NAR Reports Reveal Two Reasons to Sell This Winter

NAR Reports Reveal Two Reasons to Sell This Winter | Keeping Current Matters

We all realize that the best time to sell anything is when demand is high and the supply of that item is limited. The last two major reports issued 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 by the latest Pending Home NAR Reports Reveal Two Reasons to Sell This Winter Report and Existing Home Sales Report.

THE PENDING HOME SALES REPORT

The report announced that pending home sales (homes going into contract) are up 3.9% over last year, and have increased year-over-year now for 14 consecutive months.

Lawrence Yun, NAR’s Chief Economist, expects demand to remain stable through the final two months of the year, and “forecasts existing-home sales to finish 2015 at a pace of 5.30 million – the highest since 2006.” 

Takeaway: Demand for housing will continue throughout the end of 2015 and into 2016. The seasonal slowdown often felt in the winter months hasn’t started and shows little signs of being near.

THE EXISTING HOME SALES REPORT

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

  • Total housing inventory decreased 2.3% to 2.14 million homes available for sale
  • That represents a 4.8-month supply at the current sales pace
  • Unsold inventory is 4.5% lower than a year ago

There were two more interesting comments made by Yun in the report:

1. “New and existing-home supply has struggled to improve, leading to few choices for buyers and no easement of the ongoing affordability concerns still prevalent in some markets.”

In real estate, there is a guideline that often applies. When there is less than 6 months inventory available, we are in a sellers’ 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 7 months inventory means we are in a buyers’ market and should expect depreciation in home values. As Yun notes, we are currently in a sellers’ market (prices still increasing).

2. “Unless sizeable supply gains occur for new and existing homes, prices and rents will continue to exceed wages into next year and hamstring a large pool of potential buyers trying to buy a home.” As rents and prices increase, potential buyers will not able to save as much for a down payment and many may become priced out of the market.

Takeaway: Inventory of homes for sale is still well below the 6 months needed for a normal market. Prices will continue to rise if a ‘sizeable’ supply does not enter the market. Take advantage of the ready willing and able buyers that are still out looking for your house.

Bottom Line

If you are going to sell, now may be the time.

The Hidden Costs of Homeownership

If you’ve never owned your own property before, there are some costs you should prepare yourself for ahead of time. Should you take out a mortgage, you’ll have your monthly mortgage payment, but often there are additional costs and fees added that a new homeowner will not expect. Listed below are items you should expect to pay once you become a homeowner.

Property Taxes

budgeting - The Hidden Costs of HomeownershipWhen you rent, you are not responsible for the property taxes on the property. But when you become a homeowner, you’re expected to pay yearly property taxes, of which go to public works, wages for government workers or public school boards. Based on the current value of your home, property taxes are assessed every year and will likely change to reflect an increase (or decrease) in your home’s value. Property taxes can be paid at one time, or they can be divided into 12 payments over the course of a year and added to your mortgage payment. When you’re trying to determine what your mortgage payment will be each month, don’t forget to factor in property taxes.

Home Maintenance

home maintenance - The Hidden Costs of HomeownershipWhen you live in a rental property, most maintenance is performed by the landlord or a property manager. When you become a homeowner, those maintenance costs fall upon you. When you purchase a home, all maintenance items should be considered when it comes to your overall budget. Will you want to replace all the appliances? Will the property need new windows or a new roof? Does the home need basic upgrades? Most people in the industry suggest you allocate 1% of your home’s worth for maintenance costs every year, but the reality is that 1% is likely the minimum – you should plan on more than 1% maintenance costs each year as a homeowner, and if you plan on any larger renovations, bet on the costs to be even higher.

Mortgage Insurance

Most people, when they buy a home or property, are able to do so by taking out a mortgage loan. If you put less than 20% of the cost of your property down, you’re required to have Private Mortgage Insurance (PMI). PMI protects lenders if the borrower defaults on their loan. PMI is charged annually, and it will typically cost 0.5% to 1% of the entire loan amount. The payments are generally paid each month rather than in a large one-time payment. If you plan on taking out a mortgage loan, and you don’t have 20% to put down, expect to add private mortgage insurance payments to your other monthly bills.

Supplemental Insurance

flood - The Hidden Costs of HomeownershipDo you live in an area prone to natural disaster? As a homeowner you’ll need to have regular home insurance to protect your home or property from typical things (plumbing issues, roof leaks, etc.) that homeowners encounter. Should you live in an area that’s prone to weather-related issues (floods, tornadoes, earthquakes, hurricanes) you will want to purchase supplemental insurance to make sure your home is covered should nature decide to show herself.

Landscaping and Lawn Care

landscaping - The Hidden Costs of HomeownershipWhen you rent a condo or an apartment, it’s highly likely you are not spending a lot of time outside in a yard. When you buy your own property (should it have a yard or some kind of outdoor area), expect some hidden costs to come in the form of lawn care. Does the yard need some major landscaping? Are you going to mow it yourself, or will you hire a company to do it? Do you have a lawn mower, rakes, snow or leaf blower, yard tools, shed, and any other items needed to keep your yard looking great year-round? A yard comes with extra costs, so be sure to know how much you want to spend on upkeep per year.

HOA Fees

If you’ve been renting your previous residence, it’s likely you haven’t had to pay Homeowners Association (HOA) fees for your apartment or rental. Should you buy a house, condo or townhouse in a neighborhood with common areas, a clubhouse, pool, or any other kind of community meeting places, it’s likely you’ll move into a neighborhood with an HOA. HOA fees can vary in terms of what the HOA covers within the community, but unless you know through your Realtor or through the homeowner the monthly fee, you can expect to spend anywhere from $10 to hundreds of dollars per month on HOA fees.

Buying your first home or property is a huge step in anyone’s life. Before you start your property search, make sure you consider all of the items above when you’re thinking of buying a home or property and during your property search.

 

Is it Time to Downsize your Home?

Downsizing-KCM

 

A recent study by Edelman Berland revealed that of homeowners who are contemplating selling their house in the near future 33% plan to scale down. Let’s look at a few reasons why that would make sense to many Americans.

In a recent blog post, Dave Ramsey, the financial guru, discussed the advantages of selling your current house and downsizing into a smaller home that better serves your current needs. Ramsey explains three potential financial advantages to downsizing:

  1. A smaller home means less space, but it also means less time, stress and money spent on upkeep
  2. Let’s assume you save $500 a month on your mortgage payment. In 30 years, you could have an additional $1–1.6 million in the bank to get you through your golden years.
  3. Use the proceeds from selling your current home to pay cash for a smaller one. Just imagine what you could do with no mortgage holding you down! If you can’t pay cash, aim for a 15-year fixed rate mortgage and put at least 10–20% down on your new home. Apply the $500 you saved from downsizing to your new monthly payment. At 3% interest, you could pay off a $200,000 mortgage in less than 10.5 years, saving almost $16,000 in the process.

Realtor.com also addressed downsizing in a recent article. They suggest you ask yourself some questions before deciding if downsizing is right for you and your family. Here are two of their questions followed by their answers (in italics) and some additional information that could help.

Q: What kind of lifestyle do I want after I downsize?

A: “For some folks, it’s a matter of living a simpler life focused on family. Some might want to cross off travel destinations on their bucket lists. Some might want a low-maintenance community with high-end upgrades and social events. Decide what you want to achieve from your move first, and you’ll be able to better narrow down your housing options.”

Comments: Many homeowners are taking the profit from the sale of their current home and splitting it to put down payments on a smaller home in their current location and a vacation/retirement home where they plan to live when they retire.

This allows them to lock in the home price and mortgage interest rate at today’s values. This makes sense financially as both home prices and interest rates are projected to rise.

Q: Have I built up enough equity in my current home to make a profit?

A: “For most homeowners, the answer is yes. This is if they’ve held on to their properties long enough to have positive equity that will be sizable enough to put a large down payment on their next home.”

Comments: A recent study by Fannie Mae revealed that only 37% of Americans believe they have significant equity (> 20%) in their current home. In actually, 69% have greater than 20% equity. That equity could enable you to build a life you have always dreamt about.

Bottom Line

If you are debating downsizing your home and want to evaluate the options you currently have, meet with a real estate professional in your area who can help guide you through the process.

by The KCM Crew

Fast and Easy Updates to Help a Home Sell

REA_August2015

We are smack dab in the middle of home buying season, and while some properties are off the market before they’re even on it, others haven’t had such luck. A great way to boost your home’s selling power is to make small and affordable updates throughout the home. These quick updates and fixes won’t break the bank or a budget, and they will help make your home more inviting to potential buyers and a potential sale.

Spruce Up the Front Door

The front door is one of the first things potential buyers see when viewing your home. Spruce up the front door by touching up paint (either paint over chipped or fading paint, or change the color completely), adding a kick plate, changing out the hardware, or you can replace the door completely. A new front door can add energy efficiency and additional security if you choose a metal door. Making the front door pop not only adds a special touch to your curb appeal, but potential buyers definitely notice a door that’s been taken care of.

Freshen Up the Kitchen

Closeup of Woman Painting Kitchen Cabinets

Kitchens appeal to so many buyers. If you don’t have the budget or time to overhaul your kitchen, don’t panic. If you have nice wood cabinets and don’t have the budget to update them, consider adding a coat of paint to freshen them up. You can also add new hardware (knobs, handles or pulls) to help give cabinets a younger look. You can also change out any outdated countertops, and adding a new faucet to the sink is another way to give a kitchen a new vibe. If you have the time and the budget, consider changing any flooring that is chipped, cracked or broken. Vinyl flooring is economical and affordable, and it’s available in a number of types and styles to suit any kitchen design.

Update Porch Columns

Porch columns are another item buyers see immediately; if you have columns that have chipped paint, are decaying, or don’t match the style of the home, consider updating or replacing them completely. Sand and paint over chips, or update the look with vinyl wraps. If you have the budget to replace the columns, consider fiberglass, which is weather resistant and helps support the weight of the porch roof.

Tidy Up a Bathroom

Brand new modern luxury bathroom interior

 

Bathrooms are another large selling feature of properties, and outdated bathrooms are a top sale killer. Update within reason of your budget and time: replacing the vanity, counter, sink and faucet can be a quick fix that is also budget friendly (some home improvement stores have entire kits available for this). If this doesn’t fit your budget, consider painting the vanity and replacing the hardware and faucet. Other updates that can be done in the bathroom: change out a toilet (you can usually find energy efficient toilets at a local big box store for under $200), update a showerhead, and replace any vanity or overhead lighting for more modern and energy efficient options.

Update a Staircase

Many staircases are located just as you enter a home, which means they are a focal point and something buyers look at and judge the moment they walk into a property. If your staircase has seen better days, take the time to do some small updates. Fix any broken or loose steps and evaluate the railing; refinish a wood staircase, replace a broken railing, change outdated balusters, and, if the stairs are carpeted, clean or replace the carpet.

Jazz Up a Fireplace

Fireplace and Television in Luxury Home

 

Whether it’s gas or wood, many homes have fireplaces, and many buyers love them for their purpose and as focal points. An updated fireplace can say loads about your home, and a great looking fireplace can help a sale. You can paint and transform outdated brick or add ceramic tiles to add color. You also have the option of adding budget-friendly artificial stone veneer or natural stone (if you have the time and money). Mantels are a large part of fireplaces – add, update or replace a mantel with wood, stone or marble. An updated fireplace and mantel can help any home sale.

Light Up the Yard

Lighting can take the exterior of a home from drab to fab. Dark homes don’t pop to buyers, and outdoor lighting can add a ton of appeal. Update any outdated outdoor lighting fixtures, especially those that no longer work or are broken. If you have some extra money to put toward projects, consider adding additional outdoor lighting in the way of a lamppost or path lights, and if you live in a sunny climate you also have the option of solar lights.

Organize a Closet

Wardrobe

 

Buyers will go through cupboards and closets, and a cramped bedroom closet can be an issue with some buyers. A quick and budget-friendly fix is a closet organizer. Organizers come in a variety of options, from wood and plastic-laminate to wire, and most are DIY, which cuts down any installation costs. If your closets are stuffed or poorly organized, buyers will see this and could potentially be turned off by it.

Make an Attic More Usable

Most homes have some kind of attic, whether it be a small crawlspace that’s barely accessible or a large attic area accessed by a staircase. Make sure your attic area is accessible: if it’s not, add a ladder and insulate the door for better energy efficiency. If your attic area is just studs, add a plywood floor to make it more accessible and ready for storage. By adding a couple extra things to an attic area, you’re adding usable space and making your home more marketable to potential buyers.

These fixes are relatively easy, and most shouldn’t break the bank. If you can afford to do some, go for it, but do what is in reason of your time and budget. You want to sell your house, and you don’t want to spend a fortune updating it. Small fixes can be the ticket to a quick sell, or they can help a home that’s been sitting for a while finally get some movement.

 

Taken from Real Estate Advisor – August 2015

The Market Needs Your Homes!

Uncle-Sam

The real estate market has rebounded. So much so that there is a short supply of available homes for sale on the market. Especially for lower priced homes.

How does real estate help our economy?

The increased sales mean increased sales prices. Increased sales prices mean increased values for homes. Even those who aren’t selling their homes will realize the increased values. This in turn boosts  consumer confidence and consumer spending.

NAR compiled data from research conducted by the Bureau of Economic Analysis & Macroeconomic Advisors on the economic impact of a home purchase.

After reviewing the data, they concluded that the total economic impact of a typical home sale in the United States is an astonishing $52,205.

The more homes that are sold the better the economy. The better the economy the better it is for everyone.

How does this help you?

Homes listed in todays market go fast! And with mortgage rates still low this may be the time to upgrade your current home to a bigger house or one in a nicer location.

Give us a call and we will happy to show you what your options are.