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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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Are Low Interest Rates Here to Stay?

Are Low Interest Rates Here to Stay? | MyKCM

Interest rates for a 30-year fixed rate mortgage have been on the decline since November, now reaching lows last seen in January 2018. According to Freddie Mac’s latest Primary Mortgage Market Survey, rates came in at 4.12% last week!

This is great news for anyone who is planning on buying a home this spring! Freddie Mac had this to say,

“Mortgage interest rates have been steadily declining since the start of 2019. These lower mortgage interest rates combined with a strong labor market should attract prospective homebuyers this spring and could help the housing sector regain its momentum later in the year.”

To put the low rates in perspective, the average for 2018 was 4.6%! The chart below shows the recent drop, and also shows where the experts at Freddie Mac believe rates will be by the end of 2019.

Are Low Interest Rates Here to Stay? | MyKCM

Bottom Line

If you plan on buying a home this year, let’s get together to start your home search to ensure you can lock in these historically low rates today!

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How Long Will It Take To Save A Down Payment?

When asked, most Americans who don’t own a home say they’d like to become homeowners someday. Regardless of current market conditions or the state of the economy, the desire to own a home endures. Part of this is because it helps to build wealth. The other part is homeownership’s long-cemented status as a key element of the American dream. So what’s keeping aspiring homeowners from pursuing their dream? Well, one main factor is coming up with a down payment. The down payment is among the biggest obstacles that keep people from buying. Mostly, this is because the traditional 20 percent down payment can be difficult to save. In fact, according to one recent analysis, someone making the median income and saving 10 percent of their earnings each month would take more than seven years to save a down payment on the typical American home. And, because home prices have grown faster than incomes over the past few decades, the amount of time it takes has been increasing. Fortunately, though, a 20 percent down payment isn’t required, depending on the type of loan you choose. Also, where you’re looking to buy will affect the amount of time it’ll take. For example, a down payment in Pittsburgh will take just 4.8 years to save, while in cities like Boston or Miami it can take twice that long. More here.

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Most Homeowners Say They Love Their House

Sometimes picking a house to buy can cause anxiety. After all, what if you choose the wrong one and aren’t happy living there? What if there are structural or mechanical issues that go undetected and will end up meaning costly renovations? It’s hard to imagine that you could possibly cover all the potential issues in just a few walkthroughs. And so, it’s natural to worry about buyer’s remorse. But, according to a new survey, you might be worrying yourself unnecessarily. That’s because, the results show an overwhelming majority of respondents said they love their current home. In fact, 83 percent of participants said they were happy in their house. To some degree, the responses fell along demographic lines, with people 55 years or older and retirees being the most likely groups to say they love their home and have no plans to move. Respondents between 18 and 34 were more likely to want to move. There were also regional differences. For example, residents in Boston and Detroit were more likely to say they like their current home and would rather renovate than move, while the survey found Los Angeles residents were the most likely to say they’d prefer a new house. More here.

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Where Homeowners Have The Most Extra Cash

Your financial health isn’t really about how much money you make. It’s more about how much you have left over once you’ve paid all your bills. After all, if you make $1 million a month but also spend $1 million, you’re still struggling financially. And no one likes worrying about money. For that reason, a recent analysis took a look at the 50 biggest cities in the country and – based on household income, home prices, and cost of living – tried to determine where homeowners were able to live most comfortably. Fortunately, the results show that in 44 of the 50 cities included the average homeowner had money leftover at the end of the month. But surprisingly, the hardest places for Americans to put away a little extra cash weren’t necessarily the most expensive places to live. In fact, cities in the Midwest and South were among the toughest, rather than pricier areas on the coasts. For example, Detroit, Memphis, New Orleans, and Cleveland were four of the six cities where residents showed a negative balance. Philadelphia also made the list. The number one spot, however, was Miami, where a high cost of living and a low median income make it a tough place to save. More here.

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Majority Say They Want To Own A Home In Retirement

The vast majority of surveyed Americans say that homeownership is among their retirement goals, according to a recent survey. In fact, 85 percent of non-retiree respondents said they want to own their own home in retirement and believe they can pay off their mortgage before they retire. But, though non-retiree participants feel like they’ll have their mortgage paid off in time, more than 25 percent of retired respondents said they’re still paying off a mortgage and over half of those had a balance of more than $50,000. In short, Americans may be a bit too optimistic. But regardless of whether or not they make it, the debate about homeownership and retirement will continue. On the one hand, tax breaks and equity make a good case for the wealth-building benefits of owning a home. But, on the other hand, property tax, maintenance and potential renovation costs can add unpredictability to a household budget that may largely be fixed. In the end, which situation is the right one for you will ultimately depend on your personal finances, assets, and outlook – as there is no one-size fits all strategy for meeting your retirement goals. More here.

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First Quarter Sees Return Of First-Time Buyers

First-time home buyers are an important demographic when it comes to the health of the housing market. Because they’ve historically accounted for about 40 percent of home sales, they garner a lot of attention from experts, economists, and analysts hoping to gauge how the market is doing and where it’s headed. In recent years, first-time buyers have been less active than usual. The financial crash and recession led to a long period where Americans of typical home-buying age did not have the economic stability or job security to feel comfortable pursuing homeownership. Then, even after economic conditions began to improve, a lack of affordable, starter homes kept many younger Americans on the sidelines. This year, conditions are still challenging but new numbers from Freddie Mac show things may finally be changing. That’s because, first quarter results show that first-time buyers accounted for 46 percent of new mortgages during the early part of this year. That’s the largest quarterly share since 2012 and an indication that young Americans are finally becoming more active in the real-estate market. More here.

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How Much Does Your Neighborhood Matter?

When you buy a house, you’re also buying the surrounding neighborhood. And, depending on your lifestyle and wishlist, the neighborhood may be even more important to you than the actual home you’re buying. After all, most of your life happens outside your home. So your proximity to schools, shopping, healthcare, recreation, and nature will have a large effect on how much you enjoy living in a particular house. In short, finding your dream house in the wrong neighborhood could make it a nightmare. Unconvinced? Well, a recent survey of Americans found large majorities who said the feel of a neighborhood was important when deciding where to live. In fact, 80 percent said the surrounding neighborhood had to fit their personality and an almost equal amount said they’d consider moving if they found they didn’t like their new neighborhood. In other words, when shopping for a new house, be sure to spend as much time considering the area around it as you do the areas inside it. It could even work out to be a better idea to find a smaller house in a great location than a big house somewhere you may grow to dislike. More here.