58% Of Homeowners See A Drop In Home Values Coming

According to the recently released Modern Homebuyer Survey from ValueInsured58 percent of homeownersthink there will be a “housing bubble and price correction” within the next 2 years.

After what transpired just ten years ago, we can understand the concern Americans have about the current increase in home prices. However, this market has very little in common with what happened last decade.

 

The two major causes of the housing crash were:

  1. A vast oversupply of housing inventory caused by home builders building at a pace that far exceeded historical norms.
  2. Lending standards that were so relaxed that unqualified buyers could easily obtain financing thus enabling them to purchase a home.

Today, housing inventory is at a 20-year low with new construction starts well below historic norms and financing a home is anything but simple in the current mortgage environment. The elements that precipitated the housing crash a decade ago do not exist in today’s real estate market.

The current increase in home prices is the result of a standard economic equation: when demand is high and supply is low, prices rise.

If you are one of the 58% of homeowners who are concerned about home values depreciating over the next two years and are hesitant to move up to the home of your dreams, take comfort in the latest Home Price Expectation Survey.

Once a quarter, a nationwide panel of over one hundred economists, real estate experts and investment & market strategists are surveyed and asked to project home values over the next five years. The experts predicted that houses would continue to appreciate through the balance of this year and in 2018, 2019, 2020 and 2021. They do expect lower levels of appreciation during these years than we have experienced over the last five years but do not call for a decrease in values (depreciation) in any of the years mentioned.

Bottom Line

If you currently own a home and are thinking of moving-up to the home your family dreams about, don’t let the fear of another housing bubble get in the way as this housing market in no way resembles the market of a decade ago.

 

Posted by The KCM Crew

Inventory Challenges Continue! [INFOGRAPHIC]

Some Highlights:

  • After a surge in March, existing home sales and new home sales slowed due to a drop in inventory available for sale in the start-up and trade-up categories.
  • Median existing home prices surged for the 62nd straight month, up 6.0% over last year to $244,800.
  • New home prices slowed as builders have started to turn their focus toward single family, smaller homes.

 

Posted by The KCM Crew

Home Sales Expected to Increase Nicely in 2017

The National Association of Realtors, The Mortgage Bankers’ Association, Freddie Macand Fannie Mae are all projecting that home sales will increase in 2017. Here is a chart showing what each entity is projecting in sales for this year and the next.

As we can see, each is projecting sizable increases in home sales next year. If you have considered selling your house recently, now may be the time to put it on the market.

Posted by The KCM Crew

How Will Britain’s Exit From the EU Affect U.S. Mortgage Rates?

Shutterstock ID 421081036; PO: Cat Overman

Shutterstock ID 421081036; PO: Cat Overman

Thirty-year fixed rates approached all-time record lows in the wake of the vote. Will they continue to drop?

Financial market turmoil can be good for mortgage rates. Don’t forget this concept as you continue to read headlines about how a “Brexit” is wreaking havoc on markets.

Brexit is slang for Britain’s vote Thursday, June 23 to exit the European Union (EU), which is a political and economic union allowing free trade and movement of people among 28 member countries.

This outcome was unexpected, and caused stock markets around the world to nosedive.

Mortgage rates approach record lows

The Brexit vote also caused U.S. mortgage rates to nosedive. Rates were down .125 percent the day after the Brexit vote, and are now approaching all-time record lows as30-year fixed rates move below 3.5 percent.

Why? Because Brexit uncertainty is causing investors to sell riskier global stocks and buy safer U.S. mortgage bonds — which are among the safest bonds in the world because they’re comprised of U.S. home loans approved using the strictest guidelines in decades.

When bond prices rise on this buying, bond yields (or rates) drop. When rates drop, it’s often a good time to refinance your mortgage.

To put it in perspective: On a $300,000 loan, if you refinanced at a rate dip of .25 percent, your payment could be lowered by $42 per month.

Mortgage rate outlook from here

When markets are driven more by politics than economics, rate movement will be especially unpredictable. If this Brexit-driven rate dip meets your financial objectives, you should work with your lender to refinance at this lower rate.

Some projections call for rates to rise gradually as Brexit concerns wane, but, conversely, there is also a growing consensus that ultra-low rates may be here to stay.

If you have the stomach to watch rate markets a bit longer, Brexit isn’t the only factor driving lower rates. Forthcoming Brexit negotiations may inspire other EU countries to seek independence, which would fuel market turmoil and keep U.S. rates low.

This sentiment has already caused the Federal Reserve to pause its rate hike campaign, citing non-U.S. factors as contributing to increased risk of U.S. recession.

These conflicting predictions mean rate movement will be especially unpredictable in the coming months, so it’s best to lock rate dips that meet your financial objectives. Your lender can help you with your objectives and mortgage math.

Tips for refinancers

Thinking of refinancing to take advantage of the low rates? Here are a few tips.

  • Ensure your lender is quoting correctly. Rate quotes are predicated on a loan closing in a certain number of days. Longer rate locks have higher rates, and lock extensions can eat away refinance savings. If you see one rate quote lower than another when you shop, ask that lender what their rate lock period is, and make sure they can close your loan within their rate lock period.
  • Ask about timing. Lenders get extremely busy during rate dips, so ask your lender to confirm that they’re quoting a rate that allows them enough time to close your loan. (If they can’t, you can look into finding a new lender.)
  • Don’t forget your second mortgage. Your second mortgage holder must agree to the terms of your new first mortgage refinance before the refinance can close. This is required even if you have a Home Equity Line of Credit (HELOC) with a zero balance. This step will add time to the process, so make sure lenders you’re shopping with know this as they’re quoting rates.
  • Get ready to provide documents again. Even if you refinance with a lender you’ve worked with before, federal laws require them to update your employment, income, asset, and debt documentation for a new loan.

When do refi costs break even? A typical refinance costs $2,000 to $4,000, depending on your market. Interest cost savings from the refi should repay closing costs within 24 to 36 months. A refinance calculator can help you estimate your breakeven time.

And don’t forget that a “no-cost” refinance isn’t actually without cost. You’re just accepting a higher rate to enable your lender to credit closing costs. Make sure your lender compares long-term savings of cost vs. no-cost refi options.

Reminder for home buyers

A rate lock runs with a borrower and a property, so as a home buyer, you cannot lock a mortgage rate until you’re in contract to buy a home.

Rate dips like the current one tipped off by the Brexit vote benefit you as a home shopper because you’ll likely get to lock a lower rate when you get into contract. But until then, you’re subject to daily rate market movements.

Posted by Julian Hebron on Zillow

Are Foreclosures Increasing or Decreasing?

Recently, there has been a lot of talk about the size of the foreclosure inventory in the nation. There has been some speculation that distressed property inventories are about to skyrocket. Today, we want to reveal what is actually taking place in this segment of the housing market.

CoreLogic, in their most recent National Foreclosure Report, reported that foreclosure inventory has decreased by 23.2% since this time last year. The report also showed that foreclosure inventory has decreased in 49 of the 50 states and that 45 states have posted a year-over-year, double-digit decline (see chart below).

Other findings in the report:

  • The Seriously Delinquent Rate (homeowners more than 90 days behind in their mortgage payment) is 3.1% which is the lowest level since November 2007
  • The Foreclosure Rate is 1.1% which is also the lowest level since November 2007
  • This was the 53rd consecutive month that showed a decline in the Foreclosure Rate

Bottom Line

Though foreclosures do remain in the market, the number is dramatically decreasing. The fact that mortgage delinquency rates are also decreasing means the worst of the foreclosure crisis is in the rearview mirror.

Posted by The KCM Crew

Homes Selling Quickly Across The Country

According to the National Association of Realtors’ (NAR) Existing Home Sales Report, homes were on market for an average of 58 days in December. This was slightly longer than the 54 days in November, but still better than the 66 days experienced in December 2014.

32% of homes across the country were on the market for less than a month!

Colorado, Utah and Delaware led all states as homes are selling in 30 days or less on average. The map below was created using results from NAR’s Monthly Realtor Confidence Survey.

Bottom Line

Buyer demand remains strong. The inventory of homes available for sale remains low. If you are thinking about listing your home for sale this year, meet with a local real estate professional who can help you take advantage of current market conditions!

Posted by The KCM Crew

Our Economist’s Top Tips for Selling a Home in 2016

DreamPictures/Getty Images

If you’re planning to sell your house this year, well, you’re in luck.

“The 2016 housing market is forecasted to be mainly a seller’s market, filled with increasing home prices, relatively low inventory, and fierce competition between buyers,” says Jonathan Smoke, chief economist for realtor.com®.

But you could still make missteps on the way to the bank. Yes, your house will likely sell, but when? Remember, time is money.

“For sellers, it’s about understanding the ins and outs of their local market so they can optimize the price of their home and close quickly,” Smoke says.

Smoke and his team analyzed market trends to distill their best advice for homeowners looking to sell in 2016. Follow these tips to get the most out of your home sale.

Price your home to the market

“What Realtors® tell me over and over again, and from the analysis that I’ve seen historically, the most important thing is getting the price right,” Smoke says.

In 2016, prices are expected to increase nationally 3% year over year. Local price changes are anticipated to be more dramatic, with markets such as Stockton, CA, and Las Vegas, NV, expected to increase by 10%. But that doesn’t mean those stats are true of your town, or your neighborhood.

“Making the error of going for a price that’s well above the market price is a recipe for being let down and potentially not selling the home at all,” he adds. A home that sits on the market eventually will turn off buyers, who will suspect that something is wrong with it.

Sellers who work with a local Realtor to optimize the price of their home based on its unique features and surrounding neighborhood are often able to receive the highest price for their market and sell more quickly.

List during peak season

Unlike buyers, who want to minimize competition, sellers benefit from demand. Prime home-buying season begins in April and reaches its peak in June, according to realtor.com analysis of home sales. Sellers who list their home during the prime spring and summer months benefit from a larger population of buyers and potential bidding wars, which often result in higher prices and faster closings.

Offer incentives

This one seems counterintuitive, given what we’ve said about a seller’s market, but hear us out. Last year—the best for U.S. home sales in nearly a decade—37% of all sellers offered incentives to attract buyers.

“The nature of this market is that you’re going to have more first-time buyers, who are more dependent on financing,” Smoke says. Getting a loan is one thing; coming up with a chunk of cash for closing costs, on top of the down payment, is another.

“If you’re a seller and you’re able to offer some money toward closing costs, you’re actually making it easier on that buyer, and they might be more willing to give you the full asking price,” Smoke explains. You could end up with a faster sale and more profit.

Best place to sell a home: California

This isn’t really actionable advice since if you don’t already own a home there you won’t be selling one, but FYI: California markets are accelerating past the already strong national averages and showing extremely favorable conditions for sellers.

Robust job growth, increasing prices, and limited inventory have sellers ready for big gains in the greater metro areas of Stockton, Bakersfield, Fresno, and San Jose. Once you’ve sold, though, you may not be able to afford to buy again in the area—we’d suggest looking in the Midwest or South.

Check out the full realtor.com 2016 housing forecast.

Posted by Cicely Wedgeworth on realtor.com