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What Are the Experts Saying about Mortgage Rates?

What Are the Experts Saying about Mortgage Rates? | Simplifying The Market

Mortgage interest rates have risen over the last few months and projections are that they will continue their upswing throughout 2017. What impact will this have on the housing market? Here is what the experts are saying:

Laurie Goodman, Co-director of the Urban Institute’s Housing Finance Policy Center:

“In 1984, 1994, 2000, and 2013, every time we have rate increases, we have increases in nominal home prices. We expect this to be more pronounced, as there is a big demand-and-supply gap at the present time.”

Scott Anderson, Chief Economist for Bank of the West:

“The tightening labor market, rising wage growth, high levels of consumer confidence and a millennial generation with a pent-up demand for housing should allow the housing market to weather the storm of gradually rising interest rates.”

Ivy Zelman in her latest “Z” Report:

“Although we strongly believe that the housing supply-demand imbalance for single-family homes will continue to drive above-average home price appreciation, just as falling mortgage rates aided pricing power on the margin in recent months, we expect the opposite effect to become evident in the coming months. As such, we project year-end home price inflation of 4.8% for 2017 and 4.1% for 2018.”

Bob Walters, President & COO of retail mortgage lender Quicken Loans:

“A modest increase in mortgage rates won’t have much of an effect on home purchases. A buyer may need to slightly re-evaluate which homes they can afford, but it’s not likely to make an impact on qualifying, in most cases.”

First American Chief Economist Mark Fleming:

“Our survey data shows that mortgage rates would have to be significantly higher to have any meaningful impact. The house buying power that borrowers have, even with rates below five percent, still remains historically strong.”

Source: Keeping Current Matters

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Which Homes Have Appreciated the Most?

Which Homes Have Appreciated the Most? | Simplifying The Market

Home values have risen dramatically over the last twelve months. The latest Existing Home Sales Report from the National Association of Realtors puts the annual increase in the median existing-home price at 7.1%. CoreLogic, in their most recent Home Price Insights Report, reveals that national home prices have increased by 6.9% year-over-year.

The CoreLogic report broke down appreciation even further into four different price categories:

  1. Lower Priced Homes: priced at 75% or less of the median
  2. Low-to-Middle Priced Homes: priced between 75-100% of the median
  3. Middle-to-Moderate Priced Homes: priced between 100-125% of the median
  4. High Price Homes: priced greater than 125% of the median

Here is how each category did in 2016:

Which Homes Have Appreciated the Most? | Simplifying The Market

Bottom Line

The lower priced homes (which are more in demand) appreciated at greater rates than the homes at the upper ends of the spectrum.

Source: Keeping Current Matters

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A Tale of Two Markets: Inventory Mismatch Paints a More Detailed Picture

A Tale of Two Markets: Inventory Mismatch Paints a More Detailed Picture | Simplifying The Market

The inventory of existing homes for sale in today’s market was recently reported to be at a 3.6-month supply according to the National Association of Realtors latest Existing Home Sales Report. Inventory is now 7.1% lower than this time last year, marking the 20th consecutive month of year-over-year drops.

Historically, inventory must reach a 6-month supply for a normal market where home prices appreciate with inflation. Anything less than a 6-month supply is a sellers’ market, where the demand for houses outpaces supply and prices go up.

As you can see from the chart below, the United States has been in a sellers’ market since August 2012, but last month’s numbers reached a new low.

A Tale of Two Markets: Inventory Mismatch Paints a More Detailed Picture | Simplifying The Market

Recently Trulia revealed that not only is there a shortage of homes on the market in general, but the homes that are available for sale are not meeting the needs of the buyers that are searching.

Homes are generally bucketed into three groups by price range: starter, trade-up, and premium.

Trulia’s market mismatch score measures the search interest of buyers against the category of homes that are available on the market. For example: “if 60% of buyers are searching for starter homes but only 40% of listings are starter homes, [the] market mismatch score for starter homes would be 20.”

The results of their latest analysis are detailed in the chart below.

A Tale of Two Markets: Inventory Mismatch Paints a More Detailed Picture | Simplifying The Market

Nationally, buyers are searching for starter and trade-up homes and are coming up short with the listings available, leading to a highly competitive seller’s market in these categories. Ninety-two of the top 100 metros have a shortage in trade-up inventory.

Premium homebuyers have the best chance of less competition and a surplus of listings in their price range with an 11-point surplus, leading to more of a buyer’s market.

“It leaves Americans who are in the market for a home increasingly chasing too fewer options in lower price ranges, and sellers of premium homes more likely to be left waiting longer for a buyer.”

 Lawrence Yun, NAR’s Chief Economist doesn’t see an end to this coming any time soon: 

“Competition is likely to heat up even more heading into the spring for house hunters looking for homes in the lower- and mid-market price range.”

Bottom Line

Real estate is local. If you are thinking about buying OR selling this spring, let’s get together to discuss the exact market conditions in your area.

Source: Keeping Current Matters

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Spring Forward: The Difference An Hour Makes [INFOGRAPHIC]

Spring Forward: The Difference An Hour Makes [INFOGRAPHIC] | Simplifying The Market

Some Highlights:

  • Don’t forget to set your clocks forward this Sunday, March 12th at 2:00 AM EST in observance of Daylight Savings Time.
  • Unless of course, you are a resident of Arizona or Hawaii!
  • Every hour in the United States: 649 homes are sold, 177 homes regain equity (meaning they are no longer underwater on their mortgage), and the median home price rises $1.86!

Source: Keeping Current Matters

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Thinking of Selling? Do it TODAY!!

Thinking of Selling? Do it TODAY!! | Simplifying The Market

That headline might be a little aggressive. However, as the data on the 2017 housing market begins to roll in, we can definitely say one thing: If you are considering selling, IT IS TIME TO LIST YOUR HOME!

The February numbers are not in yet, but the January numbers were sensational. Lawrence Yun, Chief Economist for the National Association of Realtors, said:

“Much of the country saw robust sales activity last month as strong hiring and improved consumer confidence at the end of last year appear to have sparked considerable interest in buying a home. Market challenges remain, but the housing market is off to a prosperous start as homebuyers staved off inventory levels that are far from adequate…”

And CNBC says consumer confidence in the economy is fueling the market:

“U.S. home resales surged to a 10-year high in January as buyers shrugged off higher prices and mortgage rates, a sign of growing confidence in the economy.”

The only challenge to the market is a severe lack of inventory. A balanced market would have a full six-month supply of homes for sale. Currently, there is less than a four-month supply of inventory. This represents a decrease in supply of 7.1% from the same time last year.

Bottom Line

With demand increasing and supply dropping, this may be the perfect time to get the best price for your home. Let’s get together and discuss the inventory levels in your neighborhood to determine your next steps.

Source: Keeping Current Matters

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How Long Do Most Families Stay in Their Home?

How Long Do Most Families Stay in Their Home? | Simplifying The Market

The National Association of Realtors (NAR) keeps historical data on many aspects of homeownership. One of the data points that has changed dramatically is the median tenure of a family in a home. As the graph below shows, for over twenty years (1985-2008), the median tenure averaged exactly six years. However, since 2008, that average is almost nine years – an increase of almost 50%.

How Long Do Most Families Stay in Their Home? | Simplifying The Market

Why the dramatic increase?

The reasons for this change are plentiful!

The fall in home prices during the housing crisis left many homeowners in a negative equity situation (where their home was worth less than the mortgage on the property). Also, the uncertainty of the economy made some homeowners much more fiscally conservative about making a move.

With home prices rising dramatically over the last several years, 93.7% of homes with a mortgage are now in a positive equity situation with 79.1% of them having at least 20% equity, according to CoreLogic.

With the economy coming back and wages starting to increase, many homeowners are in a much better financial situation than they were just a few short years ago.

One other reason for the increase was brought to light during a recent presentation by Lawrence Yun, the Chief Economist of NAR, at the Realtor’s Summit in San Diego, CA. Yun pointed to the fact that historically, young homeowners who were either looking for more space to accommodate their growing family or looking for a better school district were more likely to move more often (every 5 years). The homeownership rate among young families, however, has still not caught up to previous generations resulting in the jump we have seen in median tenure!

What does this mean for housing?

Many believe that a large portion of homeowners are not in a house that is best for their current family circumstances. They could be baby boomers living in an empty, four-bedroom colonial, or a millennial couple planning to start a family that currently lives in a one-bedroom condo.

These homeowners are ready to make a move. Since the lack of housing inventory is a major challenge in the current housing market, this could be great news.

Source: Keeping Current Matters

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Existing Home Sales Reach Highest Mark Since 2007 [INFOGRAPHIC]

Existing Home Sales Reach Highest Mark Since 2007 [INFOGRAPHIC] | Simplifying The Market

Highlights:

  • Sales of existing homes reached the highest pace in a decade at a seasonally adjusted annual rate of 5.69 million.
  • January marked the 59th consecutive month of year-over-year price gains as the median home price rose 7.1% to $228,900.
  • NAR’s Chief Economist, Lawrence Yun had this to say, “Much of the country saw robust sales activity last month as strong hiring and improved consumer confidence at the end of last year appear to have sparked considerable interest in buying a home.” 

Source: Keeping Current Matters

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Time to File Your Homestead Exemption

reminder to Dont Forget to file your Homestead Exemption

Homestead Exemptions 

Basic Requirements for Homestead Exemption:

  1. Must be legal resident of the county; and
  2. Must own and occupy home as of January 1 of the year the homestead exemption is sought.

Deadline for Filing Homestead Exemption:

In most counties, the application must be filed by April 1 of the year the exemption is sought, but some counties have a later deadline.

How Long will the Homestead Exemption Last?
The Homestead exemption will remain on the property until there is a change in ownership.

What is the Homestead Exemption Amount?
These amounts are a reduction in what the amount that the taxed is based on.

As of January, 2017:

Cobb County: $10,000
Learn More About Cobb County Homestead Exemptions

 

DeKalb County: $12,500 for school taxes and $10,000 for county taxes
Learn More About DeKalb County Homestead Exemptions

 

Fulton County: $30,000.00 for Atlanta/Fulton
Learn More About Fulton County Homestead Exemptions

 

Gwinnett County: $10,000 for the County taxes, $4,000 off of the school, and $7,000 off recreation
Learn More About Gwinnett County Homestead Exemptions

 

How does this affect my bill?

Example 2016 Cobb County Property Tax amount:

Market Value $100,000
Taxable Value (40% of Market Value)                        $40,000
Less Exemptions (assuming $10,000) $10,000
$50,000
Multiply by Millage Rate 0.02875
Property Tax $1,437.50

Without a Homestead Exemption, the county property taxes would be $1,725.00. In many property tax bills, there are also city taxes, school taxes, recreation taxes and other taxes which would amplify the savings that would be made by applying for the homestead exemption.

 

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Buyers Are Searching For Your House

Buyers Are Searching For Your House | Simplifying The Market

The most recent Pending Homes Sales Index from the National Association of Realtors revealed a slight bump in contracts with an increase of 1.6% in December. This news comes as existing home sales are also forecasted to be on pace for 5.54 million in 2017, a 1.7% increase over 2016, which was the best year for sales in a decade.

The Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed.

According to NAR’s Chief Economist, Lawrence Yun,

Pending sales bounded last month as enough buyers fended off rising mortgage rates and alarmingly low inventory levels to sign a contract.

So, what’s the problem?

Buyers are searching for existing homes, but supply is not keeping up with their demand!

Yun went on to explain,

The main storyline in the early months of 2017 will be if supply can meaningfully increase to keep price growth at a moderate enough level for households to absorb higher borrowing cost. Sales will struggle to build on last year’s strong pace if inventory conditions don’t improve.” (emphasis added)

Bottom Line

Buyers are out in force right now! If you are considering selling your home this year, the early months of 2017 will be your best option. Let’s get together to discuss how you can capitalize on current market conditions.

Source: Keeping Current Matters

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Lack of Homes for Sale Slowing Down the Housing Market

Lack of Homes for Sale Slowing Down the Housing Market | Simplifying The Market

The housing crisis is finally in the rear-view mirror as the real estate market moves down the road to a complete recovery. Home values are up. Home sales are up. Distressed sales (foreclosures and short sales) have fallen dramatically. It seems that 2017 will be the year that the housing market races forward again.

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 December dropped 10.8%…which is the lowest level since NAR began tracking the supply of all housing types in 1999. Inventory has fallen year-over-year for 19 straight months and is at a 3.6-month supply at the current sales pace.”

Jonathan Smoke, Chief Economist for Realtor.com

“More than two-thirds of the markets are seeing less inventory now compared to a year ago.”

Lawrence Yun, Chief Economist at NAR:

“The dismal number of listings in the affordable price range is squeezing prospective first-time buyers the most. As a result, young households are missing out on the wealth gains most homeowners have accrued from the 41% cumulative rise in existing home prices since 2011.”

Sam Khater, Deputy Chief Economist at CoreLogic

“The lack of affordable supply is really driving up home prices.”

Peter Muoio, Chief Economist at Auction.com

“Tight housing inventory remains a constraining factor limiting stronger sales growth…

We expect further price growth to entice more homeowners to list their homes, particularly as existing homeowners have greater equity.”

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.

Source: Keeping Current Matters