Thinking of Selling Your Home? Why You Need A Pro in Your Corner

Thinking of Selling Your Home? Why You Need A Pro in Your Corner | MyKCM

With home prices on the rise and buyer demand strong, some sellers may be tempted to try and sell their homes on their own (FSBO) without using the services of a real estate professional.

Real estate agents are trained and experienced in negotiation and, in most cases, the seller is not. Sellers must realize that their ability to negotiate will determine whether or not they get the best deal for themselves and their families.

Here is a list of some of the people with whom the seller must be prepared to negotiate if they decide to FSBO:

  • The buyer who wants the best deal possible
  • The buyer’s agent who solely represents the best interest of the buyer
  • The buyer’s attorney (in some parts of the country)
  • The home inspection companies, which work for the buyer and will almost always find some problems with the house
  • The termite company if there are challenges
  • The buyer’s lender if the structure of the mortgage requires the sellers’ participation/changes/status updates
  • The appraiser if there is a question of value
  • The title company if there are challenges with certificates of occupancy (CO) or other permits
  • The town or municipality if you need to get the CO permits mentioned above
  • The buyer’s buyer in case there are challenges with the house your buyer is selling
  • Your bank in the case of a short sale

Bottom Line

The percentage of sellers who have hired real estate agents to sell their homes has increased steadily over the last 20 years. Let’s get together and discuss all we can do to make the process easier for you.

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“Short of a War or Stock Market Crash…”

“Short of a war or stock market crash…” | MyKCM

This month, Arch Mortgage Insurance released their spring Housing and Mortgage Market Review. The report explained that an increase in mortgage rates and/or home prices would impact monthly payments this way:

  • A 5% increase in home prices increases payments by roughly 5%
  • A 1% rise in interest rates increases payments by roughly 13% or 14%

That begs the question…

What if both rates and prices increase as predicted?

The report revealed:

“If interest rates and home prices rise by year-end in the ballpark of what most analysts are forecasting, monthly mortgage payments on a new home purchase could increase another 10–15%. That would make 2018 one of the worst full-year deteriorations in affordability for the past 25 years.”

The percent increase in mortgage payments would negatively impact affordability. But, how would affordability then compare to historic norms?

Per the report:

“For the U.S. overall, even if affordability were to deteriorate as forecasted, affordability would still be reasonable by historic norms. That is because the percentage of pre-tax income needed to buy a typical home in 2019 would still be similar to the historical average during 1987–2004. Thus, nationally at least, even with higher rates and home prices, affordability will just revert to historical norms.”

What about home prices?

A decrease in affordability will cause some concern about home values. Won’t an increase in mortgage payments negatively impact the housing market? The report addressed this question:

“Even recent interest rate increases and higher taxes on some upper-income earners didn’t slow the market, as many had feared…Short of a war or stock market crash, housing markets could continue to surprise on the upside over the next few years.”

To this point, Arch Mortgage Insurance also revealed their Risk Index which estimates the probability of home prices being lower in two years. The index is based on factors such as regional unemployment rates, affordability, net migration, housing starts and the percentage of delinquent mortgages.

Below is a map depicting their projections (the darker the blue, the lower the probability of a price decrease):

“Short of a war or stock market crash…” | MyKCM

Bottom Line

If interest rates and prices continue to rise as projected, the monthly mortgage payment on a home purchased a year from now will be dramatically more expensive than it would be today.

A Tale of Two Markets

A Tale of Two Markets [INFOGRAPHIC] | MyKCM

Some Highlights:

  • A trend that has been emerging for some time now is the contrast between inventory & demand in the Premium & Luxury Markets vs. the Starter & Trade-Up Home Markets and what that’s, in turn, doing to prices!
  • Inventory continues to rise in the luxury & premium home markets which is causing prices to cool.
  • Demand continues to rise with low inventory in the starter & trade-up home markets, causing prices to rise!

Three Ways Rising House Prices Could Impact You

According to the National Association of Realtors, median home prices across the US have increased by more than 7% year-over-year.  This means you’d pay approx. $374,000 in today’s market for a house you could have purchased a year ago for $349,000.  Here are three ways this could impact you:

1 – If You’re Thinking of Selling a Home
You may benefit by selling your home now instead of waiting. The new home you’d purchase to replace your current home is likely to cost you more if you wait a year.  Not only that, but your monthly payments could also increase if interest rates continue to climb.

2 – If You’re Thinking of Buying a Home
For the same reasons stated above, it’s probably a good idea for you to consider buying now instead of waiting.  If home prices continue to increase, you’d benefit from the increase instead of being stuck on the other side of the decision wishing you could have purchased a home at last year’s prices.

3 – If You’re Thinking of Making Home Improvements
If your home has increased in value, you may be able to tap into the additional equity to finance your home improvement project.

Contact me for more info or to explore your options!

How Much Do You Need to Make to Buy a Home in Your State?

How Much Do You Need to Make to Buy a Home in Your State? | MyKCM

It’s no mystery that cost of living varies drastically depending on where you live, so a new study by GOBankingRates set out to find out what minimum salary you would need to make in order to buy a median-priced home in each of the 50 states, and Washington, D.C.

States in the Midwest came out on top as most affordable, requiring the smallest salaries in order to buy a median-priced home. States with large metropolitan areas saw a bump in the average salary needed to buy with California, Washington, D.C., and Hawaii edging out all others with the highest salaries required.

Below is a map with the full results of the study:

How Much Do You Need to Make to Buy a Home in Your State? | MyKCM

GoBankingRates gave this advice to anyone considering a home purchase,

“Before you buy a home, it’s important to find out if you can afford the monthly mortgage payment. To do this, some financial experts recommend your housing costs — primarily your mortgage payments — shouldn’t consume more than 30 percent of your monthly income.”

As we recently reported, research from Zillow shows that historically, Americans had spent 21% of their income on owning a median-priced home. The latest data from the fourth quarter of 2017 shows that the percentage of income needed today is only 15.7%!

Bottom Line

If you are considering buying a home, whether it’s your first time or your fifth time, let’s get together to evaluate your ability to do so in today’s market!

Top 4 Home Renovations for Maximum

Top 4 Home Renovations for Maximum ROI [INFOGRAPHIC] | MyKCM

Some Highlights:

  • Whether you are selling your home, just purchased your first home, or are a homeowner planning to stay put for a while, there is value in knowing which home improvement projects will net you the most “Return On Investment” (ROI).
  • While big projects like adding a bathroom or a complete remodel of a kitchen are popular ways to increase a home’s value, something as simple as updating landscaping and curb appeal can have a quick impact on a home’s value.

House Prices: Simply a Matter of Supply & Demand

House Prices: Simply a Matter of Supply & Demand | MyKCM

Why are home prices still rising? It is a simple answer. There are more purchasers in the market right now than there are available homes for them to buy. This is an example of the theory of “supply and demand” which is defined as:

“the amount of a commodity, product, or service available and the desire of buyers for it, considered as factors regulating its price.”

When demand exceeds supply, prices go up. This is currently happening in the residential real estate market.

Here are the numbers for supply and demand as compared to last year for the last three months (March numbers are not yet available):

House Prices: Simply a Matter of Supply & Demand | MyKCM

In each of the last three months, demand (buyer traffic) has increased as compared to last year while supply (number of available listings) has decreased. If this situation persists, home values will continue to increase.

Bottom Line

The reason home prices are still rising is because there are many purchasers looking to buy, but very few homeowners ready to sell. This imbalance is the reason prices will remain on the uptick.