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Planning on Buying a Home? Be Sure You Know Your Options.

Author:Shannah Ferrante
Categories:First Time Home Buyers,For Buyers,Move-Up Buyers,New Construction

Planning on Buying a Home? Be Sure You Know Your Options. | Simplifying The Market

When you’re ready to buy, you’ll need to determine if you prefer the charm of an existing home or the look and feel of a newer build. With limited existing home inventory available today, especially in the starter and middle-level markets, many buyers are considering a new home that’s recently been constructed, or they’re building the home of their dreams.

According to Robert Dietz, Chief Economist at the National Association of Home Builders (NAHB),

“The second half of 2019 has seen steady gains in single-family construction, and this is mirrored by the gradual uptick in builder sentiment over the past few months.”

This is great news for homebuyers because it means there is additional inventory coming to the market, giving buyers more choices. The most recent data from NAHB shows,

“The inventory of new homes for sale was 321,000 in September, representing a 5.5 months’ supply. The median sales price was $299,400. The median price of a new home sale a year earlier was $328,300.”

Another added bonus is that builders are very aware of buyer demand in this segment, so they’re now building in a price range where there are more interested buyers ($299,400 instead of $328,300). With a reduced sales price and low-interest rates, today’s buyers have strong purchasing power.

Bottom Line

If you’re thinking of buying a home, you may want to consider a new build to meet your family’s needs. Let’s get together to discuss the process and review what’s available in our area.

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The #1 Reason to List Your House in the Winter

Author:Shannah Ferrante
Categories:For Sellers,Move-Up Buyers,Selling Myths

The #1 Reason to List Your House in the Winter | Simplifying The Market

Many sellers believe spring is the best time to put their homes on the market because buyer demand traditionally increases at that time of year. What they don’t realize is if every homeowner believes the same thing, then that’s when they’ll have the most competition.

So, what’s the #1 reason to list your house in the winter? Less competition.

Housing supply traditionally shrinks at this time of year, so the choices buyers have will be limited. The chart below was created using the months supply of listings from the National Association of Realtors.The #1 Reason to List Your House in the Winter | Simplifying The MarketAs you can see, the ‘sweet spot’ to list your house for the most exposure naturally occurs in the late fall and winter months (November – January). 

Temperatures aren’t the only thing that heats up in the spring – so do listings!The #1 Reason to List Your House in the Winter | Simplifying The MarketIn 2018, listings increased from December to May. Don’t wait for these listings and the competition that comes with them to come to the market before you decide to list your house.

Added Bonus: Serious Buyers Are Out in the Winter

At this time of year, purchasers who are serious about buying a home will be in the marketplace. You and your family will not be bothered and inconvenienced by mere ‘lookers.’ The lookers are at the mall or online doing their holiday shopping.

 Bottom Line

If you’ve been debating whether or not to sell your house and are curious about market conditions in your area, let’s get together to determine the best time to list your house.

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How to Determine If You Can Afford to Buy a Home

Author:Shannah Ferrante
Categories:First Time Home Buyers,For Buyers,Interest Rates,Move-Up Buyers,Pricing

The gap between the increase in personal income and residential real estate prices has been used to defend the concept that we are experiencing an affordability crisis in housing today.

It is true that home prices and wages are two key elements in any affordability equation. There is, however, an extremely important third component to that equation: mortgage interest rates.

Mortgage interest rates have fallen by more than a full percentage point from this time last year. Today’s rate is 3.75%; it was 4.86% at this time last year. This has dramatically increased a purchaser’s ability to afford a home.

Here are three reports validating that purchasing a home is in fact more affordable today than it was a year ago:

CoreLogic’s Typical Mortgage Payment

“Falling mortgage rates and slower home-price growth mean that many buyers this year are committing to lower mortgage payments than they would have faced for the same home last year. After rising at a double-digit annual pace in 2018, the principal-and-interest payment on the nation’s median-priced home – what we call the “typical mortgage payment”– fell year-over-year again.”  

The National Association of Realtors’ Affordability Index

“At the national level, housing affordability is up from last month and up from a year ago…All four regions saw an increase in affordability from a year ago…Payment as a percentage of income was down from a year ago.”

First American’s Real House Price Index (RHPI)

“In 2019, the dynamic duo of lower mortgage rates and rising incomes overcame the negative impact of rising house price appreciation on affordability. Indeed, affordability reached its highest point since January 2018. Focusing on nominal house price changes alone as an indication of changing affordability, or even the relationship between nominal house price growth and income growth, overlooks what matters more to potential buyers – surging house-buying power driven by the dynamic duo of mortgage rates and income growth. And, we all know from experience, you buy what you can afford to pay per month.”

Bottom Line

Though the price of homes may still be rising, the cost of purchasing a home is actually falling. If you’re thinking of buying your first home or moving up to your dream home, let’s connect so you can better understand the difference between the two.

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4 Reasons to Buy a Home This Fall

Author:Shannah Ferrante
Categories:First Time Home Buyers,For Buyers,Move-Up Buyers

4 Reasons to Buy a Home This Fall | Simplifying The Market

Here are four great reasons to consider buying a home today, instead of waiting.

1. Prices Will Continue to Rise

CoreLogic’s latest Home Price Insights Report shows that home prices have appreciated by 3.6% over the last 12 months. The same report predicts prices will continue to increase at a rate of 5.8% over the next year.

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 Next Year

The Primary Mortgage Market Survey from Freddie Mac indicates that interest rates for a 30-year mortgage have recently hovered just above 3.5%. This is great news for buyers in the market right now, because low interest rates increase your purchasing power – but don’t wait! Most experts predict rates will rise over the next 12 months. The Mortgage Bankers Association, Fannie Mae, Freddie Mac, and the National Association of Realtors are in unison, projecting that rates will increase by this time next year.

An increase in rates will impact your monthly mortgage payment. A year from now, your housing expense will increase if a mortgage is needed to buy your next home.

3. Either Way, You Are Paying a Mortgage 

There are some renters who haven’t purchased a home yet because they’re uncomfortable taking on the obligation of a mortgage. Everyone should realize that, unless you’re living rent-free with your parents, you are paying a mortgage – either yours or that of your landlord.

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

Are you ready to put your housing costs to work for you?

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 both are on the rise.

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

Look at the actual reason you’re buying and decide if 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 custom renovations, maybe now is the time to buy.

Bottom Line

Buying a home sooner rather than later could lead to substantial savings. Let’s get together to determine if homeownership is the right choice for you and your family this fall.

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5 Reasons to Consider Living in a Multigenerational Home

Author:Shannah Ferrante
Categories:Baby Boomers,Demographics,First Time Home Buyers,For Buyers,For Sellers,Generation X,Millennials,Move-Up Buyers,Senior Market

5 Reasons to Consider Living in a Multigenerational Home | Simplifying The Market

Did you know that 1 in 6 Americans currently live in a multigenerational household?

According to Generations United, the number of multigenerational households rose from 42.4 million in 2000 to 64 million in 2016. The 2018 Profile of Home Buyers and Sellers from the National Association of Realtors shows that 12% of all buyers have a multigenerational household.

Why Are Many Americans Choosing to Live in a Multigenerational Household?

The benefits to multigenerational living are significant. According to Toll Brothers,

“In recent years, there’s been a steady rise in the number of multigenerational homes in America. Homeowners and their families are discovering new ways to get the most out of home with choices that fit the many facets of their lives.”

The piece continues to explain the top 5 benefits of multigenerational living. Here is the list, and a small excerpt from their article:

1. Shared Expenses

“…Maintaining two households is undeniably costlier and more rigorous than sharing the responsibilities of one. By bringing family members and resources together under one roof, families can collectively address their expenses and allocate finances accordingly.”

2. Shared Responsibilities

“Distributing chores and age-appropriate responsibilities amongst family members is a tremendous way of ensuring that everyone does their part. For younger, more able-bodied members, physical work such as mowing the lawn or moving furniture is a nice trade-off so that the older generation can focus on less physically demanding tasks.”

3. Strengthened Family Bond

“While most families come together on special occasions, multigenerational families have the luxury of seeing each other every day. By living under one roof, these families develop a high level of attachment and closeness.”

4. Ensured Family Safety

“With multiple generations under one roof, a home is rarely ever left unoccupied for long, and living with other family members increases the chances that someone is present to assist elderly family members should they have an accident.”

5. Privacy

“One of the primary trepidations families face when shifting their lifestyle is the fear of losing privacy. With so many heads under one roof, it can feel like there’s no place to turn for solitude. Yet, these floor plans are designed to ensure that every family member can have quiet time… [and] allow for complete separation between the generations within the household.”

Bottom Line

The trend of multigenerational living is growing, and the benefits to families who choose this option are significant. If you’re considering a multigenerational home, let’s get together to discuss the options available in our area.

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Depending on the Price, You’re Going to Need Advice

Author:simplify
Categories:First Time Home Buyers,For Buyers,For Sellers,Luxury Market,Move-Up Buyers,Pricing

Depending on the Price, You’re Going to Need Advice | Simplifying The Market

To understand today’s complex real estate market, it is critical to have a local, trusted advisor on your side – for more reasons than you may think.

In real estate today, there are essentially three different price points in the market: the starter-home market, the middle-home market, and the premium or luxury market. Each one is unique, and depending on the city, the price point in these categories will vary. For example, a starter or lower-end home in San Francisco, California is much more expensive than almost any other part of the country. Let’s explore what you need to know about each of these tiers.

Starter-Home Market: This market varies by price, and these homes are typically purchased by first-time home buyers or investors looking to flip them for a profit. Across the country, homes in this space currently have less than 6 months of inventory for sale. That means there aren’t enough homes on the lower end of the market for the number of people who want to buy them. A low supply like this generally increases competition, drives bidding wars, and sets up an environment where homes sell above the listing price. According to data from the National Association of Realtors (NAR) on realtor.com,

“The desire for affordability continues to push down the inventory for homes listed for less than $200,000.00.”

Middle-Home Market: This segment is often thought of as the move-up market. Typically, the buyer in this market is moving up to a larger, more custom home with more features, all coming at a higher price. Across the country, this market is looking more balanced than the lower end of the market, meaning it has closer to a 6-month supply of inventory for sale. This market is more neutral, but leaning towards a seller’s market.

Premium & Luxury Home Market: This is the top end of the market with larger homes that have even more custom features and upgrades. Nationwide, this market is growing in the number of homes for sale. In the same realtor.com article, we can see that year-over-year inventory of homes in this tier has grown by 4.7%. Today, there are more homes available in the premium and luxury space, leading to more of a buyer’s market at this end.

Bottom Line

Depending on the segment of the market and the price point you’re looking at, you’re going to need the advice of a true local market expert. Let’s get together to help you navigate the home-buying or selling process in your market.

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5 Tips for Starting Your Home Search

Author:simplify
Categories:First Time Home Buyers,For Buyers,Move-Up Buyers

5 Tips for Starting Your Home Search | Simplifying The Market

In today’s market, low inventory dominates the conversation in many areas of the country. It can often be frustrating to be a first-time homebuyer if you aren’t prepared. Here are five tips from realtor.com’s article, “How to Find Your Dream Home—Without Losing Your Mind.”

1. Get Pre-Approved for a Mortgage Before You Start Your Search

One way to show you’re serious about buying your dream home is to get pre-qualified or pre-approved for a mortgage. Even if you’re in a market that is not as competitive, understanding your budget will give you the confidence of knowing whether or not your dream home is within your reach. This will help you avoid the disappointment of falling in love with a home well outside your price range.

2. Know the Difference Between Your ‘Must-Haves’ and ‘Would-Like-To-Haves’

Do you really need that farmhouse sink in the kitchen to be happy with your home choice? Would a two-car garage be a convenience or a necessity? Before you start your search, list all the features of a home you would like. Qualify them as ‘must-haves’, ‘should-haves’, or ‘absolute-wish list’ items. This will help you stay focused on what’s most important.

3. Research and Choose a Neighborhood Where You Want to Live

Every neighborhood has unique charm. Before you commit to a home based solely on the house itself, take a test-drive of the area. Make sure it meets your needs for “amenities, commute, school district, etc. and then spend a weekend exploring before you commit.”

4. Pick a House Style You Love and Stick to It

Evaluate your family’s needs and settle on a style of home that will best serve those needs. Just because you’ve narrowed your search to a zip code doesn’t mean you need to tour every listing in that vicinity. An example from the article says, “if you have several younger kids and don’t want your bedroom on a different level, steer clear of Cape Cod–style homes, which typically feature two or more bedrooms on the upper level and the master on the main.”

5. Document Your Home Visits

Once you start touring homes, the features of each individual home will start to blur together. The article suggests keeping your camera handy and making notes on the listing sheet to document what you love and don’t love about each property you visit.

Bottom Line

In a high-paced, competitive environment, any advantage you can give yourself will help you on your path to buying your dream home.

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3 Reasons This is NOT the 2008 Real Estate Market

Author:simplify
Categories:First Time Home Buyers,For Buyers,For Sellers,Housing Market Updates,Move-Up Buyers

3 Reasons This is NOT the 2008 Real Estate Market | Simplifying The Market

Today’s real estate market is nothing like the 2008 market. When an economic slowdown happens, it won’t resemble the last one.

No one knows for sure when the next recession will occur. What is known, however, is that the upcoming economic slowdown will not be caused by a housing market crash, as was the case in 2008. There are those who disagree and are comparing today’s real estate market to the market in 2005-2006, which preceded the crash. In many ways, however, the market is very different now. Here are three suppositions being put forward by some, and why they don’t hold up.

SUPPOSITION #1

A critical warning sign last time was the surging gap between the growth in home prices and household income. Today, home values have also outpaced wage gains. As in 2006, a lack of affordability will kill the market.

Counterpoint

The “gap” between wages and home price growth has existed since 2012. If that is a sign of a recession, why didn’t we have one sometime in the last seven years? Also, a buyer’s purchasing power is MUCH GREATER today than it was thirteen years ago. The equation to determine affordability has three elements:  home prices, wages, AND MORTGAGE INTEREST RATES. Today, the mortgage rate is about 3.5% versus 6.41% in 2006.

SUPPOSITION #2

In 2018, as in 2005, housing-price growth began slowing, with significant price drops occurring in some major markets. Look at Manhattan where home prices are in a “near free-fall.”

Counterpoint

The only major market showing true depreciation is Seattle, and it looks like home values in that city are about to reverse and start appreciating again. CoreLogic is projecting home price appreciation to reaccelerate across the country over the next twelve months.

Regarding Manhattan, home prices are dropping because the city’s new “mansion tax” is sapping demand. Additionally, the new federal tax code that went into effect last year continues to impact the market, capping deductions for state and local taxes, known as SALT, at $10,000. That had the effect of making it more expensive to own homes in states like New York.

SUPPOSITION #3

Prices will crash because that is what happened during the last recession.

Counterpoint

It is true that home values sank by almost 20% during the 2008 recession. However, it is also true that in the four previous recessions, home values depreciated only once (by less than 2%). In the other three, residential real estate values increased by 3.5%, 6.1%, and 6.6%.

Price is determined by supply and demand. In 2008, there was an overabundance of housing inventory (a 9-month supply). Today, housing inventory is less than half of that (a 4-month supply).

Bottom Line

We need to realize that today’s real estate market is nothing like the 2008 market. Therefore, when a recession occurs, it won’t resemble the last one.

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3 Reasons to Use a Real Estate Pro in a Complex Digital World

Author:simplify
Categories:First Time Home Buyers,For Buyers,Housing Market Updates,Move-Up Buyers

3 Reasons to Use a Real Estate Pro in a Complex Digital World | Simplifying The Market

If you’re searching for a home online, you’re not alone; lots of people are doing it. The question is, are you using all of your available resources, and are you using them wisely? Here’s why the Internet is a great place to start the home-buying process, and the truth on why it should never be your only go-to resource when it comes to making such an important decision.

According to the National Association of Realtors (NAR), the three most popular information sources home buyers use in the home search are:

  • Online website (93%)
  • Real estate agent (86%)
  • Mobile/tablet website or app (73%)

Clearly, you’re not alone if you’re starting your search online; 93% of home buyers are right there with you. The even better news: 86% of buyers are also getting their information from a real estate agent at the same time.

Here are 3 top reasons why using a real estate professional in addition to a digital search is key:

1. There’s More to Real Estate Than Finding a Home Online. It’s a lonely and complicated trek around the web if you don’t have a real estate professional to also help you through the 230 possible steps you’ll face as you navigate through a real estate transaction. That’s a pretty staggering number! Determining your price, submitting an offer, and successful negotiation are just a few of these key steps in the sequence. You’ll definitely want someone who has been there before to help you through it.

2. You Need a Skilled Negotiator. In today’s market, hiring a talented negotiator could save you thousands, maybe even tens of thousands of dollars. From the original offer to the appraisal and the inspection, many of the intricate steps can get complicated and confusing. You need someone who can keep the deal together until it closes.

3. It Is Crucial to Make a Competitive and Compelling Offer. There is so much information out there in the news and on the Internet about home sales, prices, and mortgage rates. How do you know what’s specifically going on in your area? 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 a real estate professional who has his or her finger on the pulse of the market will make your buying experience an informed and educated one. You need someone who is going to tell you the truth, not just what they think you want to hear.

Bottom Line

If you’re ready to start your search online, let’s get together. You’ll want someone who is educated and informed at your side who can answer your questions and guide you through a process that can be complex and confusing if you go at it with the Internet alone.

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Be on the Lookout for Gen Z: The Next Generation of Homebuyers

Author:simplify
Categories:Demographics,First Time Home Buyers,For Buyers,Housing Market Updates,Millennials,Move-Up Buyers

Be on the Lookout for Gen Z: The Next Generation of Homebuyers | Simplifying The Market

Gen Zers are the next generation of homeowners, and they’re eager to jump in and buy their first homes. Whether you are part of this generation or any other, it’s never too early to start saving, so you can reach your homeownership goal sooner rather than later.

You’ve likely heard a ton about Millennials, but what about Gen Z? In the next 5 years, this generation will be between the ages of 23 and 28, and they’re eager to become homeowners faster than you may think.

According to realtor.com, “Nearly 80 percent of Generation Z members say they want to own a home before age 30,” and Concentrix Analytics said, “52% of prospective Gen Z buyers are already saving to buy a home.”

Wikipedia defines Generation Z (Gen Z) as “the demographic cohort after the Millennials. Demographers and researchers typically use the mid-1990s to mid-2000s as starting birth years.”

The report from Concentrix goes a little deeper on Gen Z, identifying the main reasons this cohort wants to own homes:

  • 55% want to own a home because they want to start a family
  • 47% want to build wealth over time
  • 33% want to make their family proud

Although they’re eager to buy, this generation also perceives a few challenges ahead:

  • 66% believe saving for a down payment and closing costs will be challenging
  • 58% feel covering the monthly costs of owning may be difficult
  • 52% perceive a lack of knowledge about where to start

It is also interesting to note that 21% of Gen Zers think their parents will provide financial help, 17% will use a down payment assistance program, and 15% believe other family members will help them. One of the highlights of the report mentioned,

“More than half of Gen Zers who think they’ll receive help also think they will need to pay their parents back, compared to 40 percent of millennials.”

Bottom Line

It is never too early to start saving for your own home, whether you are part of Gen Z or a different generation. If you would like to know where to start and how much you need to save to reach your goal of buying a home, let’s get together so you can better understand the process.

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