Category: Altitude Real Estate

  • Is Buying a Home Really More Stressful Than Planning a Wedding? [INFOGRAPHIC]

    Some Highlights:

    • According to a new survey from Open Listings, 62% of Americans ages 25-54 believe that buying a home is more stressful than planning a wedding.
    • Many young couples are saving for a wedding and a home at the same time.
    • The average US wedding now costs 66% of a median home down payment, according to The Knot.

     

  • Are Homebuyers Starting to Hit the ‘Pause’ Button?

    Are Homebuyers Starting to Hit the ‘Pause’ Button?

    For the last several years, buyer demand has far exceeded the housing supply available for sale. This low supply and high demand have led to home prices appreciating by an average of 6.2% annually since 2012.

    With this being said, three of the four major reports used to measure buyer activity have revealed that purchasing demand may be softening. Here are the four indices, how they measure demand (methodology), what their latest reports said, and a quick synopsis of the report.

    The Foot Traffic Report
    by the National Association of Realtors

    Methodology: Every month SentriLock, LLC provides NAR Research with data on the number of properties shown by a REALTOR®. Lockboxes made by SentriLock, LLC are used in roughly a third of home showings across the nation. Foot traffic has a strong correlation with future contracts and home sales, so it can be viewed as a peek ahead at sales trends two to three months into the future.

    Latest Report“Foot Traffic climbed 3.2 points to 55.8 mid-summer in July. Additionally, the diffusion index is higher than last year by 13.5 points. Despite a healthy economy and labor market, supply and new construction remains unable to keep up with buyer demand.”

    Synopsis: Buyer demand remains strong.

    The Showing Index
    by ShowingTime

    Methodology: The ShowingTime Showing Index® tracks the average number of buyer showings on active residential properties on a monthly basis, a highly reliable leading indicator of current and future demand trends.

    Latest Report“Showing activity throughout the country increased by 0.3 percent year over year in July, the third consecutive month that the U.S. ShowingTime Showing Index recorded buyer interest deceleration compared to the previous year. The June 2018 figures revealed a 0.0 percent change in showing traffic from 2017, while May showed a 1.2 percent year-over-year increase. The 12-month average year-over-year increase was 4.6 percent.”

    Synopsis: Buyer demand is softening

    Realtors Confidence Index
    by the National Association of Realtors

    Methodology: The REALTORS Confidence Index is a key indicator of housing market strength based on a monthly survey sent to over 50,000 real estate practitioners. Practitioners are asked about their expectations for home sales, prices and market conditions.

    Latest Report“REALTORS reported slower homebuying activity in July 2018…The REALTORS® Buyer Traffic Index registered at 62, down from the same month one year ago (69). This is the fifth straight month (since March 2018) that Realtors reported a decline in buyer activity compared to conditions one year ago.”

    Synopsis: Buyer demand is softening

    The Real Estate Broker Survey
    in the ‘Z’ Report by Zelman and Associates (subscription needed)

    Methodology: Proprietary survey results of real estate executives.

    Latest Report“While we continue to expect a resumption of growth in resale transactions on the back of easing inventory in 2019 and 2020, our real-time view into the market through our Real Estate Broker Survey does suggest that buyers have grown more discerning of late and a level of “pause” has taken hold in many large housing markets. Indicative of this, our broker contacts rated buyer demand at 69 on a 0-100 scale, still above average but down from 74 last year and representing the largest year-over-year decline in the two-year history of our survey.”

    Synopsis: Buyer demand is softening

    Bottom Line

    Again, three of the four most reliable measures of buyer activity are reporting that demand is softening. We had a strong buyers’ market directly after the housing crash which was immediately followed by a strong sellers’ market over the last six years.

    If demand continues to soften and supply begins to grow (as is projected to happen), we will return to a more neutral market which will favor neither buyers nor sellers. This “more normal” market will be better for real estate in the long term.

  • Home Prices Have Appreciated 6.9% in 2018

    Home Prices Have Appreciated 6.9% in 2018

    Between 1987 and 1999, which is often referred to as the ‘Pre-Bubble Period,’ home prices grew at an average of 3.6% according to the Home Price Expectation Survey.

    Every month, the economists at CoreLogic release the results of their Home Price Insights Report, which includes the actual year-over-year change in prices across the country and their predictions for the following year.

    The chart below shows the forecasted year-over-year prices for 2018 (predictions made in 2017). According to their predictions, the average appreciation over the course of 2018 should be 4.8%, which is still greater than the ‘normal’ appreciation of 3.6%.

    Home Prices Have Appreciated 6.9% in 2018 | MyKCM

    If we layer in the actual price appreciation that has occurred this year, we can see that over the course of 2018, home prices have appreciated by an average of 6.9% and have outpaced projections all year!

    Home Prices Have Appreciated 6.9% in 2018 | MyKCM

    What does this mean?

    The tale of today’s real estate market is one of low inventory, high demand, and rising prices. The forces at work can be simply explained with the theory of supply and demand. That being said, if a large supply of inventory were to come to the market, prices may start to appreciate closer to the forecasted rate which would STILL be greater than the historic norm!

    Bottom Line

    If you are a homeowner whose house no longer meets your needs, now may be a great time to list your home and capitalize on the equity you have gained over the last year to make a significant down payment on your next home!

  • NAR Reports Show It’s A Great Time to Sell!

    NAR Reports Show It’s A Great Time to Sell!

    We all realize that the best time to sell anything is when the demand for that item 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 right now continues to be a great time to sell your house.

    Let’s look at the data covered in the latest Pending Home Sales Report and Existing Home Sales Report.

    THE PENDING HOME SALES REPORT

    The report announced that pending home sales (homes going into contract) are down 2.3% from last year and have continued to fall on an annual basis for seven straight months.

    Lawrence Yun, NAR’s Chief Economist, had this to say:

    “The reason sales are falling off last year’s pace is that multiple years of inadequate supply in markets with strong job growth have finally driven up home prices to a point where an increasing number of prospective buyers are unable to afford it.”

    Takeaway: Demand for housing is strong and will continue to grow in 2019. Without an influx of new listings for sale, pending home sales will continue to decline. Listing now means you will be able to take advantage of the demand currently in the market.

    THE EXISTING HOME SALES REPORT

    The most important data point revealed in the report was not sales-based, but was instead the inventory of homes for sale (supply). The report explained:

    • Total housing inventory decreased 0.7% to 5.34 million homes available for sale in July
    • This represents a 4.3-month supply at the current sales pace
    • Sales are now 1.5% below a year ago

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

    “Led by a notable decrease in closings in the Northeast, existing home sales trailed off again last month, sliding to their slowest pace since February 2016 at 5.21 million.”

    In real estate, there is a guideline that often applies: When there is less than a 6-month supply of inventory available, we are in a seller’s market and we will see appreciation; between 6-7 months is a neutral market, where prices will increase at the rate of inflation; and more than a 7-month supply means we are in a buyer’s market and should expect depreciation in home values. As Yun notes, we are (and will remain) in a seller’s market and prices will continue to increase unless more listings come to the market.

    “Listings continue to go under contract in under a month, which highlights the feedback from Realtors® that buyers are swiftly snatching up moderately-priced properties. Existing supply is still not at a healthy level, and new home construction is not keeping up to meet demand.”

    Takeaway: Inventory of homes for sale is still well below the 6-month supply needed for a normal market. Prices will continue to rise if a sizable supply does not enter the market.

    Bottom Line

    If you are going to sell, now may be the time to take advantage of the ready, willing, and able buyers that are still out looking for your house.

  • 4 Reasons Why Fall Is A Great Time to Buy A Home!

    4 Reasons Why Fall Is A Great Time to Buy A Home!

    Here are four great reasons to consider buying a home today instead of waiting.

    1. Prices Will Continue to Rise

    CoreLogic’s latest Home Price Insights report reveals that home prices have appreciated by 6.2% over the last 12 months. The same report predicts that prices will continue to increase at a rate of 5.1% over the next year.

    Home values will continue to appreciate for years. Waiting no longer makes sense.

    2. Mortgage Interest Rates Are Projected to Increase

    Freddie Mac’s Primary Mortgage Market Survey shows that interest rates for a 30-year mortgage have already increased by half of a percentage point, to around 4.5% in 2018. Most experts predict that rates will rise over the next 12 months. The Mortgage Bankers Association, Fannie Mae, Freddie Mac and the National Association of Realtors are in unison, projecting that rates will increase by half a percentage point to around 5.1% by this time next year.

    An increase in rates will impact your monthly mortgage payment. A year from now, your housing expense will increase if a mortgage is necessary to buy your next home.

    3. Either Way, You Are Paying a Mortgage

    There are some renters who have not yet purchased homes because they are uncomfortable taking on the obligation of a mortgage. Everyone should realize that unless you are living with your parents rent-free, you are paying a mortgage – either yours or your landlord’s.

    As an owner, your mortgage payment is a form of ‘forced savings’ that allows you to build equity in your home which you can then tap into later in life. As a renter, you guarantee your landlord is the person building that equity.

    Are you ready to put your housing cost to work for you?

    4. It’s Time to Move on with Your Life

    The ‘cost’ of a home is determined by two major components: the price of the home and the current mortgage rate. It appears that both are on the rise.

    But what if they weren’t? Would you wait?

    Look at the actual reason you are buying and decide if it is worth waiting. Whether you want to have a great place for your children to grow up, you want your family to be safer, or you just want to have control over renovations, maybe now is the time to buy.

    If the right thing for you and your family is to purchase a home this year, buying sooner rather than later could lead to substantial savings.

  • Strategizing In a Changing Market

    Strategizing In a Changing Market

    You may have heard in the news that our real estate market is changing. First and foremost I want to assure you that the sky is not falling. Our national market has been in an unhealthy inventory-starved state for the last couple of years, so in my opinion, this latest influx of inventory is a welcome change.

    Here is what buyers and sellers can expect in this more-equalized market:

    Sellers – The days of pricing very aggressively have come to an end for the time being for sellers who want to get the attention of buyers. Although pricing at market was important before, the lack of inventory had many buyers overlooking price because competition would cause the price to escalate anyway. Now with more inventory, sellers will need to price correctly to get the most buyers interested.

    Buyers – An increase in inventory means more opportunities for buyers. More inventory means there may actually only be one offer on a property rather than many buyers competing for the same home. This means I expect sellers will be more-receptive to offers and be willing to negotiate on things like down payment percentage, inspections, and what occurs when an appraisal comes in lower than anticipated. And, of course, they will be more willing to negotiate on price, closing date, and more. However buyers, just because the market has shifted slightly doesn’t mean that you call the shots. It means you have more of an opportunity to work with the seller to come to a mutually-beneficial agreement.

    It is important to note that this market shift does NOT represent a complete turnaround, putting all power back in the hands of buyers as it seemed to be after the recession. It means that buyers and sellers have an opportunity to work together so all parties can get what they need out of the home-buying or selling experience.

    The market is always changing, by price, location, style of home, age of home, and more. The real estate market is no different than the stock market in that it is driven by supply and demand. Supply is on the rise right now, but demand continues to be strong due to the economy, due to natural population increase, due to migration, and due to fact that nationally we still do not have the new construction homes to address the new construction deficit that occurred after the recession. The mechanics for a severe market correction are just not there.

    I don’t have a crystal ball, but I am excited about the current market conditions in that more buyers and sellers can join in and can work together. I have plenty of trends to better-illustrate the current situation so you can make great decisions about what you should do with your real estate. Reach out! 253-222-2626 or john@altitude-re.com.

  • Why are Existing Home Sales Down?

    Why are Existing Home Sales Down?

    The latest Existing Home Sales Report issued by the National Association of Realtors (NAR) revealed that home sales have decreased for four consecutive months and are at their slowest pace in over two years. This has some industry leaders puzzled considering the fact that the economy is strengthening, unemployment is down, and wages are beginning to rise. This begs the question: “Where are the buyers?”

    Actually, agents in the field of most communities are still seeing strong desire from prospective purchasers. They have a list of potential buyers ready to go if the right houses come on the market and they claim it is not a shortage of demand, but is instead a shortage of inventory that is causing the market to soften.

    Why is there a shortage of inventory?

    You only need to look at the graph below to understand:

    Why are Existing Home Sales Down? | MyKCM

     

    New construction sales over the last ten years are far below historic numbers from 1995-2002.

    A recent industry report looked at building permits and concluded:

    “If construction over the past decade matched historic norms, accounting for population change, the country would have had 2.3 million more single-family home permits.”

    That decade of not building enough homes is the primary reason for the concerns about today’s market.

    Wait, weren’t we talking about ‘existing’ home sales?

    Some may argue that NAR’s sales report deals with existing home sales and not new construction, and they would be correct. However, reports have shown that one of the main reasons why existing homeowners are not selling is because they can’t find homes that meet the needs of their current lifestyles. Historically, the upgrades in a newly constructed home were the answers to those needs.

    Over the last decade, however, there were fewer homes built to satisfy this move-up seller. Consequently, there are many homeowners who stayed in their homes for a longer tenure, instead of putting their homes up for sale.

    Bottom Line

    As more new homes are being built, there will be more housing inventory to satisfy current demand which will cause prices to moderate and sales volumes to increase.

  • Top 3 Myths About Today’s Real Estate Market

    Top 3 Myths About Today’s Real Estate Market

    There are many conflicting headlines when it comes to describing today’s real estate market. Some are making comparisons to the market we experienced 10 years ago and are starting to believe that we may be doomed to repeat ourselves. Others are just plain wrong when it comes to what it takes to qualify for a mortgage.

    Today, we want to try and clear the air by shedding some light on what’s causing some of these headlines, as well as what’s truly going on.

    Myth #1: We Are Headed for Another Housing Bubble

    Home prices have appreciated year-over-year for the last 76 straight months. Many areas of the country are at or near their peak prices achieved before the last housing bubble burst. This has many worried that we are headed towards another housing bubble.

    Reality: The biggest challenge facing today’s real estate market is a lack of homes for sale! Demand is strong, as many renters have come off the fence and are searching for their dream homes.

    Historically, a normal market requires a 6-month supply of inventory in order for prices to rise with the rate of inflation. According to the National Association of Realtors (NAR) there is currently a 4.3-month supply of inventory.

    The US housing market hasn’t had 6-months inventory since August 2012! The concept of supply and demand is what is driving home prices up!

    Myth #2: The Rumored Recession Will Lead to Another Housing Market Crash

    Economists and analysts know that the country has experienced economic growth for almost a decade. When this happens, they also know that a recession can’t be too far off. But what is a recession?

    Merriam-Webster defines a recession as “a period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two consecutive quarters.”

    Reality: Recession DOES NOT equal housing crisis. Many people associate these two terms with one another because the last time we had a recession it was caused by a housing crisis. According to the Federal Reserve, over the last 40 years, there have been six recessions. In each of the previous five recessions, home values appreciated.

    Myth #3: There is an Affordability Crisis Looming

    Rising home prices have many concerned that the average family will no longer be able to afford the most precious piece of the American Dream – their own home.

    There are many different affordability indexes supported by different organizations that all measure different data. For this reason, there is a lot of confusion about what “affordable” actually means.

    The monthly cost of a home is determined by the home’s price and the interest rate on the mortgage used to purchase it. According to Freddie Mac, interest rates have risen from 3.95% in January to 4.59% just last week.

    Reality: As we mentioned earlier, home prices have appreciated year-over-year for the last 76 months, largely driven by high demand and low supply.

    According to a recent study by Zillow, the percentage of median incomenecessary to buy a home in today’s market (17.1%) is well below the mark reached in 1985 – 2000 (21%), as well as the mark reached in 2006 (25.4)! Interest rates would have to increase to 6% before buying a home would be less affordable than historical norms.

    The starter-home market has appreciated at higher levels (9.4% year-over-year) than any other market. One reason for this is the fact that many of the first-time buyers who have flocked to the starter-home market are being met with high competition. For some hopeful buyers, it may take more than a good offer to stand out from the crowd!

    Bottom Line

    There is a lot of confusion in today’s real estate market. If your future plans include buying or selling, make sure you have a trusted advisor and market expert by your side to help guide you to the best decision for you and your family.

  • Rent or Buy: Either Way You’re Paying A Mortgage!

    Rent or Buy: Either Way You’re Paying A Mortgage!

    There are some people who have not purchased homes because they are uncomfortable taking on the obligation of a mortgage. Everyone should realize, however, that unless you are living with your parents rent-free, you are paying a mortgage – either yours or your landlord’s.

    As Entrepreneur Magazine, a premier source for small business, explained in their article, “12 Practical Steps to Getting Rich”:

    “While renting on a temporary basis isn’t terrible, you should most certainly own the roof over your head if you’re serious about your finances. It won’t make you rich overnight, but by renting, you’re paying someone else’s mortgage. In effect, you’re making someone else rich.”

    With home prices rising, many renters are concerned about their house-buying power. Mark Fleming, Chief Economist at First Americanexplained:

    Over the last three years, renter house-buying power has increased fast enough to keep pace with house price appreciation, so the share of homes that a renter can afford to buy has remained the same since 2015.

    Although mortgage rates are expected to rise, they are still low by historic standards, and real household incomes are the highest they have ever been. Assuming this trend continues, our measure of affordability, which takes into account income, interest rates, and house prices, indicates that homeownership is still within reach for renters.”

    As an owner, your mortgage payment is a form of ‘forced savings’ which allows you to build equity in your home that you can tap into later in life. As a renter, you guarantee the landlord is the person building that equity.

    Interest rates are still at historic lows, making it one of the best times to secure a mortgage and make a move into your dream home. Freddie Mac’s latest report shows that rates across the country were at 4.51% last week.

    Bottom Line

    Whether you are looking for a primary residence for the first time or are considering a vacation home on the shore, now may be the time to buy.

  • 5 Real Estate Reality TV Myths Explained

    5 Real Estate Reality TV Myths Explained

    Have you ever been flipping through the channels, only to find yourself glued to the couch in an HGTV binge session? We’ve all been there, watching entire seasons of “Love it or List it,” “Million Dollar Listing,” “House Hunters,” “Property Brothers,” and so many more all in one sitting.

    When you’re in the middle of your real estate themed show marathon, you might start to think that everything you see on TV must be how it works in real life, but you may need a reality check.

    Reality TV Show Myths vs. Real Life:

    Myth #1: Buyers look at 3 homes and decide to purchase one of them.
    Truth: There may be buyers who fall in love and buy the first home they see, but according to the National Association of Realtors the average homebuyer tours 10 homes as a part of their search.  

    Myth #2: The houses the buyers are touring are still for sale.
    Truth: Everything is staged for TV. Many of the homes being shown are already sold and are off the market. 

    Myth #3: The buyers haven’t made a purchase decision yet.
    Truth: Since there is no way to show the entire buying process in a 30-minute show, TV producers often choose buyers who are further along in the process and have already chosen a home to buy. 

    Myth #4: If you list your home for sale, it will ALWAYS sell at the open house.
    Truth: Of course, this would be great! Open houses are important to guarantee the most exposure to buyers in your area but are only a PIECE of the overall marketing of your home. Keep in mind that many homes are sold during regular showing appointments as well. 

    Myth #5: Homeowners decide to sell their homes after a 5-minute conversation.
    Truth: Similar to the buyers portrayed on the shows, many of the sellers have already spent hours deliberating the decision to list their homes and move on with their lives/goals.

    Bottom Line

    Having an experienced professional on your side while navigating the real estate market is the best way to guarantee that you can make the home of your dreams a reality!