Looking to Upgrade Your Current Home? Now’s the Time to Move-Up!

Looking to Upgrade Your Current Home? Now’s the Time to Move-Up! | MyKCM

In every area of the country, homes that are priced at the top 25% of the price range for that area are considered to be Premium Homes. In today’s real estate market there are deals to be had at the higher end! This is great news for homeowners who want to upgrade from their current house and move-up to a premium home.

Much of the demand for housing over the past couple years has come from first-time buyers looking for their starter home, which means that many of the more expensive homes that have been listed for sale have not seen as much interest.

This mismatch in demand and inventory has created a Buyer’s Market in the luxury and premium home markets according to the ILHM’s latest Luxury Report. For the purpose of the report, a luxury home is defined as one that costs $1 million or more.

“A Buyer’s Market indicates that buyers have greater control over the price point. This market type is demonstrated by a substantial number of homes on the market and few sales, suggesting demand for residential properties is slow for that market and/or price point.”

The authors of the report were quick to point out that the current conditions at the higher end of the market are no cause for concern,

“While luxury homes may take longer to sell than in previous years, the slower pace, increased inventory levels and larger differences between list and sold prices, represent a normalization of the market, not a downturn.”

Luxury can mean different things to different people. It could mean a secluded home with a ton of property for privacy to one person, or a penthouse in the center of it all for someone else. Knowing what characteristics you are looking for in a premium home and what luxury means to you will help your agent find your dream home.

Bottom Line

If you are debating upgrading your current house to a premium or luxury home, now is the time!

How Can I Increase My Family’s Net Worth?

How Can I Increase My Family’s Net Worth? | MyKCM

Every three years, the Federal Reserve conducts their Survey of Consumer Finances. Data is collected across all economic and social groups. The latest survey data covers 2013-2016.

The study revealed that the median net worth of a homeowner is $231,400 – a 15% increase since 2013. At the same time, the median net worth of renters decreased by 5% ($5,200 today compared to $5,500 in 2013).

These numbers reveal that the net worth of a homeowner is over 44 times greater than that of a renter.

Owning a home is a great way to build family wealth.

As we’ve said before, simply put, homeownership is a form of ‘forced savings.’ Every time you pay your mortgage, you are contributing to your net worth by increasing the equity in your home.

That is why Gallup reported that Americans picked real estate as the best long-term investment for the fifth year in a row. According to this year’s results, 34% of Americans chose real estate. Stocks followed at 26%, and then gold, savings accounts/CDs, or bonds.

Bottom Line

If you want to find out how you can use your monthly housing cost to increase your family’s wealth, let’s get together to guide you through the process.

The Cost of Waiting Until Next Year to Buy?

What is the Cost of Waiting Until Next Year to Buy? [INFOGRAPHIC] | MyKCM

Some Highlights:

  • The “cost of waiting to buy” is defined as the additional funds necessary to buy a home if prices & interest rates were to increase over a period of time.
  • Freddie Mac forecasts interest rates to rise to 4.5% by the Q4 2020.
  • CoreLogic predicts home prices to appreciate by 4.8% over the next 12 months.
  • If you are ready and willing to buy your dream home, find out if you are able to!

Mortgage Rates Down! US-China Trade War creates opportunity… For Now!

US-CHINA TRADE WAR DRIVES DOWN RATES… FOR NOW

The US-China trade war has caused global interest rates to drop as investors divert capital away from the stock market and into the bond market. The 25% tariff recently placed on Chinese imports into the US means that these products could potentially cost 25% more than what they cost last year, driving up consumer prices on those goods and services. It remains to be seen whether companies will pass on the higher costs to their customers, or whether they’ll absorb the cost increases themselves. Either way, corporations are likely to earn less profit, which is the main reason why stock prices have tumbled recently.

In the meantime, bonds have benefited as investors have shifted their funds into the safety of the bond market to ride out the storm. This has caused interest rates on government bonds as well as mortgages to go down. In fact, mortgage rates are at their best levels of the year. But how long will this last?

Generally, tariffs and trade wars are bad for both stocks and bonds. That’s because tariffs carry with them the risk of higher inflation. Whenever there is inflation (higher prices), interest rates also go up. That’s because inflation erodes the purchasing power of the interest that’s being paid to the one lending the money. For example, if you pay 5% interest to a lender who lends you $100,000, that lender is earning $5,000 each year. But if that $5,000 has less purchasing power due to inflation, the lender may ask you to pay 6% instead.

That’s the long-term risk with tariffs and trade wars. Although interest rates are very low right now, market conditions could change at any time. If you’re thinking of buying a new house or refinancing your mortgage, you may want to get moving on it now, because the longer you wait, the bigger the risk you’re taking that interest rates could go higher. Do not wait!

Contact me for more info or evaluate your options!

Home Prices Up 5.73% Across the Country!

Home Prices Up 5.73% Across the Country! [INFOGRAPHIC] | MyKCM

Some Highlights:

  • The Federal Housing Finance Agency (FHFA)recently released their latest Quarterly Home Price Indexreport.
  • In the report, home prices are compared both regionally and by state.
  • Based on the latest numbers, if you plan on relocating to another state, waiting to move may end up costing you more!

Home Buying earlier in life is one of the Best ways to Building Wealth

Buying a Home Young is the Key to Building Wealth | MyKCM

Homeowners who purchase their homes before the age of 35 are better prepared for retirement at age 60, according to a new Urban Institute study. The organization surveyed adults who turned 60 or 61 between 2003 and 2015 for their data set.

“Today’s older adults became homeowners at a younger age than today’s young adults. Half the older adults in our sample bought their first house when they were between 25 and 34 years old, and 27 percent bought their first home before age 25.”

The full breakdown is in the chart below:

Buying a Home Young is the Key to Building Wealth | MyKCM

The study goes on to show the impact of purchasing a home at an early age. Those who purchased their first homes when they were younger than 25 had an average of $10,000 left on their mortgage at age 60. The 50% of buyers who purchased in their mid-twenties and early-30s had close to $50,000 left, but traditionally had purchased more expensive homes.

Buying a Home Young is the Key to Building Wealth | MyKCM

Many housing experts are concerned that the homeownership rate amongst millennials, those 18-34, is much lower than previous generations in the same age range. The study results gave a great reason why this generation should consider buying instead of signing a renewal on their lease:

“As people age into retirement, they rely more heavily on their wealth rather than their income to support their lifestyles. Today’s young adults are failing to build housing wealth, the largest single source of wealth, at the same rate as previous generations.

While people make the choice to own or rent that suits them at a given point, maybe more young adults should take into account the long-term consequences of renting when homeownership is an option.”

Bottom Line

If you are one of the many young people debating whether buying a home this year is right for you, let’s get together to discuss your options!

Homeowners & Appraisers See the Most Eye-to-Eye on Price in 3 Years

Homeowners & Appraisers See the Most Eye-to-Eye on Price in 3 Years | MyKCM

In today’s housing market, where supply is very low and demand is very high, home values are increasing rapidly. Many experts are projecting that home values could appreciate by another 5% (or more) over the next twelve months. One major challenge in such a market is the bank appraisal.

When prices are surging, it is difficult for appraisers to find adequate, comparable sales (similar houses in the same neighborhood that recently closed) to defend the selling price when performing the appraisal for the bank.

Every month in their Home Price Perception Index (HPPI), Quicken Loans measures the disparity between what a homeowner who is seeking to refinance their home believes their house is worth and what an appraiser’s evaluation of that same home is.

March 2015 marked the first month of a three-year gap between what an appraiser and a homeowner believed a home was worth. That gap widened to 2.65% in September 2015 and had consistently hovered between 1.0% and 2.0% through November 2017.

The chart below illustrates the changes in home price estimates over the last three years:

Homeowners & Appraisers See the Most Eye-to-Eye on Price in 3 Years | MyKCM

In the latest release, the disparity was the narrowest it has been since March 2015, as the gap between appraisers and homeowners was only -0.33%. This is important for homeowners to note as even a .33% difference in appraisal could equate to thousands of dollars that a buyer or seller has to come up with at closing (depending on the price of the home).

Bill Banfield, Executive VP of Capital Markets at Quicken Loans urges homeowners to find out how their local markets have been impacted by supply and demand: 

“The appraisal is one of the most important, although sometimes least predictable, parts of the mortgage process. The Home Price Perception Index is a way to illustrate the differences of opinion, and these differences affect everything from the type of mortgage a borrower can get to the expectations a seller has about the proceeds available upon sale of their home.”

Bottom Line

Every house on the market must be sold twice; once to a prospective buyer and then again to the bank (through the bank’s appraisal). With escalating prices, the second sale may be even more difficult than the first. If you are planning on entering the housing market this year, let’s get together to discuss this and any other obstacles that may arise.