Are You Aware of How Much Equity You Have in Your Home? You May Be Surprised!

Are You Aware of How Much Equity You Have in Your Home? You May Be Surprised! | Simplifying The Market

CoreLogic’s latest Equity Report revealed that 675,000 US homeowners regained positive equity in their homes in 2017. This is great news for the country, as 95.1% of all mortgaged properties are now in a positive equity situation.

U.S homeowners with mortgages (roughly 63% of all the properties) have seen their equity increase by a total of $908.4 billion since the fourth quarter 2016, an increase of 12.2%, year over year.”

Price Appreciation = Good News for Homeowners

Frank Nothaft, CoreLogic’s Chief Economist, explains:

Home-price growth has been the primary driver of home-equity wealth creation. The CoreLogic Home Price Index grew 6.2 percent during 2017. The largest calendar-year increase since 2013. Likewise, the average growth in home equity was more than $15,000 during 2017, the most in four years.”

He also believes this is a great sign for the market in 2018, saying:

“Because wealth gains spur additional consumer purchases, the rise in home-equity wealth during 2017 should add more than $50 billion to U.S. consumption spending over the next two to three years. 

This is great news for homeowners! But, do they realize that their equity position has changed?

study by Fannie Mae suggests that many homeowners are not aware that they have regained equity in their homes as their investment has increased in value. For example, their study showed that 23% of Americans still believe their home is in a negative equity position when, in actuality, CoreLogic’s report shows that only 4.9% of homes are in that position (down from 6.3% in Q4 2016).

The study also revealed that only 37% of Americans believe that they have “significant equity” (greater than 20%) when in actuality, 83% do!

Are You Aware of How Much Equity You Have in Your Home? You May Be Surprised! | Simplifying The Market

This means that 46% of Americans with a mortgage fail to realize the opportune situation they are in. With a sizeable equity position, many homeowners could easily move into a house (either larger or smaller) that better meets their current needs.

Fannie Mae spoke out on this issue in their report:

“Homeowners who underestimate their homes’ values not only underestimate their home equity, they also likely underestimate 1) how large a down payment they could make with their home equity, 2) their chances of qualifying for mortgages, and, therefore, 3) their opportunities for selling their current homes and for buying different homes.”

Bottom Line

If you are one of the many Americans who is unsure of how much equity you have built in your home, don’t let that be the reason you fail to move on to your dream home in 2018! Let’s get together to evaluate your situation!

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Dreaming of a Luxury Home? Now’s the Time!

Dreaming of a Luxury Home? Now's the Time! | Simplifying The Market

If your house no longer fits your needs and you are planning on buying a luxury home, now is a great time to do so! Recently, the Institute for Luxury Home Marketing released its Luxury Market Report which showed that in today’s premium home market, buyers are in control.

The inventory of homes for sale in the luxury market far exceeds the number of people searching to purchase these properties in many areas of the country. This means that homes are often staying on the market longer or can be found at a discount.

Those who have a starter or trade-up home to sell will find buyers competing, and often entering bidding wars, to be able to call their house their new home.

The sale of your starter or trade-up house will help you come up with a larger down payment for your new luxury home. Even a 5% down payment on a million-dollar home is $50,000.

But not all who are buying luxury properties have a home to sell first.

A recent Bloomberg article gave some insight into what many millennials are choosing to do:

“A new generation of affluent homebuyers powered by a surge in inherited wealth is driving the luxury-home market, demanding larger spaces and fancier finishes, according to a report heralding ‘the rise of the new aristocracy.’”

Bottom Line

The best time to sell anything is when demand is high, and supply is low. If you are currently in a starter or trade-up house that no longer fits your needs and you are looking to step into a luxury home, now’s the time to list your house for sale and make your dreams come true.

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The Cost of Waiting: Interest Rates Edition [INFOGRAPHIC]

The Cost of Waiting: Interest Rates Edition [INFOGRAPHIC] | Simplifying The Market

The Cost of Waiting: Interest Rates Edition [INFOGRAPHIC] | Simplifying The Market

Some Highlights:

  • Interest rates are projected to increase steadily heading into 2019.
  • The higher your interest rate, the more money you end up paying for your home and the higher your monthly payment will be.
  • Rates are still low right now. Don’t wait until rates hit 5% to start searching for your dream home!

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Moving up Is MORE Affordable Now Than Almost Any Other Time in 40 Years

Moving up Is MORE Affordable Now Than Almost Any Other Time in 40 Years | Simplifying The Market

If you are considering selling your current home, to either move up to a larger home or into a home in an area that better suits your current family needs, great news was just revealed.

Last week, Trulia posted a blog, Not Your Father’s Housing Market, which examined home affordability over the last 40+ years (1975-2016). Their research revealed that:

“Nationally, homes are just about the most affordable they’ve been in the last 40 years… the median household could afford a home 1.5 times more expensive than the median home price. In 1980, the median household could only afford about 3/4 of the median home price.

Despite relatively stagnant incomes, affordability has grown due to the sharp drop in mortgage rates over the last 30 years – from a high of over 16% in the 1980s to under 4% by 2016.

Of the nation’s 100 largest metros, only Miami became unaffordable between 1990 and 2016. Meanwhile, 22 metros have flipped from being unaffordable to becoming affordable in that same time frame.”

Here is a graph showing the Affordability Index compared to the 40-year average:

Moving up Is MORE Affordable Now Than Almost Any Other Time in 40 Years | Simplifying The Market

The graph shows that housing affordability is better now than at any other time in the last forty years, except during the housing crash last decade.

(Remember that during the crash you could purchase distressed properties – foreclosures and short sales – at 20-50% discounts.)

There is no doubt that with home prices and mortgage rates on the rise, the affordability index will continue to fall. That is why if you are thinking of moving up, you probably shouldn’t wait.

Bottom Line

If you have held off on moving up to your family’s dream home because you were hoping to time the market, that time has come.

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7 Factors to Consider When Choosing A Home to Retire In

7 Factors to Consider When Choosing A Home to Retire In | Simplifying The Market

As more and more baby boomers enter retirement age, the question of whether or not to sell their homes and move will become a hot topic. In today’s housing market climate, with low available inventory in the starter and trade-up home categories, it makes sense to evaluate your home’s ability to adapt to your needs in retirement.

According to the National Association of Exclusive Buyers Agents (NAEBA), there are 7 factors that you should consider when choosing your retirement home.

1. Affordability

“It may be easy enough to purchase your home today but think long-term about your monthly costs. Account for property taxes, insurance, HOA fees, utilities – all the things that will be due whether or not you have a mortgage on the property.

Would moving to a complex with homeowner association fees actually be cheaper than having to hire all the contractors you would need to maintain your home, lawn, etc.? Would your taxes go down significantly if you relocated? What is your monthly income going to be like in retirement?

2. Equity

“If you have equity in your current home, you may be able to apply it to the purchase of your next home. Maintaining a healthy amount of home equity gives you a source of emergency funds to tap, via a home equity loan or reverse mortgage.”

The equity you have in your current home may be enough to purchase your retirement home with little to no mortgage. Homeowners in the US gained an average of over $14,000 in equity last year.

3. Maintenance

“As we age, our tolerance for cleaning gutters, raking leaves and shoveling snow can go right out the window. A condominium with low-maintenance needs can be a literal lifesaver, if your health or physical abilities decline.”

As we mentioned earlier, would a condo with an HOA fee be worth the added peace of mind of not having to do the maintenance work yourself?

4. Security

“Elderly homeowners can be targets for scams or break-ins. Living in a home with security features, such as a manned gate house, resident-only access and a security system can bring peace of mind.”

As scary as that thought may be, any additional security and an extra set of eyes looking out for you always adds to peace of mind.

5. Pets

“Renting won’t do if the dog can’t come too! The companionship of pets can provide emotional and physical benefits.”

Evaluate all of your options when it comes to bringing your ‘furever’ friend with you to a new home. Will there be necessary additional deposits if you are renting or in a condo? Is the backyard fenced in? How far are you from your favorite veterinarian?

6. Mobility

“No one wants to picture themselves in a wheelchair or a walker, but the home layout must be able to accommodate limited mobility.”

Sixty is the new 40, right? People are living longer and are more active in retirement, but that doesn’t mean that down the road you won’t need your home to be more accessible. Installing handrails and making sure your hallways and doorways are wide enough may be a good reason to look for a home that was built to accommodate these needs.

7. Convenience

“Is the new home close to the golf course, or to shopping and dining? Do you have amenities within easy walking distance? This can add to home value!”

How close are you to your children and grandchildren? Would relocating to a new area make visits with family easier or more frequent? Beyond being close to your favorite stores and restaurants, there are a lot of factors to consider.

Bottom Line

When it comes to your forever home, evaluating your current house for its ability to adapt with you as you age can be the first step to guaranteeing your comfort in retirement. If after considering all these factors you find yourself curious about your options, let’s get together to evaluate your ability to sell your house in today’s market and get you into your dream retirement home!

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Shannon Fowler on March 13,2018

Outdoor Kitchen Ideas for Northern Virginia

It’s almost spring, and time to start thinking about your outdoor spaces. Many of you may be undertaking projects to extend your living space outdoors, and one popular option is the outdoor kitchen! The possibilities are endless and limited only by your budget.

There is much more to designing an outdoor kitchen than picking appliances and seating options. Depending on how elaborate your design, you may need to think about utilities (gas and electric), plumbing, fire safety, and lighting, as well as hardscapes such as brick or stonework, pergolas, and concrete work. The intrepid do-it-yourself-er may feel up to tackling all the various projects, but many homeowners will need to engage a contractor that specializes in outdoor kitchens.

Given the unpredictable weather in the Northern Virginia area, you may also want to consider ways to extend your seasons. With the expense of outdoor kitchens you want to be able to use them more than 4-5 months out of the year! Think about ways to heat the area in the fall, and provide shade and cooling in the summer.

Another consideration is your home’s resale value. Any major project such as this should enhance the value of your home, but not overprice it for your neighborhood.  We can help you determine what makes sense for your home and your Northern Virginia  or Greater DC neighborhood.

Houzz offers a ton of ideas to get your creativity flowing!

Herbert Riggs and Associates can help you with all your real estate needs. Whether buying, selling, or investing, If you have any questions, give me a call at 703-966-2647 or send me an email at Herbert.Riggs@gmail.com.

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Shannon Fowler on March 13,2018

NoVA Real Estate Update – February 2018

The Northern Virginia Association of Realtors® reports on February 2018 home sales activity for Fairfax and Arlington counties, the cities of Alexandria, Fairfax and Falls Church and the towns of Vienna, Herndon and Clifton.

According to the Northern Virginia Association of Realtors, February 2018 continued the trend of tight supply of homes for sale, and stiff competition for the available homes. As a matter of fact 1 in 8 home buyers are making cash offers, which can make it difficult for those using traditional financing to make a deal.

A total of 1,143 homes sold in February 2018, which represents a 4.11 percent decrease from February 2017 home sales of 1,192.

According to Ryan T. Conrad, NVAR CEO, “Northern Virginia continues to be a stable market for real estate. Although year-over-year numbers for February show a slowing of home sale activity in our local footprint, the numbers overall are positive when compared with a five-year February average.

Active listings decreased in February when compared with 2017. The number of new listings were down about 19% from last year, based on 2,396 active listings in February. By comparison, in February 2017, there were 2,973 homes available. The average days on market (DOM) continues to decrease, showing February 2018 at an average of 61 days, compared to the average 67 DOM in February 2017, which is a 9% reduction.

Image courtesy of NVAR

The average home sale price rose slightly compared with last February, to $556,791. This is up less than 1 percent compared to February 2017, when the average price was $552,942.

As can be expected, short supply and buyer competition results in rising home prices. The median sold price for homes in February 2018 was $500,000, up 7.37 percent compared to the February 2017 median price of $465,700.

New pending home sales, reported in February 2018 at 1,768 in Northern Virginia was 3.49 percent below the previous year 1,832 pending contracts. Total pending sales were down by 7.55 percent last month, compared with 2018.

Herbert Riggs and Associates can help you with all your real estate needs. Whether buying, selling, or investing, If you have any questions, give me a call at 703-966-2647 or send me an email at Herbert.Riggs@gmail.com.

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Shannon Fowler on March 13,2018

National Cherry Blossom Festival 2018

Each year, the National Cherry Blossom Festival brings hundreds of thousands of visitors to the DC area. The festival is typically timed to coincide with peek bloom, although weather can sometimes wreak havoc on the plans. This year’s event is slated for March 20-April 15, so you should have plenty of opportunity to take in the beauty of the spring foliage.

Due to current weather conditions, the latest intel suggests peak bloom will be approximately March 27-31.

Major Events

March 31 – Blossom Kite Festival. Free at Washington Monument.  Bring your own kite, compete in various events, or kids can make their own kites. Find more about it here.

April 7 – PetalPalooza. Free admission. Wharf area (formerly known as the Southwest Waterfront). Entertainment, dining, and nighttime fireworks. More information here.

April 14 – National Cherry Blossom Festival Parade. Free general admission; tickets required for bleacher seating. The parade route runs down Constitution Avenue between the National Archives building and the Washington Monument.  Find parade info here or buy tickets here.

Herbert Riggs and Associates can help you with all your real estate needs. Whether buying, selling, or investing, If you have any questions, give me a call at 703-966-2647 or send me an email at Herbert.Riggs@gmail.com.

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Shannon Fowler on March 13,2018

4 Reasons Spring is a Great Time to Buy a Home!

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

Prices Will Continue to Rise

CoreLogic’s latest Home Price Index reports that home prices have appreciated by 6.6% over the last 12 months. The same report predicts that prices will continue to increase at a rate of 4.3% 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.

Mortgage Interest Rates Are Projected to Increase

Freddie Mac’s Primary Mortgage Market Survey shows that interest rates for a 30-year mortgage hovered close to 4.0% in 2017. Most experts predict that 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 nearly a full percentage point 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 necessary to buy your next home.

Either Way, You Are Paying a Mortgage

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

As an owner, your mortgage payment is a form of ‘forced savings’ that allows you to have equity in your home that 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 cost to work for you?

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 that both are on the rise.

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

Look at the actual reason you are 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 renovations, maybe now is the time to buy.

If the right thing for you and your family is to purchase a home this year, buying sooner rather than later could lead to substantial savings.

Herbert Riggs and Associates can help you with all your real estate needs. Whether buying, selling, or investing, If you have any questions, give me a call at 703-966-2647 or send me an email at Herbert.Riggs@gmail.com.

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Shannon Fowler on March 13,2018

Save for a Down Payment Faster Than You Think!

Saving for a down payment is often the biggest hurdle for a first-time homebuyer. Depending on where you live, median income, median rents, and home prices all vary. So, we set out to find out how long it would take to save for a down payment in each state.

Using data from the United States Census Bureau and Zillow, we determined how long it would take, nationwide, for a first-time buyer to save enough money for a down payment on their dream home. There is a long-standing ‘rule’ that a household should not pay more than 28% of their income on their monthly housing expense.

By determining the percentage of income spent renting in each state, and the amount needed for a 10% down payment, we were able to establish how long (in years) it would take for an average resident to save enough money to buy a home of their own.

According to the data, residents in Ohio can save for a down payment the quickest in just under 3 years (2.44). Below is a map that was created using the data for each state:

 

What if you only needed to save 3%?

What if you were able to take advantage of one of Freddie Mac’s or Fannie Mae’s 3%-down programs? Suddenly, saving for a down payment no longer takes 5 or 10 years, but becomes possible in a year or two in many states as shown on the map below.

Bottom Line

Whether you have just started to save for a down payment, or have been saving for years, you may be closer to your dream home than you think! Let’s meet up so I can help you evaluate your ability to buy today.

Herbert Riggs and Associates can help you with all your real estate needs. Whether buying, selling, or investing, If you have any questions, give me a call at 703-966-2647 or send me an email at Herbert.Riggs@gmail.com.

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You Can Save for a Down Payment Faster Than You Think!

You Can Save for a Down Payment Faster Than You Think! | Simplifying The Market

Saving for a down payment is often the biggest hurdle for a first-time homebuyer. Depending on where you live, median income, median rents, and home prices all vary. So, we set out to find out how long it would take to save for a down payment in each state.

Using data from the United States Census Bureau and Zillow, we determined how long it would take, nationwide, for a first-time buyer to save enough money for a down payment on their dream home. There is a long-standing ‘rule’ that a household should not pay more than 28% of their income on their monthly housing expense.

By determining the percentage of income spent renting in each state, and the amount needed for a 10% down payment, we were able to establish how long (in years) it would take for an average resident to save enough money to buy a home of their own.

According to the data, residents in Ohio can save for a down payment the quickest in just under 3 years (2.44). Below is a map that was created using the data for each state:

You Can Save for a Down Payment Faster Than You Think! | Simplifying The Market

What if you only needed to save 3%?

What if you were able to take advantage of one of Freddie Mac’s or Fannie Mae’s 3%-down programs? Suddenly, saving for a down payment no longer takes 5 or 10 years, but becomes possible in a year or two in many states as shown on the map below.

You Can Save for a Down Payment Faster Than You Think! | Simplifying The Market

Bottom Line

Whether you have just started to save for a down payment, or have been saving for years, you may be closer to your dream home than you think! Let’s meet up so I can help you evaluate your ability to buy today.

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4 Reasons Spring is a Great Time to Buy a Home!

4 Reasons Spring is a Great Time to Buy a Home! | Simplifying The Market

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

Prices Will Continue to Rise

CoreLogic’s latest Home Price Index reports that home prices have appreciated by 6.6% over the last 12 months. The same report predicts that prices will continue to increase at a rate of 4.3% 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.

Mortgage Interest Rates Are Projected to Increase

Freddie Mac’s Primary Mortgage Market Survey shows that interest rates for a 30-year mortgage hovered close to 4.0% in 2017. Most experts predict that 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 nearly a full percentage point 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 necessary to buy your next home.

Either Way, You Are Paying a Mortgage

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

As an owner, your mortgage payment is a form of ‘forced savings’ that allows you to have equity in your home that 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 cost to work for you?

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 that both are on the rise.

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

Look at the actual reason you are 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 renovations, maybe now is the time to buy.

If the right thing for you and your family is to purchase a home this year, buying sooner rather than later could lead to substantial savings.

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Shannon Fowler on March 9,2018

The Difference an Hour Will Make This Spring

Some Highlights:

  • Don’t forget to set your clocks forward this Sunday, March 11th at 2:00 AM EST in observance of Daylight Saving Time.
  • Unless of course, you are a resident of Arizona or Hawaii!
  • Every hour in the United States: 614 homes are sold, 81 homes regain equity (meaning they are no longer underwater on their mortgage), and the median home price rises $1.51!

Herbert Riggs and Associates can help you with all your real estate needs. Whether buying, selling, or investing, If you have any questions, give me a call at 703-966-2647 or send me an email at Herbert.Riggs@gmail.com.

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The Difference an Hour Will Make This Spring [INFOGRAPHIC]

The Difference an Hour Will Make This Spring [INFOGRAPHIC] | Simplifying The Market

Some Highlights:

  • Don’t forget to set your clocks forward this Sunday, March 11th at 2:00 AM EST in observance of Daylight Saving Time.
  • Unless of course, you are a resident of Arizona or Hawaii!
  • Every hour in the United States: 614 homes are sold, 81 homes regain equity (meaning they are no longer underwater on their mortgage), and the median home price rises $1.51!

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A New Housing Bubble Forming…Not Before 2024!

A New Housing Bubble Forming…Not Before 2024! | Simplifying The Market

A recent report by CoreLogic revealed that U.S. home values appreciated by more than 37% over the last five years. Some are concerned that this is evidence we may be on the verge of another housing “boom & bust” like the one we experienced from 2006-2008.

Recently, several housing experts weighed in on the subject to alleviate these fears.

Sean Becketti, Freddie Mac Chief Economist

 “The evidence indicates there currently is no house price bubble in the U.S., despite the rapid increase of house prices over the last five years.”

Edward Golding, a Senior Fellow at the Urban Institute’s Housing Finance Policy Center

 “There is not likely to be a national bubble in the way that we saw the first decade of the century.”

Christopher Thornberg, Partner at Beacon Economics

 “There is no direct or indirect sign of any kind of bubble.”

Bill McBride, Calculated Risk

 “I wouldn’t call house prices a bubble.”

David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices

 “Housing is not repeating the bubble period of 2000-2006.”

A recent article by Teo Nicolais, a real estate entrepreneur who teaches courses on real estate principles, markets, and finance at Harvard Extension School concluded that the next housing bubble may not occur until 2024.

The article, How to Use Real Estate Trends to Predict the Next Housing Bubble, looks at previous peaks in real estate values going all the way back to 1818. Nicolais uses the research of several economists. The article details the four phases of a real estate cycle and what defines each phase.

Nicolais concluded his article by saying:

“Those who study the financial crisis of 2008 will (we hope) always be weary of the next major crash. If George, Harrison, and Foldvary are right, however, that won’t happen until after the next peak around 2024. 

Between now and then, aside from the occasional slow down and inevitable market hiccups, the real estate industry is likely to enjoy a long period of expansion.”

Bottom Line

The reason for the price appreciation we are seeing is an imbalance between supply and demand for housing. This has created a natural increase in values, not a bubble in prices.

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Home Prices: The Difference 5 Years Makes

Home Prices: The Difference 5 Years Makes | Simplifying The Market

The economists at CoreLogic recently released a special report entitled, Evaluating the Housing Market Since the Great Recession. The goal of the report was to look at economic recovery since the Great Recession of December 2007 through June 2009.

One of the key indicators used in the report to determine the health of the housing market was home price appreciation. CoreLogic focused on appreciation from December 2012 to December 2017 to show how prices over the last five years have fared.

Frank Nothaft, Chief Economist at CoreLogic, commented on the importance of breaking out the data by state,

“Homeowners in the United States experienced a run-up in prices from the early 2000s to 2006, and then saw the trend reverse with steady declines through 2011. After finally reaching bottom in 2011, home prices began a slow rise back to where we are now.

Greater demand and lower supply – as well as booming job markets – have given some of the hardest-hit housing markets a boost in home prices. Yet, many are still not back to pre-crash levels.”

The map below was created to show the 5-year appreciation from December 2012 – December 2017 by state.

Home Prices: The Difference 5 Years Makes | Simplifying The Market

Nationally, the cumulative appreciation over the five-year period was 37.4%, with a high of 66% in Nevada, and a modest increase of 5% in Connecticut.

Where were prices expected to go?

Every quarter, Pulsenomics surveys a nationwide panel of over 100 economists, real estate experts, and investment and market strategists and asks them to project how residential home prices will appreciate over the next five years for their Home Price Expectation Survey (HPES).

According to the December 2012 survey results, national homes prices were projected to increase cumulatively by 23.1% by December 2017. The bulls of the group predicted home prices to rise by 33.6%, while the more cautious bears predicted an appreciation of 11.2%.

Where are prices headed in the next 5 years?

Data from the most recent HPES shows that home prices are expected to increase by 18.2% over the next 5 years. The bulls of the group predict home prices to rise by 27.4%, while the more cautious bears predict an appreciation of 8.3%.

Bottom Line

Every day, thousands of homeowners regain positive equity in their homes. Some homeowners are now experiencing values even higher than before the Great Recession. If you’re wondering if you have enough equity to sell your house and move on to your dream home, let’s get together to discuss conditions in our neighborhood!

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Competition is Coming, Are You Thinking of Selling Your Home?

Competition is Coming, Are You Thinking of Selling Your Home? | Simplifying The Market

The number of building permits issued for single-family homes is the best indicator of how many newly built homes will rise over the next few months. According to the latest U.S. Census Bureau and U.S. Department of Housing & Urban Development Residential Sales Report, the number of these permits were up 7.4% over last year.

How will this impact buyers?

More inventory means more options. Lawrence Yun, NAR’s Chief Economist, explained this is good news for the housing market – especially for those looking to buy:

“This rise in single-family housing construction will help tame home price growth, and the increase in multifamily units should continue to help slow rent growth.”

How will this impact sellers?

More inventory means more competition. Today, because of the tremendous lack of inventory, a seller can expect:

  1. A great price on their home as buyers outbid each other for it
  2. A quick sale as buyers have so little to choose from
  3. Fewer hassles as buyers don’t want to “rock the boat” on the deal

With an increase in competition, the seller may not enjoy these same benefits. As Chief Economist Nela Richardson, added:

“Because existing home inventory has been so low for so long, new construction is taking a larger share of the market…Builders meet the buyers and see the demand firsthand.”

Bottom Line

If you are considering selling your house, you’ll want to beat this new competition to market to ensure you get the most attention for your listing and the best price.

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Housing Market Expected To “Spring Forward” This Year

Housing Market Expected To "Spring Forward" This Year | Simplifying The Market

Just like our clocks this weekend in the majority of the country, the housing market will soon “spring forward!” Similar to tension in a spring, the lack of inventory available for sale in the market right now is what is holding back the market.

Many potential sellers believe that waiting until Spring is in their best interest, and traditionally they would have been right.

Buyer demand has seasonality to it, which usually falls off in the winter months, especially in areas of the country impacted by arctic temperatures and conditions.

That hasn’t happened this year.

Demand for housing has remained strong as mortgage rates have remained near historic lows. Even with the recent increase in rates, buyers are still able to lock in an affordable monthly payment. Many more buyers are jumping off the fence and into the market to secure a lower rate.

The National Association of Realtors (NAR) recently reported that the top 10 dates sellers listed their homes in 2017 all fell in April, May, or June.

Those who act quickly and list now could benefit greatly from additional exposure to buyers prior to a flood of more competition coming to market in the next few months.

Bottom Line

If you are planning on selling your home in 2018, let’s get together to evaluate the opportunities in our market.

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4 Reasons to Sell This Spring [INFOGRAPHIC]

4 Reasons to Sell This Spring [INFOGRAPHIC] | Simplifying The Market

4 Reasons to Sell This Spring [INFOGRAPHIC] | Simplifying The Market

Some Highlights:

  • Buyer demand continues to outpace the supply of homes for sale which means that buyers are often competing with one another for the few listings that are available!
  • Housing inventory is still under the 6-month supply needed to sustain a normal housing market.
  • Perhaps the time has come for you and your family to move on and start living the life you desire.

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Are Home Values Really Overinflated?

Are Home Values Really Overinflated? | Simplifying The Market

Last week, the National Association of Realtors (NAR) released their most recent Existing Home Sales Report. According to the report:

“The median existing-home price for all housing types in January was $240,500, up 5.8 percent from January 2017 ($227,300). January’s price increase marks the 71st straight month of year-over-year gains.”

Seventy-one consecutive months of price increases may have some concerned that current home values may be overinflated.

However, at the same time, Zillow issued a press release which revealed:

“If the housing bubble and bust had not happened, and home values had instead appreciated at a steady pace, the median home value would be higher than its current value.”

Here are two graphs that help show why home prices are exactly where they should be.

The first graph shows actual median home sales prices from 2000 through 2017.

Are Home Values Really Overinflated? | Simplifying The Market

By itself, this graph could heighten concerns as it shows home values rose in the early 2000s, came tumbling down and are now headed up again. It gives the feel of a rollercoaster ride that is about to take another turn downward.

However, if we also include where prices would naturally be, had there not been a boom & bust, we see a different story.

Are Home Values Really Overinflated? | Simplifying The Market

The blue bars on this graph represent were prices would be if they had increased by the normal annual appreciation rate (3.6%). By adding 3.6% to the actual 2000 price and repeating that for each subsequent year, we can see that prices were overvalued during the boom, undervalued during the bust, and a little bit LOWER than where they should be right now.

Bottom Line

Based on historic appreciation levels, we should be very comfortable that current home values are not overinflated.

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It’s Tax Season… Use Your Refund to Jump Start Your Down Payment Savings!

It's Tax Season… Use Your Refund to Jump Start Your Down Payment Savings! | Simplifying The Market

According to data released by the Internal Revenue Service (IRS), Americans can expect an estimated average refund of $2,840 this year when filing their taxes. This is down slightly from the average refund of $2,895, last year.

Tax refunds are often thought of as ‘extra money’ that can be used toward larger goals; for anyone looking to buy a home in 2018, this can be a great jump start toward a down payment!

The map below shows the average tax refund Americans received last year by state. (The refunds received for the 2017 tax year should continue to reflect these numbers as the new tax code will go into effect for 2018 tax filings.)

It's Tax Season… Use Your Refund to Jump Start Your Down Payment Savings! | Simplifying The Market

Many first-time buyers believe that a 20% down payment is required to qualify for a mortgage. Programs from the Federal Housing Authority, Freddie Mac, and Fannie Mae all allow for down payments as low as 3%, with Veterans Affairs Loans allowing many veterans to purchase a home with 0% down.

If you started your down payment savings with your tax refund check this year, how close would you be to a 3% down payment?

The map below shows what percentage of a 3% down payment is covered by the average tax refund by taking into account the median price of homes sold by state.

It's Tax Season… Use Your Refund to Jump Start Your Down Payment Savings! | Simplifying The Market

The darker the blue, the closer your tax refund gets you to homeownership! For those in Alabama looking to purchase their first homes, their tax refund could potentially get them 69% closer to that dream!

Bottom Line

Saving for a down payment can seem like a daunting task. But the more you know about what’s required, the more prepared you can be to make the best decision for you and your family! This tax season, your refund could be your key to homeownership!

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Shannon Fowler on February 27,2018

Market Woes and Your Home Values

Let’s face it. For the last eight or so years, we’ve been pretty spoiled with stock market gains that recovered the losses of 2007/08 and continued to move into ever higher territory. Sure, there were little blips and dips along the way, but we have mostly been spared from major equity market losses for nearly a decade.

As for all good things, bull markets eventually come to an end.

Now, I don’t have a crystal ball, so I don’t know if these recent market losses will be short lived or part of an extended downward trend. But experts are suggesting that volatility in the market (those gut-wrenching swings that take you from euphoria to fear in a matter of minutes) could be the norm for the foreseeable future.

If you are invested in the market, then you are probably already wondering what the future may hold for your retirement portfolio and your kids’ education funds. But, increasingly, home owners and potential home buyers are wondering what this market could mean for their home values or their ability to buy a home in the future.

Interest Rates

Probably the biggest potential impact to homeowners and potential home buyers is the specter of increasing interest rates. The reason the market has reacted so violently in the past week or so was actually because of positive economic news. But that news raised fears that interest rates may go up more the Federal Reserve had previously indicated, in an effort to stave off inflation. This could be bad news for businesses wanting to borrow, but it also potentially impacts mortgage borrowers.

Those seeking new mortgages in the future may find themselves paying higher interest rates, which could in turn reduce the maximum banks will allow them to borrow. Borrowers will pay thousands more in interest over the life of the loan than during more favorable interest rate climates.

Rising interest rates, of course, will also impact people who hold variable rate mortgages, or those who may need to take out a home equity line to make home improvements or complete repairs.

We don’t know yet how much rates may go up. This is key. We still have a couple percentage points to go before we are back to the 6-7% rates that were common in the 90’s. So rates are still low, and now is still a good time to take advantage of lower rates.

Home Prices

If rates should get above 5 or more percent, then we may see buyers start to sit on the sidelines, which could put some pressure on sellers to be more competitive in pricing their homes or make more buyer concessions than they have been accustomed to in the current sellers’ market.

This isn’t necessarily bad for home buyers, though. Here in Northern Virginia and the DC Metro area, we have been in an extended seller’s market, with ever increasing prices. Buyers could enjoy some respite from the need to compete with multiple offers and may even experience some price stabilization. Any price breaks will likely be offset by the higher interest rates, though.

Investment Portfolios

For most people, investing in the stock market is a long-game. Speak to your investment advisor if you have concerns about your overall portfolio balance and the volatility of your individual investments. As your portfolio relates to real estate, if you have your down payment funds for your next home currently invested in in the market, you may want to speak to your advisor about protecting some of those funds against the market volatility or consider interest-bearing vehicles to park your down payment funds until you are ready to use them. This could give you peace of mind to ensure you don’t end up with less funds than you thought you had at closing.

The Nitty Gritty

I have to caveat this entire discussion with the usual disclaimers. We don’t know what future economic data may come out that totally changes the landscape again. This analysis is based on what we know right now, and what we can conjecture based on the facts at hand. Other variables could be rising wages and the as-yet-unknowns of the tax changes that won’t be realized until tax season 2019 and beyond, as well as other economic factors.

The bottom line is that real estate is a solid investment that typically results in growth of principle over time. If you are thinking of buying a home, you may want to consider taking the plunge before interest rates rise again. If you are thinking about selling, you may want to consider how waiting could impact your ability to attract buyers and your selling price.

Herbert Riggs and Associates can help you with all your real estate needs. Whether buying, selling, or investing, If you have any questions, give me a call at 703-966-2647 or send me an email at Herbert.Riggs@gmail.com.

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Latest NAR Data Shows Now Is a Great Time to Sell!

Latest NAR Data Shows Now Is a Great Time to Sell! | Simplifying The Market

We all realize that the best time to sell anything is when demand for that item is high, and the supply of that item is limited. Two major reports released by the National Association of Realtors (NAR) revealed information that suggests that now is a great time to sell your house.

Let’s look at the data covered in the latest REALTORS® Confidence Index and Existing Home Sales Report.

REALTORS® CONFIDENCE INDEX

Every month, NAR surveys “over 50,000 real estate practitioners about their expectations for home sales, prices and market conditions.” This month, the index showed (again) that homebuying demand continued to outpace the supply of homes available in January.

The map below illustrates buyer demand broken down by state (the darker your state, the stronger demand there is).

Latest NAR Data Shows Now Is a Great Time to Sell! | Simplifying The Market

In addition to revealing high demand, the index also shows that compared to conditions in the same month last year, seller traffic conditions were ‘weak’ in 22 states, ‘stable’ in 25 states, and ‘strong’ in only 4 states (Alaska, Nevada, North Dakota & Utah).

Takeaway: Demand for housing continues to be strong but supply is struggling to keep up, and this trend is likely to continue throughout 2018.

THE EXISTING HOME SALES REPORT

The most important data revealed in the report was not sales but was instead the inventory of homes for sale (supply). The report explained:

  • Total housing inventory rose 4.1% from December to 1.52 million homes available for sale.
  • Unsold inventory is 9.5% lower than a year ago, marking the 32nd consecutive month with year-over-year declines.
  • This represents a 3.4-month supply at the current sales pace.

According to Lawrence Yun, Chief Economist at NAR:

“Another month of solid price gains underlines this ongoing trend of strong demand and weak supply. The underproduction of single-family homes over the last decade has played a predominant role in the current inventory crisis that is weighing on affordability.”

In real estate, there is a guideline that often applies; when there is less than a 6-month supply of inventory available, we are in a seller’s market and we will see appreciation. Between 6-7 months is a neutral market, where prices will increase at the rate of inflation. More than a 7-month supply means we are in a buyer’s market and should expect depreciation in home values.

As we mentioned before, there is currently a 3.4-month supply, and houses are going under contract fast. The Existing Home Sales Report shows that 43% of properties were on the market for less than a month when sold.

In January, properties sold nationally were typically on the market for 42 days. As Yun notes, this will continue unless more listings come to the market.

“While the good news is that Realtors in most areas are saying buyer traffic is even stronger than the beginning of last year, sales failed to follow course and far lagged last January’s pace. It’s very clear that too many markets right now are becoming less affordable and desperately need more new listings to calm the speedy price growth.”

Takeaway: Inventory of homes for sale is still well below the 6-month supply needed for a normal market and supply will ‘fail to catch up with demand’ if a ‘sizable’ supply does not enter the market.

Bottom Line

If you are going to sell, now may be the time to take advantage of the ready, willing, and able buyers that are still out searching for your house.

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Mortgage Rates on FIRE! Home Prices Up in Smoke?

Mortgage Rates on FIRE! Home Prices Up in Smoke? | Simplifying The Market

Mortgage interest rates have already risen by over a quarter of a percentage point in 2018. Many are projecting that rates could increase to 5% by the end of the year.

What impact will rising rates have on house values?

Many quickly jump to the conclusion that an increase in mortgage rates will have a detrimental impact on real estate prices as fewer buyers will be able to qualify for a loan. This seems logical; if there is less demand for housing then prices will drop.

However, in a good economy, rising mortgage rates increase demand as many prospective purchasers immediately jump off the fence to guarantee they get the lower rate.

Let’s look at home prices the last four times mortgage rates increased dramatically.

Mortgage Rates on FIRE! Home Prices Up in Smoke? | Simplifying The Market

In each case, home prices APPRECIATED and did not depreciate. No one is projecting as dramatic an increase in rates as the examples above. Most are projecting an increase of approximately 1% by the end of the year.

The last time mortgage rates increased by 1% over a twelve-month period was January 2013 (3.41%) to January 2014 (4.43%). What happened to house prices during that span? They appreciated by 9.8%.

Just two weeks ago, Rick Palacios Jr., Director of Research at John Burns Real Estate Consulting explained:

“Mortgage rates have risen 1% or more ten times in the last 43 years, with little impact on home sales and prices when the economy was also strong…Historically, rising confidence, solid job growth, and higher wages have more than offset reduced demand for housing resulting from higher mortgage rates.”

Bottom Line

When mortgage rates increase, history has shown that prices appreciate (and do not depreciate) during that same time span.

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