbor’s houses?’” No one knew whether or not their home or business still existed. “There was a lot of hysteria and rumors.

“Just coming back in and passing on whatever information and helping people…at that point it was not about the business anymore,” Toye explained. “It was more about just helping people on a very human level to deal with a dramatic natural event that had all kinds of difficult financial and emotional and personal consequences for people. So that was kind of the beginning of it.”

Toye made it his mission to get involved and let people know “what areas were hit and which weren’t,” and passed along other important information to those who were still evacuated, such as when essential services like electricity were restored. People who lost their homes were able to start working with their insurance companies and move forward.

When dealing with disaster, you must “be adaptable…it was a moment just to respond…be smart, be intelligent, be compassionate.” As a real estate agent, you should “participate with your community because when you’re in need, you want a community around you. Be there for people.”

While we hope your community is never faced with disaster, it never hurts to be prepared. Help your clients be ready to hunker down or evacuate at a moment’s notice by sharing the Emergency Preparedness Checklist with your clients. Just add your contact information and share it with your friends, family, contacts, and community.

For more information, please visit connect.homes.com.

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4 Creative Ways to Work Around the Inventory Problem

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4 Creative Ways to Work Around the Inventory Problem

One of the most frustrating aspects of this year’s housing recovery is that solid demand from buyers has encountered stubbornly low inventory levels in many U.S. and Canadian markets, especially for starter homes. It’s a situation that requires both patience and creative solutions.

As a managing broker, your buyer’s reps may be tossing up their hands and asking, “What can I do?” To be sure, when the supply of homes is inadequate, buyers’ options are limited.

On the other hand, this may be an excellent time for your agents to explore options that aren’t on the buyer’s radar. At a minimum, buyer-clients will feel better about working with someone who keeps the dialogue going and remains interested in proposing potential solutions, including:

  1. Buy a fixer-upper. That run-down house that’s been sitting on the market for months may be a diamond in the rough for a buyer with the vision to see its potential, especially if they have the time and skills to participate in renovations. Before making an offer, however, encourage your agents to assist this buyer in estimating renovation costs and identifying people in the trades to assist them. Also, see if they qualify for and can take advantage of FHA’s 203(k) renovation loan.
  1. Buy a teardown and rebuild. If a buyer doesn’t want to deal with the potential headaches of a fixer-upper, they may be a good candidate for purchasing a teardown, or a vacant lot, and building a new home. Fortunately, there are many ways to accomplish this without the expense of hiring an architect or a custom home builder. Learn who is supplying prefabricated and modular homes to your market—options that aren’t only economical and energy-efficient, but also increasingly popular with younger buyers.
  1. Explore rent-to-own possibilities. One reason starter homes are so hard to find is because many move-up buyers are holding onto their original home, renting it to someone else or listing it on sites like Airbnb. Coupled with investor purchases during the housing slump, it’s no wonder inventories are pinched at certain price points. While national rent rates continue to inch up, some markets are already facing declines. This may be the perfect time to approach investor-owners with a rent-to-own proposal for your buyer-client.
  1. Buy a larger home with rentable space. If a buyer qualifies for a larger mortgage than they need (or want), it may make sense to go ahead and purchase a bigger property that includes a mother-in-law apartment or similar rentable space. That way, the buyer can offset part of their mortgage expense with rental income, while also building extra equity in their home. Additionally, if they start feeling crowded in their home, they may decide to take over the rental space, eliminating the need to search for a larger house, while also saving on transaction and moving expenses.

Admittedly, these solutions may be less than ideal for many buyers. Until the inventory situation improves, they’re examples of ways to put a positive spin on a challenging situation. After all, as the saying goes, “When life gives you lemons, make lemonade.”

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Why Inventory Is the Lowest It’s Been in 20 Years

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Why Inventory Is the Lowest It’s Been in 20 Years

Housing demand continues to outstrip supply, with shortages now at their worst in 20 years. Why?

The answer is simple: Homeowners are happy where they are, according to a new survey by realtor.com®. Sixty-three percent of homeowners surveyed say their current house meets their needs, with baby boomer homeowners especially unwilling to move—a problem for succeeding generations, who are missing out on the 33 million condos and single-family houses boomers currently own. An overwhelming 85 percent of boomers surveyed have no plans to list their home for sale in the next year, with 72 percent reporting that their existing house suits their needs. Sixty-five percent of Gen X homeowners and 52 percent of millennial homeowners echoed the same sentiment.

Homeowners overall also see no need to uproot, the survey shows. Sixteen percent are not moving up due to their low mortgage interest rate (and 13 percent due to their low property taxes), 15 percent are remaining in place because they recently bought their home (a reason reported by 27 percent of millennial homeowners), and another 13 percent are staying put to make upgrades.

“Life events drive real estate transactions,” says Danielle Hale, chief economist for realtor.com. “When the majority of homeowners feel their family needs are being met by their current home, there is nothing compelling them to put their home on the market.”

Many are hesitant to sell, as well, because they know how high-priced and scarce homes are.

“Boomers indeed hold the key to those homes the market desperately needs, both in the urban condo and the detached suburban home segment,” Hale says. “But with a strong economy and rising home prices, there’s really no reason for established homeowners to sell in the short term. Although downsizing might be on the minds of boomers, they face the same inventory shortages and price increases plaguing millennials.”

Fifty-nine percent of millennial homeowners surveyed have no plans to list their home for sale in the next year, but 35 percent do—and, of those, 60 percent are looking to trade up. If their plans pan out, the housing market could gain a boost in entry-level stock.

“The housing shortage forced many first-time homebuyers to consider smaller homes and condos as a way to literally get their foot in the door,” says Hale. “Our survey data reveals that we may see more of these homes hitting the market in the next year, but whether these owners actually list will depend on whether they can find another home.”

More than 60 percent of the real estate brokers in RISMedia’s 2017 Power Broker Survey reported limited inventory as their most challenging issue.

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Housing Inventory Hits 30-Year Low

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Spring is traditionally the busiest season for real estate. Buyers, experiencing cabin fever all winter, emerge like flowers through the snow in search of their dream home. Homeowners, in preparation for the increased demand, are enticed to list their house for sale and move on to the home that will better fit their needs.

New data from CoreLogic shows that even though buyers came out in force, as predicted, homeowners did not make the jump to list their home in the second quarter of this year. Frank Nothaft, Chief Economist for CoreLogic had this to say,

“The growth in sales is slowing down, and this is not due to lack of affordability, but rather a lack of inventory. As of Q2 2017, the unsold inventory as a share of all households is 1.9 percent, which is the lowest Q2 reading in over 30 years.”

CoreLogic’s President & CEO, Frank Martell added,

“Home prices are marching ever higher, up almost 50 percent since the trough in March 2011.

While low mortgage rates are keeping the market affordable from a monthly payment perspective, affordability will likely become a much bigger challenge in the years ahead until the industry resolves the housing supply challenge.”

Overall inventory across the United States is down for the 25th consecutive month according to the latest report from the National Association of Realtors and now stands at a 4.3-month supply.

Real estate is local.

Market conditions in the starter and trade-up home markets are in line with the median US figures, but conditions in the luxury and premium markets are following an opposite path. Premium homes are staying on the market longer with ample inventory to suggest a buyer’s market.

Bottom Line

Buyers are out in force, and there has never been a better time to move-up to a premium or luxury home. If you are considering selling your starter or trade-up home and moving up this year, meet with a local real estate professional who can explain the exact conditions in your area.

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