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Category Archives for SELLERS

Time on the Market Drops to New Low in 2017

According to recently released data from the National Association of Realtors (NAR), the median amount of time a home spent on the market hit an all-time low of only three weeks in 2017.

Strong buyer demand, a good economy, and a low inventory of new and existing homes for sale created the perfect storm to accelerate the time between listing and signing a contract. The time needed to sell a home has dropped substantially since its highest mark of 11 weeks in 2012.

The chart below shows the median weeks on the market from 1987 to today.

Time on the Market Drops to New Low in 2017 | Simplifying The Market

Bottom Line

If you are a homeowner who is debating whether or not to list your home for sale, know that national market conditions are primed for a quick turnaround! Let’s get together to discuss exactly what’s going on in our area, today!

The Benefits of Homeownership Go Beyond the Financial

The Benefits of Homeownership Go Beyond the Financial | Simplifying The Market

Homeownership is a major part of the American Dream. As evidence of that, 91% of Americans believe that owning a home is either essential (43%) or important (48%) to achieving that “dream.” In a market where some people may be unsure about the benefits and possibilities of buying a home, it is important that we remember this.

Homeownership is NOT just about the money. In fact, some of the major benefits are non-financial. Here are a few of those benefits as per the National Association of Realtors:

  • Consistent findings show that homeownership does make a significant positive impact on educational achievement.
  • Several researchers have found that homeowners tend to be more involved in their communities than renters.
  • Early studies of homeownership and health outcomes found that homeowners and children of homeowners are generally happier and healthier than non-owners, even after controlling for factors such as income and education levels that are also associated with positive health outcomes and positively correlated with homeownership.

Bottom Line

Homeownership means something more to people and their families than just the financial considerations.

How Rising Prices Will Help You Build Family Wealth in 2018

How Rising Prices Will Help You Build Family Wealth in 2018 | Simplifying The Market

Over the next five years, home prices are expected to appreciate on average by 3.35% per year and to grow by 24.34% cumulatively, according to Pulsenomics’ most recent Home Price Expectation Survey.

So, what does this mean for homeowners and their equity position?

As an example, let’s assume a young couple purchases and closes on a $250,000 home this month (January). If we only look at the projected increase in the price of that home, how much equity will they earn over the next 5 years?

How Rising Prices Will Help You Build Family Wealth in 2018 | Simplifying The Market

Since the experts predict that home prices will increase by 4.2% in 2018, the young homeowners will have gained $10,500 in equity in just one year.

Over a five-year period, their equity will increase by nearly $45,000! This figure does not even take into account their monthly principal mortgage payments. In many cases, home equity is one of the largest portions of a family’s overall net worth.

Bottom Line

Not only is homeownership something to be proud of, but it also offers you and your family the ability to build equity you can borrow against in the future. If you are ready and willing to buy, find out if you are able to today!

Top 5 Reasons You Shouldn’t FSBO

In today’s market, with home prices rising and a lack of inventory, some homeowners may consider trying to sell their home on their own, known in the industry as a For Sale by Owner (FSBO). There are several reasons why this might not be a good idea for the vast majority of sellers.

Here are the top five reasons:

1. Exposure to Prospective Buyers

Recent studies have shown that 95% of buyers search online for a home. That is in comparison to only 17% looking at print newspaper ads. Most real estate agents have an internet strategy to promote the sale of your home. Do you?

2. Results Come from the Internet

Where did buyers find the home they actually purchased?

  • 49% on the internet
  • 31% from a Real Estate Agent
  • 7% from a yard sign
  • 1% from newspapers

The days of selling your house by just putting up a sign and putting it in the paper are long gone. Having a strong internet strategy is crucial.

3. There Are Too Many People to Negotiate With

Here is a list of some of the people with whom you must be prepared to negotiate if you decide to For Sale By Owner:

  • The buyer who wants the best deal possible
  • The buyer’s agent who solely represents the best interest of the buyer
  • The buyer’s attorney (in some parts of the country)
  • The home inspection companies, which work for the buyer and will almost always find some problems with the house
  • The appraiser if there is a question of value

4. FSBOing Has Become More And More Difficult

The paperwork involved in selling and buying a home has increased dramatically as industry disclosures and regulations have become mandatory. This is one of the reasons that the percentage of people FSBOing has dropped from 19% to 8% over the last 20+ years.

The 8% share represents the lowest recorded figure since NAR began collecting data in 1981.

5. You Net More Money When Using an Agent

Many homeowners believe that they will save the real estate commission by selling on their own. Realize that the main reason buyers look at FSBOs is because they also believe they can save the real estate agent’s commission. The seller and buyer can’t both save the commission.

A study by Collateral Analytics revealed that FSBOs don’t actually save anything, and in some cases, may be costing themselves more, by not listing with an agent. One of the main reasons for the price difference at the time of sale is: 

“Properties listed with a broker that is a member of the local MLS will be listed online with all other participating broker websites, marketing the home to a much larger buyer population. And those MLS properties generally offer compensation to agents who represent buyers, incentivizing them to show and sell the property and again potentially enlarging the buyer pool.”

If more buyers see a home, the greater the chances are that there could be a bidding war for the property. The study showed that the difference in price between comparable homes of size and location is currently at an average of 6% this year.

Why would you choose to list on your own and manage the entire transaction when you can hire an agent and not have to pay anything more?

Bottom Line

Before you decide to take on the challenges of selling your house on your own, sit with a real estate professional in your marketplace and see what they have to offer.

Housing Prices are NOT Heading for Another Crash

As home values continue to increase at levels greater than historic norms, some are concerned that we are heading for another crash like the one we experienced ten years ago. We recently explained that the lenient lending standards of the previous decade (which created false demand) no longer exist. But what about prices?

Are prices appreciating at the same rate that they were prior to the crash of 2006-2008? Let’s look at the numbers as reported by Freddie Mac:

Housing Prices are NOT Heading for Another Crash | Simplifying The Market

The levels of appreciation we have experienced over the last four years aren’t anywhere near the levels that were reached in the four years prior to last decade’s crash.

We must also realize that, to a degree, the current run-up in prices is the market trying to catch up after a crash that dramatically dropped prices for five years.

Bottom Line

Prices are appreciating at levels greater than historic norms. However, we are not at the levels that led to the housing bubble and bust.

Rents Are on the Rise: Don’t Get Caught in the Rental Trap!

Rents Are on the Rise: Don't Get Caught in the Rental Trap! | Simplifying The Market

There are many benefits to homeownership. One of the top benefits is protecting yourself from rising rents, by locking in your housing cost for the life of your mortgage.

Don’t Become Trapped 

A recent article by Apartment List addressed rising rents by stating:

“Rents are up 2.7% year-over-year at the national level. Year-over-year growth continues to fall between the 2.1% rate from this time last year and the 3.4% growth rate from October 2015.”

The article continues explaining that:

“Despite the seasonal slowdown, rents are still up year-over-year in 89 of the 100 Largest cities.

Additionally, the Urban Institute revealed that,

Over a quarter of renters, or 11.1 million households, are severely cost burdened, spending at least half their income on rental housing.

These households struggle to save for a rainy day and pay other bills, including groceries and healthcare.

It’s Cheaper to Buy Than Rent 

As we have previously mentioned, the results of the latest Rent vs. Buy Report from Trulia shows that homeownership remains cheaper than renting with a traditional 30-year fixed rate mortgage in the 100 largest metro areas in the United States.

The updated numbers show that the range is an average of 6.5% less expensive in San Jose (CA), all the way up to 57% less expensive in Detroit (MI) and 37.4% nationwide!

Know Your Options

Perhaps you have already saved enough to buy your first home. A nationwide survey of about 24,000 renters found that 80% of millennial renters plan to eventually buy a house, but 72% cite affordability as their primary obstacle. Aside from affordability, one in three millennial renters have concerns about their credit scores, and another 53% said that a down payment is an obstacle.

Many first-time homebuyers who believe that they need a large down payment may be holding themselves back from their dream homes. As we have reported before, in many areas of the country, a first-time home buyer can save for a 3% down payment in less than two years. You may have already saved enough!

Bottom Line

Don’t get caught in the trap that so many renters are currently in. If you are ready and willing to buy a home, find out if you are able. Let’s get together to determine if you can qualify for a mortgage now!

Top 5 Benefits of Hiring a Real Estate Agent

Top 5 Benefits of Hiring a Real Estate Agent | Simplifying The Market

The National Association of Realtors (NAR) recently released their 2017 Profile of Home Buyers and Sellers in which they surveyed recent home buyers and sellers about their experiences. An entire section of the profile is dedicated to buyers’ experiences with their real estate agents.

If you are looking to buy in 2018, here are the top 5 benefits of using a real estate agent when buying your dream home as cited by recent buyers:

1. Helped the buyer understand the process – 60%

If you are new to the home buying process, an experienced real estate professional can explain exactly what to expect during the entire transaction so you aren’t caught off guard.

2. Pointed out unnoticed features/faults with the property – 56%

Whether it’s pointing out possible uses for an extra bedroom/office, or using their trained eye to see potentially disastrous hazards that may be hiding out of site, your agent is there to protect your interests and make sure your home buying experience is a good one.

3. Negotiated better sales contract terms – 47%

When it comes to negotiating the complex terms of your contract and coming to an agreement with the seller, it never hurts to have someone who has been there before on your side. If earlier in your search you found a couple of less than desirable features on the home you are going to purchase, your agent can make sure that contingencies are in place for you to pay the best price. Their analysis of comparable properties in the area will also help to make sure that your dream home is priced properly for the market.

4. Provided a better list of service providers – 46%

Real estate agents are titans of networking. Many have a list of preferred providers who they have worked with in the past and who they trust to work as a part of your team to make your dream come true. This can include mortgage professionals (listed as the #8 reason to use an agent at 22%), home inspectors, plumbers, contractors, painters, landscapers, home stagers, and so many more!

5. Improved the buyer’s knowledge of search areas – 44%

Local real estate professionals are often members of community organizations and are usually well versed in their area’s history. Their ties to the community make them a great resource whether you plan to relocate to a new area or across town.

Bottom Line

If your plans for 2018 include purchasing your dream home, let’s get together to discuss your options and to help you make the most powerful and confident decisions for you and your family.

There’s More to a Bubble Than Rising Home Prices

There's More to a Bubble Than Rising Home Prices | Simplifying The Market

What truly causes a housing bubble and the inevitable crash? For the best explanation, let’s go to a person who correctly called the last housing bubble – a year before it happened.

“A bubble requires both overvaluation based on fundamentals and speculation. It is natural to focus on an asset’s fundamental value, but the real key for detecting a bubble is speculation…Speculation tends to chase appreciating assets, and then speculation begets more speculation, until finally, for some reason that will become obvious to all in hindsight, the ‘bubble’ bursts.

I have taken to calling the housing market a ‘bubble’.”

– Bill McBride of Calculated Risk calling the bubble back in April 2005

Where do we stand today regarding speculation?

There are two measurements that are used to determine the speculation in a housing market:

  1. The number of homes purchased by an investor and
  2. The number of homes being flipped (resold within a twelve-month period)

As compared to 2005, investor purchases are down dramatically (from 23% to 13%) and so is flipping (from 8.2% to 5.7%). McBride explains:

“There is currently some flipping activity, but this is more the normal type of flipping (buy, improve and then sell). Back in 2005, people were just buying homes and letting them sit vacant – and then selling without significant improvements. Classic speculation.”

What are the experts saying about speculation in today’s market?

DSNews recently ran an article which asked two economists to compare the speculation in today’s market to that in 2005-2007. Here is what they said:

Dr. Eddie Seiler, Chief Housing Economist at Summit Consulting:

“The speculative ‘flipping mania’ of 2006 is absent from most metro areas.”

Tian Liu, Chief Economist of Genworth Mortgage Insurance:

“The nature of housing demand is different as well, with more potential homeowners and far fewer speculators in the housing market compared to the 2005-2007 period.”

And what does McBride, who called the last housing bubble, think about today’s real estate market?

Sixty days ago, he explained:

“In 2005, people were just buying homes and letting them sit vacant – and then selling without significant improvements. Classic speculation. And even more dangerous during the bubble was the excessive use of leverage (all those poor-quality loans). Currently lending standards are decent, and loan quality is excellent…

I wouldn’t call house prices a bubble – and I don’t expect house prices to decline nationally like during the bust.”

Bottom Line

Speculation is a major element of the housing bubble formula. Right now, there are not elevated percentages of investors and house flippers. Therefore, there is not an elevated rate of speculation.

4 Reasons to Buy a Home This Winter!

4 Reasons to Buy a Home This Winter! | Simplifying The Market

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 Index reports that home prices have appreciated by 7.0% over the last 12 months. The same report predicts that prices will continue to increase at a rate of 4.7% over the next year.

The bottom in home prices has come and gone. 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 hovered around 4%. 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 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 a home 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 mortgageeither yours or your landlord’s.

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

Buying or Selling in 2018? 5 Reasons to Resolve to Hire a Pro [INFOGRAPHIC]

Buying or Selling in 2018? 5 Reasons to Resolve to Hire a Pro [INFOGRAPHIC] | Simplifying The Market

Buying or Selling in 2018? 5 Reasons to Resolve to Hire a Pro [INFOGRAPHIC] | Simplifying The Market

Some Highlights:

  • As we usher in the new year, one thing is for certain… if you plan to buy or sell a house this year, you need a real estate professional on your team!
  • There are many benefits to using a local professional!
  • Pick a professional who knows your local market and can help you achieve your dreams!