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If you are a homeowner looking to take advantage of your home equity by investing in a vacation home, let’s get together to discuss your options!

Buying A Vacation Property? Now Is A Good Time! | MyKCM

Every year around this time, many homeowners begin the process of preparing their homes in case of extreme winter weather. Some others skip winter all together by escaping to their vacation homes in a warmer climate.

For those homeowners staying at their first residence, AccuWeather warns:

“The late-week cold shot should fade next week, but this is a warning shot for winter’s return late in the month and early February.”

Given this, it’s time to go and stock up on winter weather supplies! However, if you’re tired of shoveling snow and dealing with the cold weather, maybe it’s time to consider obtaining a vacation home!

According to the Investment & Vacation Home Buyers 2018 Report by NAR:

“72% of vacation property owners and 71% of investment property owners believe now is a good time to buy.”

It’s time to take advantage of the equity in your home. As the latest Equity Report from ATTOM Data Solutions stated:

“Nearly 14.5 million U.S. properties (are) equity rich — where the combined estimated amount of loans secured by the property was 50 percent or less of the property’s estimated market value — up by more than 433,000 from a year ago to a new high as far back as data is available, Q4 2013.

The 14.5 million equity rich properties in Q3 2018 represented 25.7 percent of all properties with a mortgage.”

This means that over a quarter of Americans who have a mortgage would be able to use some of their home equity to make a significant down payment toward a vacation home, and many are doing just that! According to the same report by NAR:

“33% of vacation buyers purchased in a beach area, 21% purchased on a lakefront, and 15% purchased a vacation home in the country.”

Many homeowners who are close to retirement will use some of their equity to purchase vacation homes, which may eventually become their permanent homes post-retirement!

Bottom Line

If you are a homeowner looking to take advantage of your home equity by investing in a vacation home, let’s get together to discuss your options!

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Let’s talk about how we can make your dream of homeownership a reality!

4 Tips for Making a Competitive Offer | MyKCM

So, you’ve been searching for that perfect house to call ‘home,’ and you’ve finally found it! The price is right, and in such a competitive market, you want to make sure you make a good offer so that you can guarantee that your dream of making this house yours comes true!

Below are 4 steps provided by Freddie Mac to help buyers make offers, along with some additional information for your consideration:

1. Determine Your Price

“You’ve found the perfect home and you’re ready to buy. Now what? Your real estate agent will be by your side, helping you determine an offer price that is fair.”

Based on your agent’s experience and key considerations (like similar homes recently sold in the same neighborhood or the condition of the house and what you can afford), your agent will help you to determine the offer that you are going to present.

Getting pre-approved will not only show home-sellers that you are serious about buying, but it will also allow you to make your offer with confidence because you’ll know that you have already been approved for a mortgage in that amount.

2. Submit an Offer

“Once you’ve determined your price, your agent will draw up an offer, or purchase agreement, to submit to the seller’s real estate agent. This offer will include the purchase price and terms and conditions of the purchase.”

Talk with your agent to find out if there are any ways in which you can make your offer stand out in this competitive market! A licensed real estate agent who is active in the neighborhoods you are considering will be instrumental in helping you put in a solid offer.

3. Negotiate the Offer

“Oftentimes, the seller will counter the offer, typically asking for a higher purchase price or to adjust the closing date. In these cases, the seller’s agent will submit a counteroffer to your agent, detailing their desired changes, at this time, you can either accept the offer or decide if you want to counter.

Each time changes are made through a counteroffer, you or the seller have the option to accept, reject or counter it again. The contract is considered final when both parties sign the written offer.”

If your offer is approved, Freddie Mac urges you to “always get an independent home inspection, so you know the true condition of the home.” If the inspector uncovers undisclosed problems or issues, you can discuss any repairs that may need to be made with the seller or even cancel the contract altogether.

4. Act Fast

The inventory of homes listed for sale has remained well below the 6-month supply that is needed for a ‘normal’ market. Buyer demand has continued to outpace the supply of homes for sale, causing buyers to compete with each other for their dream homes.

Make sure that as soon as you decide that you want to make an offer, you work with your agent to present it as quickly as possible.

Bottom Line

Whether buying your first home or your fifth, having a local real estate professional who is an expert in his or her market on your side is your best bet in making sure the process goes smoothly. Let’s talk about how we can make your dream of homeownership a reality!

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What is Really Happening with Home Prices?

What is Really Happening with Home Prices? | MyKCM

Home values have softened over the last twelve months. We are no longer seeing 6-7% annual appreciation levels for the national housing market. The current numbers are closer to 4%. Some have suggested that year-over-year appreciation levels could fall to 3% or less this year.

However, a stronger-than-expected economy and a good spring housing market have changed some opinions. Some analysts are now predicting that home value appreciation may begin to increase as we move forward.

Here are three examples:

Mark Fleming, Chief Economist of First American

“Data on the movement of unadjusted house prices during the early spring home-buying season won’t be available for a few more months, but it’s quite likely that price appreciation will accelerate again.”

CoreLogic’s April “Home Price Insights”

“Home prices nationwide, including distressed sales, increased year over year by 3.7% in March 2019 compared with March 2018…The CoreLogic HPI Forecast indicates that home prices will increase by 4.8% on a year-over-year basis from March 2019 to March 2020.”

Pulsenomics’ Quarterly “Home Price Expectation Survey”

  • The 2018 4th Quarter survey called for 3.8% appreciation for 2019.
  • The 2019 1st Quarter survey raised the appreciation projection for this year to 4.3%.

Bottom Line

Price appreciation has slowed over the past year. However, a strong economy and a good housing market have many experts thinking that home values might re-accelerate moderately throughout the rest of this year.

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New Research Shows Housing Is Affordable For First-Time Buyers

New Research Shows Housing Is Affordable For First-Time Buyers | MyKCM
Home prices have been on the rise for the last seven years, leading many housing market analysts to conclude that first-time homebuyers are being shut out of the market due to affordability concerns.

The National Association of Realtors (NAR) reports on the percentage of First-Time Home Buyers (FTHB) on a monthly and yearly basis. Their latest report shows that FTHB’s made up 33% of buyers in March, which matches their reported share in 2018.

NAR uses survey data from their members to come up with this statistic, so their results do not include every transaction completed. Rather, they only the transactions reported by members who complete the survey.

The other entity that reports on FTHB share is the American Enterprise Institute (AEI). The AEI uses data from mortgage applications that define an FTHB as “any borrower who did not have a mortgage for the preceding three years.”

This means the AEI measurement also includes former homeowners who transitioned out of a home they previously owned and re-entered the market after at least 3 years. The latest FTHB share data from AEI shows that first-time buyers made up 57.5% of all mortgages in August 2018. NAR’s data shows a 31% share for the same time period.

New research from the New York Federal Reserve shows that these traditional reports on FTHB share have been unable to give an accurate depiction of this group’s involvement in the market.

The NY Fed was able to take consumer credit data and identify when a mortgage payment entered a consumer’s credit report to determine when a first-time home purchase was made. Using this data, they were able to show that AEI’s reported FTHB share was consistently 10% higher. The NAR reports were right on par with their findings until 2010, when NAR’s share dropped to the 11% gap seen today.

So, what does this all mean?

First-time home buyers have not disappeared from the market as many analysts had believed. Buying a home is very much a part of the American Dream for younger generations, just like it had been for their parents and grandparents.

This also means that rising prices have not scared buyers away from the market. Many first-time buyers are making sacrifices to save their down payment and make their dream a reality.

Bottom Line

If you are one of the many renters who is scrolling through listings on your phone every night dreaming of buying your own home, there are opportunities in every market to make that dream a reality!

 

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A Lack of Inventory Continues to Impact the Housing Market

A Lack of Inventory Continues to Impact the Housing Market | MyKCM

The housing crisis is finally in the rear-view mirror as the real estate market moves down the road to a complete recovery. Home values are up and distressed sales (foreclosures and short sales) have fallen to their lowest point in years. The market will continue to strengthen in 2019.

However, there is one thing that may cause the industry to tap the brakes: a lack of housing inventory! Buyer demand naturally increases during the summer months, but supply has not kept up.

Here are the thoughts of a few industry experts on the subject:

Lawrence Yun, Chief Economist at National Association of Realtors

“Further increases in inventory are highly desirable to keep home prices in check, the sustained steady gains in home sales can occur when home price appreciation grows at roughly the same pace as wage growth.”

Jessica Lautz, Vice President of NAR

“There’s a supply-demand mismatch… More inventory is needed at the lower end and a price reduction may be needed at the upper end.”

Danielle Hale, Chief Economist of Realtor.com

“Heading into spring, U.S. prices are expected to continue to rise and inventory is expected to continue to increase, but at a slower pace than we’ve seen the last few months as fewer sellers want to contend with this year’s more challenging conditions… A buyer’s experience will vary notably depending on the market and price point they’re targeting.”

Bottom Line

If you are thinking of selling, now may be the time! Demand for your house will be strong at a time when there is very little competition. That could lead to a quick sale for a really good price!

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Home Buyers are Optimistic About Homeownership!

Home Buyers are Optimistic About Homeownership! | MyKCM

When we consider buying an item, we naturally go through a research process prior to making our decision. We ask our friends and family members who have made similar purchases about their experience, we get opinions and insights, and we read reviews online. There’s no difference when considering a home purchase!

Most homebuyers start by listening to the news to hear what is being said about the real estate market. They check with family and friends about their experience. They spend time online reading reviews about their desired neighborhood.

The challenge is that comments from the news and those closest to us can contradict the data and reports. One source says one thing, while another source says something completely different.

There is a group of homebuyers that are not allowing comments about an upcoming recession to interfere with their decision to buy a home. According to a survey by realtor.com®,

“Nearly 70 percent of home shoppers this spring think the U.S. will enter a recession in the next three years, but that hasn’t stopped them from trying to close on a home…Despite the fact that they foresee an economic downturn, they generally expressed confidence that a future recession will be better than 2008 for the housing market.”

The report provides more insights from the survey:

  • Nearly 30% of the active home shoppers* surveyed expect the next recession to begin sometime in 2020.
  • 56% of shoppers believe home prices have hit their peak.
  • 41% believe housing will fare better than 2008.
  • 45% of home shoppers feel at least slightly more optimistic about homeownership.
  • 33% reported no impact on their feelings about homeownership.

Homebuyers are aware and making decisions with their eyes wide-open. As the report mentioned,

“The fact that some [36%] home shoppers expect the next recession to be harder on the housing market than the last recession suggests that they are buying homes with eyes wide-open and very sober, if not slightly pessimistic, views of the housing market.

This is a stark contrast to the years leading up to the last recession when ‘irrational exuberance’ was more common and yet another reason to expect that the next downturn will be very different for the housing market than the last.”

Bottom Line

If you are considering buying a home, let’s get together to help you understand our local market and determine if buying a home is the right choice for you now.

*Active home shoppers are those consumers who responded that they plan to purchase their next home in 1 year or less.

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The Benefits of a 20% Down Payment

The Benefits of a 20% Down Payment | MyKCM

If you are in the market to buy a home this year, you may be confused about how much money you need to come up with for your down payment. Many people you talk to will tell you that you need to save 20% or you won’t be able to secure a mortgage.

The truth is that there are many programs available that let you put down as little as 3%. Those who have served our country could qualify for a Veterans Affairs Home Loan (VA) without needing a down payment.

These programs have cut the savings time that many families would need to compile a large down payment from five or more years down to a year or two. This allows them to start building family wealth sooner.

So then, why do so many people believe that they need a 20% down payment to buy a home? There has to be a reason! Today, we want to talk about four reasons why putting 20% down is a good plan, if you can afford it.

1. Your interest rate will be lower.

Putting down a 20% down payment vs. a 3-5% down payment shows your lender/bank that you are more financially stable, thus a good credit risk. The more confident your bank is in your credit score and your ability to pay your loan, the lower the rate they will be willing to give you.

2. You’ll end up paying less for your home.

The bigger your down payment, the lower your loan amount will be for your mortgage. If you are able to pay 20% of the cost of your new home at the start of the transaction, you will only pay interest on the remaining 80%. If you put down a 5% down payment, the extra 15% on your loan will accrue interest and end up costing you more in the long run!

3. Your offer will stand out in a competitive market!

In a market where many buyers are competing for the same home, sellers like to see offers come in with 20% or larger down payments. The seller gains the same confidence that the bank did above. You are seen as a stronger buyer whose financing is more likely to be approved. Therefore, the deal will be more likely to go through!

4. You won’t have to pay Private Mortgage Insurance (PMI)

Simply put, PMI is “an insurance policy that protects the lender if you are unable to pay your mortgage. It’s a monthly fee, rolled into your mortgage payment, that is required for all conforming, conventional loans that have down payments less than 20%.”

As we mentioned earlier, when you put down less than 20% to buy a home, your lender/bank will see your loan as having more risk. PMI helps them recover their investment in you if you are unable to pay your loan. This insurance is not required if you are able to put down 20% or more.

Many times, home sellers looking to move up to a larger or more expensive home are able to take the equity they earn from the sale of their house to put down 20% on their next home.

If you are looking to buy your first home, you will have to weigh the benefits of saving a 20% down payment vs. the time and cost of continuing to rent while you save that amount.

Bottom Line

If your plan for your future includes buying a home and you’re already saving for your down payment, let’s get together to help you decide what down payment size best fits with your long-term plan!