Karen R. Brown
Karen R. Brown
RE/MAX Innovative Properties
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47% of New Buyers Surprised by How Affordable Homes Are Today

 

 

47% of New Buyers Surprised by How Affordable Homes Are Today

47% of New Buyers Surprised by How Affordable Homes Are Today | MyKCM

Headlines matter. Right now, it’s hard to read about real estate without seeing a headline that suggests homes have become unaffordable for most Americans. In reality, there’s hard evidence that shows how owning a home is more affordable than renting in most parts of the country, as record-low interest rates are keeping monthly mortgage payments about 23% lower than the typical payment of 20 years ago. Despite the facts, misleading headlines persist, and they impact how hopeful homebuyers perceive the market.

In a recent survey by realtor.com, home shoppers indicated they were surprised by what they could actually afford when buying their first home. In fact, 47% discovered their budget was larger than they expected. George Ratiu, Senior Economist at realtor.com, explains:

“For first-time buyers, especially, the drop in the 30-year mortgage rate…has provided unexpected leverage. Lower rates allowed many buyers to stretch and buy more expensive homes while keeping their monthly budget the same.”

So why do these negative headlines that cast doubt on affordability continue to exist?

Most analysts only look at two of the three elements that make up the affordability equation: price and income. It’s true that incomes haven’t kept up with the price of houses. However, affordability is about the cost of the home, not just the price. For that reason, mortgage rates, the third element of the affordability equation, are important to consider.

For example, here’s the typical mortgage payment for assorted dates going back to 2000, as calculated by CoreLogic:47% of New Buyers Surprised by How Affordable Homes Are Today | MyKCMOutside of the housing crash (when short sales and foreclosures drove prices down), it’s more affordable to buy a home today when you consider all three elements of the affordability equation: price, income, and mortgage rate.

Bottom Line

Whether you’re a first-time buyer or a move-up buyer, don’t let the headlines scare you away from your dream of homeownership. Instead, connect with mortgage and real estate professionals to determine what you can afford and what’s available at that price. Like almost half of the buyers in the survey, you may be pleasantly surprised.

6 Foundational Benefits of Homeownership Today

 

6 Foundational Benefits of Homeownership Today | MyKCM

Over the past year, our homes have become an integral part of our lives more than ever. They’re much more than the houses we live in. They’re our workplaces, virtual schools, and safe havens that provide shelter, stability, and protection through the evolving health crisis. Today, 65.8% of Americans are fortunate enough to call their homes their own.

As we continue to think about the future, our goals for the year, and what we want to achieve well beyond 2021, it’s a great time to look at the benefits of owning a home. Below are some highlights and quotes on the benefits of homeownership shared by the National Association of Realtors (NAR). From feel-good motivations to economic and social impacts on the local community, these items may give you reason to believe homeownership stretches well beyond your financial investment.

Non-Financial Benefits

Owning a home brings a sense of happiness, satisfaction, and pride.

  • Pride of Ownership: It feels good to have a place that’s truly your own, especially since you can customize it to your liking. “The personal satisfaction and sense of accomplishment achieved through homeownership can enhance psychological health, happiness and well-being for homeowners and those around them.”
  • Civic Participation: Homeownership creates stability, a sense of community, and increases civic engagement. It’s a way to add to the strength of your local area and drive value into your neighborhood.

Financial Benefits

Buying a home is also an investment in your financial future.

  • Net Worth: Homeownership builds your net worth. Today, the median household net worth of all homeowners is $254,900, while the median net worth of renters is only $6,270.
  • Financial Security: Equity, appreciation, and more predictable monthly housing expenses are huge financial benefits of owning a home. Homeownership is truly the best way to improve your long-term financial position.

Economic Benefits

Homeownership is even a local economic driver.

  • Housing-Related Spending: An economic force throughout our nation, housing-related expenses accounted for more than one-sixth of the country’s economic activity over the past three decades.
  • Entrepreneurship: Homeownership is also a form of forced savings that can provide entrepreneurial opportunities. “Owning a home enables new entrepreneurs to obtain access to credit to start or expand a business and generate new jobs by using their home as collateral for small business loans.”

Bottom Line

The benefits of homeownership go well beyond the basics. Homeownership is truly a way to build financial freedom, find greater satisfaction and happiness, and make a substantial impact in your community. If owning a home is part of your dream this year, let’s connect so you can begin the homebuying process today.

Should I Wait for Lower Mortgage Interest Rates?

Should I Wait for Lower Mortgage Interest Rates?

 

Should I Wait for Lower Mortgage Interest Rates? | MyKCM

Historically low mortgage rates are a big motivator for homebuyers right now. In 2020 alone, rates hit new record-lows 16 times, and the trend continued into the early part of this year. Many hopeful homebuyers are now wondering if they should put their plans on hold and wait for the lowest rates imaginable. However, the reality is, acting sooner rather than later may be the actual win if you’re ready to buy a home.

According to Greg McBride, Chief Financial Analyst for Bankrate:

“As vaccines become more widely available and a return to normal starts to come into view, we’ll see mortgage rates bounce off the record lows.”

While only a slight increase in mortgage rates is projected for 2021, some experts believe they will start to rise. Over the past week, for example, the average mortgage rate ticked up slightly, reaching 2.79%. This is still incredibly low compared to the trends we’ve seen over time. According to Freddie Mac:

“Borrowers are smart to take advantage of these low rates now and will certainly benefit as a result.”

Here’s why.

As mortgage rates rise, the increase impacts the overall cost of purchasing a home. The higher the rate, the higher your monthly mortgage payment, especially as home prices rise too. Sam Khater, Chief Economist at Freddie Macsays:

“The forces behind the drop in rates have been shifting over the last few months and rates are poised to rise modestly this year. The combination of rising mortgage rates and increasing home prices will accelerate the decline in affordability and further squeeze potential homebuyers during the spring home sales season.”

What does this mean for buyers?

Right now, the inventory of houses for sale is also at a historic low, making it more challenging than normal to find a home to buy in many areas. As more buyers hit the market in the typically busy spring buying season, it may become even harder to find a home in the coming months. With this in mind, Len Keifer, Deputy Chief Economist for Freddie Macrecommends taking advantage of both low mortgage rates and the opportunity to buy:

“If you’ve found a home that fits your needs at a price you can afford, it might be better to act now rather than wait for future rate declines that may never come and a future that likely holds very tight inventory.”

Bottom Line

While today’s low mortgage rates provide great opportunities for homebuyers, we may not see them stick around forever. If you’re ready to buy a home, let’s connect so you can take advantage of what today’s market has to offer.

Is This the Year to Sell My House?

 Is This the Year to Sell My House? | MyKCM

If one of the questions you’re asking yourself is, “Should I sell my house this year?” consumer sentiment about selling today should boost your confidence in the right direction. Even with the current health crisis that continues to challenge our nation, Americans still feel good about selling a house. Here’s why.

According to the latest Home Purchase Sentiment Index from Fannie Mae, 57% of consumer respondents to their survey indicate now is a good time to buy a home, while 59% feel it’s a good time to sell one:

“The percentage of respondents who say it is a good time to sell a home remained the same at 59%, while the percentage who say it’s a bad time to sell decreased from 35% to 33%. As a result, the net share of those who say it is a good time to sell increased 2 percentage points month over month.”

As you can see, many still believe that, despite everything going on in the world, it is still a good time to sell a house.

Why is now a good time to sell?

There simply are not enough homes available to meet today’s buyer demand, and they’re selling just as quickly as they’re coming to the market. According to the National Association of Realtors (NAR), unsold inventory available today sits at a 2.3-month supply at the current sales pace, which is down from a 2.5-month supply from the previous month. This record-low inventory is not even half of what we need for a normal or neutral housing market, which should have a 6.0-month supply of unsold inventory to balance out.

With so few homes available for buyers to choose from, we’re in a true sellers’ market. Homeowners ready to make a move right now have the opportunity to negotiate the best possible contracts with buyers who are feeling the pull of intense competition when it comes to finding their dream home. Lawrence Yun, Chief Economist for NAR, notes how quickly homes are selling right now, further confirming the benefits to sellers this season:

“The market is incredibly swift this winter with the listed homes going under contract on average at less than a month due to a backlog of buyers wanting to take advantage of record-low mortgage rates.”

However, this sweet spot for sellers won’t last forever. As more homes are listed this year, this tip toward sellers may start to wane. According to Danielle Hale, Chief Economist at realtor.commore choices for buyers are on the not-too-distant horizon:

“The bright spot for buyers is that more homes are likely to become available in the last six months of 2021. That should give folks more options to choose from and take away some of their urgency. With a larger selection, buyers may not be forced to make a decision in mere hours and will have more time to make up their minds.”

Bottom Line

If you’re ready to make a move, you can feel good about the current sentiment in the market and the advantageous conditions for today’s sellers. Let’s connect today to determine the best next step when it comes to selling your house this year.

The Holidays Aren’t Stopping Homebuyers This Year

The Holidays Aren’t Stopping Homebuyers This Year | MyKCM

Black Friday and Cyber Monday are behind us, yet finding the perfect holiday gifts for friends and family is certainly still top of mind for many right now. This year, there’s another type of buyer that’s very active this holiday season – the homebuyer.

Each month, ShowingTime releases their Showing Index which tracks the average number of appointments received on active U.S. house listings. The most recent index notes:

“The Showing Index reported a 60.9 percent jump in nationwide showing traffic year over year in October, the sixth consecutive month to see an increase over last year.”

Here’s the breakdown of the latest activity by region of the country compared to this time last year:

  • The Northeast increased by 65.5%
  • The West increased by 64.7%
  • The Midwest increased by 55.7%
  • The South increased by 54.7%

Why is the traffic so active?

The health crisis definitely put homebuying plans on pause for many earlier this year. Buyers, however, are in the market and making moves well past the typical busy homebuying seasons of spring and summer.

One of the main reasons buyer traffic has continued to soar in the second half of 2020 is how dramatically mortgage rates have fallen. According to Freddie Mac, the average mortgage rate last December was 3.72%. Today, the rate is a full percentage point lower.

Bottom Line

There are first-time, move-up, and move-down buyers actively looking for the home of their dreams this winter. If you’re thinking of selling your house in 2021, you don’t need to wait until the spring to do it. Your potential buyer is very likely searching for a home in your neighborhood right now.

A New Way to Shop for Homes in a Virtual World

A New Way to Shop for Homes in a Virtual World | MyKCM

In a year when we’re learning to do so much remotely, homebuying is no exception. From going to work to attending school, grocery shopping, and even seeing our doctors online, digital practices have changed the way we live.

This year, rather than delaying their home purchases, buyers – alongside their trusted real estate professionals – turned to the Internet to do more than just a typical home search. In some cases, they bought homes without even stepping foot inside. Jessica Lautz, Vice President of Demographics and Behavioral Insights at the National Association of Realtors (NAR), says:

“People really didn’t buy houses sight-unseen, traditionally. It’s still not a huge number, but it has gone up, and we have definitely seen that trend accelerate.”

According to NAR, throughout the coronavirus pandemic, one in every 20 homebuyers purchased a house sight-unseen.

How Your Real Estate Agent Will Pave the Way

Today, real estate professionals are using digital practices to help homebuyers and sellers walk through many steps in the process virtually. While following the regulations set forth by the CDC and all local guidelines, this year, agents quickly empowered buyers and sellers with virtual tours, 3D floor plans, high-quality photos, videos, online open houses, and more. For those who had homebuying and selling needs in 2020, trusted advisors made it possible in many markets.

Here’s a graph showing some of the digital options buyers found most helpful in their searches this year, as noted by NAR in the 2020 Profile of Home Buyers and Sellers:A New Way to Shop for Homes in a Virtual World | MyKCMThe report also mentions that buyers this year generally searched for eight weeks. Throughout that search, they viewed a median of 9 homes, but not all of them were seen in-person. Yahoo Finance notes:

Buyers viewed five homes online and four homes in-person during the pandemic, compared to nine homes in-person in 2019, according to NAR. This was the first year NAR asked buyers to specify the number of homes toured virtually.”

In true 2020 fashion, virtual practices helped buyers safely narrow down their top choices, so they didn’t have to unnecessarily walk into more homes than they needed to see throughout the process. Here’s the breakdown by region:A New Way to Shop for Homes in a Virtual World | MyKCMAt a time when health and safety are top priorities, current technology is making it possible for buyers and sellers to move their real estate plans forward at their own comfort levels, even through a worldwide pandemic. For many, this means buyers no longer have to physically tour every home they want to see, and sellers don’t need to open their doors over and over again throughout the process. Safety can come first, and trusted real estate professionals are here to help.

Bottom Line

If you’re ready to make a move, you may not have to press pause on your plans this season. Let’s connect to determine the safe and effective options to buy or sell a home in our area or wherever you’re looking to move.

5 Tips for Homebuyers Who Want to Make a Competitive Offer

5 Tips for Homebuyers Who Want to Make a Competitive Offer | MyKCM

Today’s real estate market has high buyer interest and low housing inventory. With so many buyers competing for a limited number of homes, it’s more important than ever to know the ins and outs of making a confident and competitive offer. Here are five keys to success for this important stage in the homebuying process.

1. Listen to Your Real Estate Agent

A recent article from Freddie Mac offers guidance on making an offer on a home in today’s market. Right off the bat, it points out how emotional this can be for buyers and why trusted professionals can help you stay focused on the most important things:

“Remember to let your homebuying team guide you on your journey, not your emotions. Their support and expertise will keep you from compromising on your must-haves and future financial stability.”

Your real estate professional should be your primary source for answers to the questions you have when you’re ready to make an offer.

2. Understand Your Finances

Having a complete understanding of your budget and how much house you can afford is essential. The best way to know this is to reach out to your lender to get pre-approved for a loan early in the homebuying process. Only 44% of today’s prospective homebuyers are planning to apply for pre-approval, so be sure to take this step so you stand out from the crowd. It shows sellers you’re a serious, qualified buyer and can give you a competitive edge if you enter a bidding war.

3. Be Ready to Move Quickly

According to the Realtors Confidence Index, published monthly by the National Association of Realtors (NAR), the average property being sold today is receiving more than three offers and is only on the market for a few weeks. These are both results of today’s competitive market, showing how important it is to stay agile and vigilant in your search. As soon as you find the right home for your needs, be prepared to work with your agent to submit an offer as quickly as possible.

4. Make a Fair Offer

It’s only natural to want the best deal you can get on a home. However, Freddie Mac also warns that submitting an offer that’s too low can lead sellers to doubt how serious you are as a buyer. Don’t submit an offer that will be tossed out as soon as it’s received. The expertise your agent brings to this part of the process will help you stay competitive:

“Your agent will work with you to make an informed offer based on the market value of the home, the condition of the home and recent home sale prices in the area.”

5. Be a Flexible Negotiator

After submitting an offer, the seller may accept it, reject it, or counter it with their own changes. In a competitive market, it’s important to stay nimble throughout the negotiation process. Your position can be strengthened with an offer that includes flexible move-in dates, a higher price, or minimal contingencies (conditions you set that the seller must meet for the purchase to be finalized). There are, however, certain contingencies you don’t want to forego. Freddie Mac explains:

Resist the temptation to waive the inspection contingency, especially in a hot market or if the home is being sold ‘as-is’, which means the seller won’t pay for repairs. Without an inspection contingency, you could be stuck with a contract on a house you can’t afford to fix.”

Bottom Line

Today’s competitive market makes it more important than ever to make a strong offer on a home, and a trusted expert can help you rise to the top along the way.

Your House May Be High on the Buyer Wish List This Holiday Season

 

Your House May Be High on the Buyer Wish List This Holiday Season | MyKCM

Around this time each year, many homeowners decide to wait until after the holidays to sell their houses. Similarly, others who already have their homes on the market remove their listings until the spring. Let’s unpack the top reasons why selling your house now, or keeping it on the market this season, is the best choice you can make. This year, buyers want to purchase homes for the holidays, and your house might be the perfect match.

Here are seven great reasons not to wait to sell your house this holiday season:

1. Buyers are active now. Mortgage rates are historically low, providing motivation for those who are ready to get more for their money over the life of their home loan.

2. Purchasers who look for homes during the holidays are serious ones, and they’re ready to buy.

3. You can restrict the showings in your house to days and times that are most convenient for you, or even select virtual options. You’ll remain in control, especially in today’s sellers’ market.

4. Homes decorated for the holidays appeal to many buyers.

5. Today, there’s minimal competition for you as a seller. There just aren’t enough houses on the market to satisfy buyer demand, meaning sellers are in the driver’s seat. Over the past year, inventory has declined to record lows, making it the opportune time to sell your house (See graph below):Your House May Be High on the Buyer Wish List This Holiday Season | MyKCM6. The desire to own a home doesn’t stop during the holidays. Buyers who have been searching throughout the fall and have been running into more and more bidding wars are still on the lookout. Your home may be the answer.

7. This season is the sweet spot for sellers, and the number of listings will increase after the holidays. In many parts of the country, more new construction will also be available for sale in 2021, which will lessen the demand for your house next year.

Bottom Line 

More than ever, this may be the year it makes the most sense to list your house during the holiday season. Let’s connect today to determine if selling now is your best move.

Buyer Interest Is Growing among Younger Generations

 

Buyer Interest Is Growing among Younger Generations | MyKCM

The demand for homes this year is extraordinary as record-breaking numbers of hopeful buyers continue to shop for homes. In a normal year, the peak homebuying season comes to a close by early fall. However, 2020 is anything but a normal year, and the housing market is no exception. Lawrence Yun, Chief Economist for the National Association of Realtors (NAR), explains:

Home sales traditionally taper off toward the end of the year, but in September they surged beyond what we normally see during this season…I would attribute this jump to record-low interest rates and an abundance of buyers in the marketplace, including buyers of vacation homes given the greater flexibility to work from home.”

What’s drawing so many buyers to the market?

As Yun mentioned, record-low interest rates are key. Today’s rates are strengthening purchasing power for buyers, too. Sam Khater, Chief Economist at Freddie Macemphasizes:

“Mortgage rates today are on average more than a full percentage point lower than rates over the last five years.”

If you’re a homebuyer right now, there’s no question that you want to take advantage of this opportunity – and you’re not alone. Competition among buyers is definitely increasing as more buyers enter the market and mortgage interest rates remain so low.

Who’s planning to buy a home right now?

Today’s affordability is appealing to all generations and seems to be especially attractive to younger buyers who want to begin growing their wealth through homeownership. There’s a distinct increase this year in the percentage of those in younger generations searching for homes. The National Association of Home Builders (NAHB) notes:

“Between the third quarters of 2019 and 2020, the share of Gen Z adults planning a home purchase rose three points to 14%. Millennials, however, are the generation most likely to be considering buying a home (22%).”

Here’s a graph showing the year-over-year increase in homebuying interest by generation:Buyer Interest Is Growing among Younger Generations | MyKCMAccording to Mark Fleming, Chief Economist for First American, millennials are reaching their prime home-buying years, a likely driver in this increase:

“Record low mortgage rates and millennials continuing to age into their prime home-buying years has boosted demand, but a lack of housing supply remains a challenge.”

What’s the biggest challenge for today’s buyers?

Finding a home, however, as Fleming notes above, is clearly a challenge today. Yun also explains:

“There is no shortage of hopeful, potential buyers, but inventory is historically low.”

With so many buyers actively searching for homes this year and so few houses for sale, it’s more important than ever to work with a trusted real estate professional to navigate today’s market. From pre-approval to bidding wars and guidance on down payment assistance resources, having an agent by your side might make the difference in your ability to land your dream home.

Bottom Line

Let’s connect if you’re ready to buy a home. More buyers mean more competition, so you need an expert guide to help you stand out from the crowd.

6 Reasons You’ll Win by Selling with a Real Estate Agent This Fall

There are many benefits to working with a real estate professional when selling your house. During challenging times, like what we face today, it becomes even more important to have an expert you trust to help guide you through the process. If you’re considering selling on your own, known in the industry as a For Sale by Owner (FSBO), it’s critical to consider the following:

1. Your Safety Is a Priority

Your family’s safety should always come first, and that’s more crucial than ever given the current health situation in our country. When you FSBO, it is incredibly difficult to control entry into your home. A real estate professional will have the proper protocols in place to protect not only your belongings but your family’s health and well-being too. From regulating the number of people in your home at one time to ensuring proper sanitization during and after a showing, and even facilitating virtual tours for buyers, real estate professionals are equipped to follow the latest industry standards recommended by the National Association of Realtors (NAR) to help protect you and your family.

2. A Powerful Online Strategy Is a Must to Attract a Buyer

Recent studies from NAR have shown that, even before COVID-19, the first step 44% of all buyers took when looking for a home was to search online. Throughout the process, that number jumps to 93%. Today, those numbers have grown exponentially. Most real estate agents have developed a strong Internet and social media strategy to promote the sale of your house. Have you?

3. There Are Too Many Negotiations

Here are just a few of the people you’ll need to negotiate with if you 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 inspection companies, which work for the buyer and will almost always find challenges with the house
  • The appraiser, if there is a question of value

As part of their training, agents are taught how to negotiate every aspect of the real estate transaction and how to mediate the emotions felt by buyers looking to make what is probably the largest purchase of their lives.

4. You Won’t Know if Your Purchaser Is Qualified for a Mortgage

Having a buyer who wants to purchase your house is the first step. Making sure they can afford to buy it is just as important. As a FSBO, it’s almost impossible to be involved in the mortgage process of your buyer. A real estate professional is trained to ask the appropriate questions and, in most cases, will be intimately aware of the progress being made toward a purchaser’s mortgage commitment.

Further complicating the situation is how the current mortgage market is rapidly evolving because of the number of families out of work and in mortgage forbearance. A loan program that was available yesterday could be gone tomorrow. You need someone who is working with lenders every day to guarantee your buyer makes it to the closing table.

5. FSBOing Has Become More Difficult from a Legal Standpoint

The documentation involved in the selling process has increased dramatically as more and more disclosures and regulations have become mandatory. In an increasingly litigious society, the agent acts as a third-party to help the seller avoid legal jeopardy. This is one of the major reasons why the percentage of people FSBOing has dropped from 19% to 8% over the last 20+ years.

6. You Net More Money When Using an Agent

Many homeowners believe they’ll save the real estate commission by selling on their own. Realize that the main reason buyers look at FSBOs is because they also believe they can save the real estate agent’s commission. The seller and buyer can’t both save on the commission.

study by Collateral Analytics revealed that FSBOs don’t actually save anything by forgoing the help of an agent. In some cases, the seller may even net less money from the sale. The study found the difference in price between a FSBO and an agent-listed home was an average of 6%. One of the main reasons for the price difference is effective exposure:

“Properties listed with a broker that is a member of the local MLS will be listed online with all other participating broker websites, marketing the home to a much larger buyer population. And those MLS properties generally offer compensation to agents who represent buyers, incentivizing them to show and sell the property and again potentially enlarging the buyer pool.”

The more buyers that view a home, the greater the chance a bidding war will take place.

Bottom Line

Listing on your own leaves you to manage the entire transaction by yourself. Why do that when you can hire an agent and still net the same amount of money? Before you decide to take on the challenge of selling your house alone, let’s connect to discuss your options.