U.S. Housing Inventory Crunch Continues… List Your House Today!

Every winter, families across the country decide if this will be the year that they sell their current houses and move into their dream homes.

Mortgage rates hovered around 4% for all of 2017 which forced many buyers off the fence and into the market, resulting in incredibly strong demand RIGHT NOW!

At the same time, however, inventory levels of homes for sale have dropped dramatically as compared to this time last year.

Trulia reported that “in Q4 2017, U.S. home inventory decreased by 10.5%. That is the biggest drop we’ve seen since Q2 2013.”

Here is a chart showing the decrease in inventory levels by category:

The largest drop in inventory was in the starter home category which saw a 19% dip in listings.

Bottom Line

Demand for your home is very strong right now while your competition (other homes for sale) is at a historically low level. If you are thinking of selling in 2018, now may be the perfect time.

 

Posted by The KCM Crew

 

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The Impact of Tight Inventory on the Housing Market

The housing crisis is finally in the rearview mirror as the real estate market moves down the road to a complete recovery. Home values are up, home sales are up, and distressed sales (foreclosures and short sales) have fallen to their lowest points in years. It seems that the market will continue to strengthen in 2018.

However, there is one thing that may cause the industry to tap the brakes: a lack of housing inventory. While buyer demand looks like it will remain strong throughout the winter, supply is not keeping up.

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

 

National Association of Realtors

“Total housing inventory at the end of November dropped 7.2 percent to 1.67 million existing homes available for sale, and is now 9.7 percent lower than a year ago (1.85 million) and has fallen year-over-year for 30 consecutive months. Unsold inventory is at a 3.4-month supply at the current sales pace, which is down from 4.0 months a year ago.”

Joseph Kirchner, Senior Economist for Realtor.com

“The increases in single-family permits and starts show that builders are planning and starting new construction projects, that’s a good thing because it will help to relieve the shortage of homes on the market.”

Sam Khater, Deputy Chief Economist at CoreLogic

Inventory is tighter than it appears. It’s much lower for entry-level buyers.”

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.

 

Posted by The KCM Crew

 

712,000 Homes in the US Regained Equity in the Past 12 Months!

CoreLogic’s latest Equity Report revealed that “over the past 12 months, 712,000 borrowers moved into positive equity.” This is great news, as the share of homeowners with negative equity (those who owe more than their home is worth), has dropped more than 20% since the peak in Q4 of 2009 (26%) to 4.9% today.

The report also revealed:

  • The average homeowner gained approximately $14,900 in equity during the past year.
  • Compared to Q3 2016, negative equity decreased 22% from 3.2 million homes, or 6.3% of all mortgaged properties.
  • U.S. homeowners with mortgages (roughly 63% of all homeownershave seen their equity increase by a total of $870.6 billion since Q3 2016, an increase of 11.8%, year-over-year.

The map below shows the percentage of homes by state with a mortgage and positive equity. (The states in gray have insufficient data to report.)

Significant Equity Is on The Rise

Frank Nothaft, Chief Economist at CoreLogic, believes this is great news for the “housing market.” He went on to say:

“Homeowner equity increased by almost $871 billion over the last 12 months, the largest increase in more than three years. This increase is primarily a reflection of rising home prices, which drives up home values, leading to an increase in home equity positions and supporting consumer spending.”

Of the 95.1% of homeowners with positive equity in the U.S., 82.9% have significant equity (defined as more than 20%). This means that more than three out of four homeowners with a mortgage could use the equity in their current home to purchase a new home now.

The map below shows the percentage of homes by state with a mortgage and significant equity.

Bottom Line

If you are one of the many homeowners who are unsure of how much equity you have in your home and are curious about your ability to move, let’s meet up to evaluate your situation.

 

Posted by The KCM Crew

Do you know how much your home is worth? Click HERE to find out!

How Rising Prices Will Help You Build Family Wealth in 2018

Over the next five years, home prices are expected to appreciate on average by 3.35% per year and to grow by 24.34% cumulatively, according to Pulsenomics’ most recent Home Price Expectation Survey.

So, what does this mean for homeowners and their equity position?

As an example, let’s assume a young couple purchases and closes on a $250,000 home this month (January). If we only look at the projected increase in the price of that home, how much equity will they earn over the next 5 years?

Since the experts predict that home prices will increase by 4.2% in 2018, the young homeowners will have gained $10,500 in equity in just one year.

Over a five-year period, their equity will increase by nearly $45,000! This figure does not even take into account their monthly principal mortgage payments. In many cases, home equity is one of the largest portions of a family’s overall net worth.

Bottom Line

Not only is homeownership something to be proud of, but it also offers you and your family the ability to build equity you can borrow against in the future. If you are ready and willing to buy, find out if you are able to today!

 

Posted by The KCM Crew

Home Prices Up 7% from Last Year

According to CoreLogic’s latest Home Price Indexnational home prices have appreciated by 7.0% from October 2016 to October 2017. This marks the second month in a row with a 7.0% year-over-year increase.

A lack of supply of homes for sale has led to upward pressure on home prices across the country, especially in areas where both existing and new home inventory have not kept up with buyer demand.

CoreLogic’s Chief Economist Frank Nothaft elaborated on the significance of such a large year-over-year gain, 

“Single-family residential sales and prices continued to heat up in October. On a year-over-year basis, home prices grew in excess of 6 percent for four consecutive months ending in October, the longest such streak since June 2014.

This escalation in home prices reflects both the acute lack of supply and the strengthening economy.”

This is great news for homeowners who have gained over $13,000 in equity in their home over the last year! Those homeowners who had been on the fence as to whether or not to sell will be pleasantly surprised to find out that they now have an even larger profit to help cover a down payment on their dream home.

CoreLogic’s President & CEO Frank Martell had this to say,

“The acceleration in home prices is good news for both homeowners and the economy because it leads to higher home equity balances that support consumer spending and is a cushion against mortgage risk. However, for entry-level renters and first-time homebuyers, it leads to tougher affordability challenges.”

Any time the price of a home goes up there will likely be concern about the affordability of that home, but there is good news. Mortgage interest rates remain at historic lows, allowing buyers to enter the housing market and lock in a low monthly housing cost.

Rents Are Also Rising

The report went on to mention that over the same 12-month period, median rental prices for a single-family home have also risen by 4.2%.

With rents and home prices rising at the same time, first-time buyers may find the task of saving for a down payment a little daunting. Low down payment programs are available and have been a very popular option for first-time buyers. The median down payment for first-time buyers in 2017 was only 5%! 

Bottom Line

If you are looking to enter the housing market, as either a buyer or a seller, let’s get together to go over exactly what’s going on in our neighborhood and discuss your options!

 

Posted by The KCM Crew

These Real Estate Trends Will Be Game-Changers in 2018

We’re almost there: the long-awaited home stretch of 2017. And quite a year it’s been! Already, we can’t help imagining what developments next year might bring to the wild world of U.S. real estate. So we asked our realtor.com® data team to give us the inside scoop. The team sifted through historical real-estate data and other major economic indicators to come up with a realistic forecast of just what might be in store next year.

And it looks like a sea change is brewing.

From housing inventory to price appreciation to generational and regional shifts, these are the top trends that will shape, and reshape, real estate markets in 2018. Buckle up! It’s going to be quite a ride.

Ravitaliy/iStock

Game-changer no. 1: Supply finally catching up with demand

After three years of a crushing shortage of homes for sale, the realtor.com economics team is predicting that the shortfall will finally ease up in the second half of 2018.

“The majority of the year should be challenging for most buyers, but we do expect growth in inventory starting in the fall,” says Danielle Hale, chief economist for realtor.com.

That’s a potentially transformative development for many would-be buyers who’ve been frustrated in their search for a home that meets their needs—and their budget.

“Once we start to see inventory turn around, there is plenty of demand in the market,” Hale says.

Although for-sale housing inventory is expected to stay tight in the first quarter of the year,  reaching a 4% year-over-year decline in March, if it increases as predicted by fall, that will be the first net inventory gain since 2015. Markets such as BostonDetroit, and Nashville—all of which recently made it onto our monthly list of the nation’s hottest real estate markets—may see inventory recover first.

Bullish construction is the engine that’s turning this ship around, bringing new homes to the market and creating opportunity for people to trade up into new homes.

“It’s adding inventory instead of just shuffling people around in existing homes,” Hale says.

But those itching to buy a starter home may have to be patient for a while longer.

“We expect the relief to start in the upper tiers, and it will make its way down to the lower tiers,” Hale says. Specifically, most of the initial inventory growth will be in the mid- and upper-tier price ranges, $350,000 and up.

As the market eases, home prices are expected to slow to 3.2% growth year over year nationally. But again, it’s the higher-priced homes that will be appreciating less. And even slower appreciation still means that prices will continue to rise.

“Overall, prices are expected to increase, and we’re expecting to see more of that in lower-priced homes,” Hale says. “It will get a bit worse before it gets better for buyers of starter and midprice homes.”

Game-changer no. 2: Millennials starting to come into their own

The housing market in 2018 will continue to present challenges for millennials—sorry, all of that student loan debt isn’t just going to disappear—but there are some bright spots on the horizon for these millions of Americans.

Millennials seem to be having more success at taking out mortgages on homes at varying prices, and not just starter homes, Hale says.

“They’re at that point where they’re seeing their incomes grow, and that will help them take on bigger mortgages,” she says. That’s because of both the overall strong economy and their own career development.

And as the largest generation in U.S. history reaches that sweet spot in their 20s to 30s when they’re settling down and starting families, they’re particularly motivated to buy. Millennials could make up 43% of home buyers taking out a mortgage by the end of 2018, up from an estimated 40% in 2017, based on mortgage originations. That 3% uptick could translate into hundreds of thousands of additional new homes. As inventory starts to rebound in late 2018 and in years to come, first-time home buyers will likely make up an even larger share of the market.

They probably shouldn’t wait too long to buy, either—mortgage rates are expected to reach 5% by the end of 2018 due to stronger economic growth, inflationary pressure, and monetary policy normalization.

Game-changer no. 3: Southern homes selling like crazy

When it comes to home sales growth, bet on Southern cities to beat the national average in 2018. We’re especially looking at you, Tulsa, OKLittle Rock, ARDallas; and Charlotte, NC. Those markets are expected to see 6% growth or more, compared with 2.5% nationally.

The South has been luring corporations and individuals to its balmy cities with its low costs of real estate, and living in general. The resulting strong economic growth and strong household growth, combined with an accommodating attitude toward builders, is setting the stage for an accelerating boom in homeownership, Hale says.

As soon as there are more homes to sell, these places will be selling strong.

Game-changer no. 4: Tax reform (maybe)

The Republican Party’s proposed changes to the tax system could change everything—but with both the House and Senate versions in limbo, the jury is still out on this one.

If a version of tax reform does pass with the current provisions affecting real estate, Hale says she would expect to see fewer home sales and declining home prices. However, it would be the upper price tiers that would likely be affected the most, in areas with expensive homes and high taxes, such as coastal cities, especially in California.

 

Posted by Cicely Wedgeworth on realtor.com

A Housing Bubble? Industry Experts Say NO!

Housing

With residential home prices continuing to appreciate at levels above historic norms, some are questioning if we are heading toward another housing bubble (and subsequent burst) like the one we experienced in 2006-2008.

Recently, five housing experts weighed in on the question.

Rick Sharga, Executive VP at Ten-X:

“We’re definitely not in a bubble.”

“We have a handful of markets that are frothy and probably have hit an affordability wall of sorts but…while prices nominally have surpassed the 2006 peak, we’re not talking about 2006 dollars.”

Christopher Thornberg, Partner at Beacon Economics:

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

“Steady as she goes. Prices continue to rise. Sales roughly flat.…Overall this market is in an almost boring place.”

Bill McBride, Calculated Risk:

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

“So prices may be a little overvalued, but there is little speculation and I don’t expect house prices to decline nationally like during the bust.”

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

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

“…price increases vary unlike the earlier period when rising prices were almost universal; the number of homes sold annually is 20% less today than in the earlier period and the months’ supply is declining, not surging.”

Bing Bai & Edward Golding, Urban Institute:

“We are not in a bubble and nowhere near the situation preceding the 2008 housing crisis.”

“Despite recent increases, house prices remain affordable by historical standards, suggesting that home prices are tracking a broader economic expansion.”

Posted by The KCM Crew