The price of any item is determined by the supply of that item, as well as the market demand. The National Association of REALTORS (NAR) surveys “over 50,000 real estate practitioners about their expectations for home sales, prices and market conditions” for their monthly REALTORS Confidence Index. [Read more…]
Every homeowner wants to make sure they get the best price when selling their home. But how do you guarantee that you receive maximum value for your house? [Read more…]
When it comes to buying a home, whether you are a rookie homebuyer or have gone through the process many times, having a local real estate expert who is well versed in the neighborhood you are looking to move into, as well as the trends of that area, should be your goal. [Read more…]
When a homeowner decides to sell their house, they obviously want the best possible price with the least amount of hassles. However, for the vast majority of sellers, the most important result is to actually get the home sold. [Read more…]
- Interest rates have come a long way in the last 30 years.
- The interest rate you secure directly impacts your monthly payment and the amount of house that you can afford.
- Experts predict that rates will increase by 3/4 a percent over the next 12 months.
- Secure a low rate now to get the most house for your money.
Do You Know The Difference Your Interest Rate Makes? [INFOGRAPHIC]
Source: Simplifying the Market
Mortgage interest rates, as reported by Freddie Mac, have increased over the last several weeks. Along with Freddie Mac, Fannie Mae, the Mortgage Bankers Association and the National Association of Realtors are all calling for mortgage rates to continue to rise over the next four quarters.
This has caused some purchasers to lament the fact they may no longer be able to get a rate less than 4%. However, we must realize that current rates are still at historic lows.
Here is a chart showing the average mortgage interest rate over the last several decades.
Though you may have missed getting the lowest mortgage rate ever offered, you can still get a better interest rate than your older brother or sister did ten years ago; a lower rate than your parents did twenty years ago and a better rate than your grandparents did forty years ago.
Should I Pay A Mortgage Interest Rate Over 4%?
Source: Simplifying the Market
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.
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.
If you are going to sell, now may be the time.
NAR Reports Reveal Two Reasons to Sell This Winter
Source: Simplifying the Market
There has been much written about how dramatically home values have increased over the last several years. With the increase in values, comes an increase in the equity each home owning family now has. The Joint Center of Housing Studies at Harvard University recently reported that, after taking inflation into account, aggregate home equity has increased 60% since 2010. And home equity is the major component of most family’s overall wealth.
Why is this so important?
Throughout history, families have tapped into their homes for many important reasons. Perhaps it was to get seed capital to start a new business; perhaps to help finance their children’s college education; perhaps to get needed medical attention not covered by insurance.
Up to ten years ago, families were able to use the equity in their homes to better the living situation for themselves and their family. More small businesses were created. College students weren’t forced to take on massive student debt. People could get needed medical care.
This hasn’t been the case over the last ten years as families found themselves in a position of having zero equity or, even worse, negative equity post the housing collapse. However, that is about to change.
Using your home as an ATM is not a good idea.
We realize that there are inherent risks to tapping into the equity in your home especially if you do it for the wrong reasons. Back in 2005-2007, homeowners were using their homes as their own personal ATM machine to buy depreciating assets like cars, boats and jet skis. This reckless behavior should never be repeated.
However, using your equity (aka family wealth) to invest in yourself, your children or other family members that could use help still makes sense. And the good news is that more and more families can do this as home values continue to increase.
Home equity gives families an additional financial option when money is needed. The proper use of this family wealth can be used to grow generational wealth.
As Julián Castro, U.S. Secretary of HUD, recently explained:
“Generation after generation, the primary vehicle to create wealth in our country has been through homeownership. In the U.S., homeownership has provided an opportunity for one generation to hand over to the next that opportunity and that wealth.”
The Importance of Home Equity to a Family
Source: Simplifying the Market
The interest rate you pay on your home mortgage has a direct impact on your monthly payment. The higher the rate the greater the payment will be. That is why it is important to look at where rates are headed when deciding to buy now or wait until next year.
Below is a chart created using Freddie Mac’s October 2015 U.S. Economic & Housing Marketing Outlook. As you can see interest rates are projected to increase steadily over the course of the next 12 months.
How Will This Impact Your Mortgage Payment?
Depending on the amount of the loan that you secure, a half of a percent (.5%) increase in interest rate can increase your monthly mortgage payment significantly.
According to CoreLogic’s latest Home Price Index, national home prices have appreciated 6.4% from this time last year and are predicted to be 4.7% higher next year.
If both the predictions of home price and interest rate increases become reality, families would wind up paying considerably more for their next home.
Even a small increase in interest rate can impact your family’s wealth. Let’s meet to evaluate your ability to purchase your dream home.
Where Are Mortgage Rates Headed? This Winter? Next Year?
Source: Simplifying the Market
Understanding how appraisals work will help you achieve a quick and profitable refinance or sale.
When you refinance or sell your home, the lender will insist that you get an appraisal–an opinion of the value of your home based on what similar homes in your area have sold for in recent months.
Here are five tips about the appraised value of your home.
1. An appraisal isn’t an exact science
When appraisers evaluate a home’s value, they’re giving their best opinion based on how the home’s features stack up against those of similar homes recently sold nearby. One appraiser may factor in a recent sale, but another may consider that sale too long ago, or the home too different, or too far away to be a fair comparison. The result can be differences in the values two separate appraisers set for your home.
2. Appraisals have different purposes
An appraisal being used to figure out how much to insure your home for or to determine your property taxes may rely on other factors and arrive at different values. For example, though an appraisal for a home loan evaluates today’s market value, an appraisal for insurance purposes calculates what it would cost to rebuild your home at today’s building material and labor rates, which can result in two different numbers.
Appraisals are also different from CMAs, or competitive market analyses. In a CMA, a real estate agent relies on market expertise to estimate how much your home will sell for in a specific time period. The price your home will sell for in 30 days may be different than the price your home will sell for in 120 days. Because real estate agents don’t follow the rules appraisers do, there can be variations between CMAs and appraisals on the same home.
3. An appraisal is a snapshot
Home prices shift, and appraised values will shift with those market changes. Your home may be appraised at $150,000 today, but in two months when you refinance or list it for sale, the appraised value could be lower or higher depending on how your market has performed.
4. Appraisals don’t factor in your personal issues
You may have a reason you must sell immediately, such as a job loss or transfer, which can affect the amount of money you’ll accept to complete the transaction in your time frame. An appraisal doesn’t consider those personal factors.
5. You can ask for a second opinion
If your home appraisal comes back at a value you believe is too low, you can request that a second appraisal be performed by a different appraiser. You, or potential buyers, if they’ve requested the appraisal, will have to pay for the second appraisal. But it may be worth it to keep the sale from collapsing from a faulty appraisal. On the other hand, the appraisal may be accurate, and it may be a sign that you need to adjust your pricing or the size of the loan you’re refinancing.
More from HouseLogic
How to use an appraisal to eliminate private mortgage insurance
Understanding the assessed value of your home for tax purposes
Understanding the amount at which to insure your home
Other web resources
More information on appraisals
How to improve the appraised value of your home
G.M. Filisko is an attorney and award-winning writer who’s had more than 10 appraisals performed on her properties in the past 20 years. A frequent contributor to many national publications including Bankrate.com, REALTOR® Magazine, and the American Bar Association Journal, she specializes in real estate, business, personal finance, and legal topics.