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featured, Joplin, MO Real Estate, Real Estate, Sellers

Baby Boomers are Downsizing, Are You Ready to Move?

Baby Boomers are Downsizing, Are You Ready to Move? | MyKCM

For a while now baby boomers have been blamed for a portion of the housing market’s current lack of housing inventory, but should they really be getting the blame?

Here’s what some of the experts have to say on the subject:

Aaron Terrazas, Senior Economist at Zillow, says that “Boomers are healthier and working longer than previous generations, which means they aren’t yet ready to sell their homes.

According to a study by Realtor.com85% of baby boomers indicated they were not planning to sell their homes.

It is true that baby boomers are healthier and are thus working and living longer, but are they also refusing to sell their homes? 

Last month, Trulia looked at the housing situation of seniors (aged 65+) today compared to that of a decade ago. Trulia’s study revealed that:

Although seniors appear to be delaying downsizinguntil later in life, as a group, households 65 and over are still downsizing at roughly the same rate as in years past.”

Trulia also explains that, 

5.5% of households 65 and over moved, pretty evenly split between moves to single family (2.7%) and multifamily (2.4%) homes. In 2005these percentages were virtually the same, with 5.5% of senior households moving, including 2.5% into single family and 2.5% into multifamily homes.”

So, if these percentages are the same, what is the challenge?

Recent reports tell us that the older population grew from 3 million in 1900 to 47.8 million in 2017.

In addition, the Census recently revised the numbers from their National Population Projections:

The aging of baby boomers means that within just a couple decades, older people are projected to outnumber children for the first time in U.S. history…By 2035, there will be 78.0 million people 65 years and older compared to 76.7 million under the age of 18.

Bottom Line

If you are a baby boomer who is not sure whether you should downsize or move to a warmer climate (other people are doing it, why not you?), let’s get together so we can help you evaluate your options today!

Buyers, featured, home buyers, Joplin, MO Real Estate, Real Estate

The Cost of NOT Paying PMI

The Cost of NOT Paying PMI | MyKCM

Saving for a down payment is often the biggest hurdle for a first-time homebuyer as median incomes, rents, and home prices all vary depending on where you live.

There is a common misconception among homebuyers that a 20% down payment is required, and it is this limiting belief that often adds months, and sometimes even years, to the home-buying process.

So, if you can purchase a home with less than a 20% down payment… why aren’t more people doing just that?

One Possible Answer: Private Mortgage Insurance (PMI)

Freddie Mac defines PMI as:

“An insurance policy that protects the lender if you are unable to pay your mortgage. It’s a monthly fee, rolled into your mortgage payment, that is required for all conforming, conventional loans that have down payments less than 20%.

Once you’ve built equity of 20% in your home, you can cancel your PMI and remove that expense from your mortgage payment.”

As the borrower, you pay the monthly premiums for the insurance policy, and the lender is the beneficiary. The monthly cost of your PMI depends on the home’s value, the amount of your down payment, and your credit score.

Below is a table showing the difference in monthly mortgage payment for a $250,000 home with a 3% down payment and PMI vs. a 20% down payment without PMI:

The Cost of NOT Paying PMI | MyKCM

The first thing you see when looking at the table above is no doubt the added $320 a month that you would be spending on your monthly mortgage cost. The second thing that should stand out is that a 20% down payment is $50,000!

If you are buying your first home, $50,000 is a large sum of money that takes discipline and sacrifice to save. Many first-time buyers save for 5-10 years before buying their homes.

To save $50,000 in 10 years, you would need to save about $420 a month. On the other hand, if you save that same $420 a month, you could afford a 3% down payment in less than a year and a half.

In a recent article by My Mortgage Insider, they explain what could happen in the market while you are waiting to save for a higher down payment:

“The time it takes to save a (larger) down payment could mean higher home prices and tougher qualifying down the road. For many buyers, it could prove much cheaper and quicker to opt for the 3% down mortgage immediately.”

The article went on to say,

“Since renters typically devote a higher percentage of their income to housing than homeowners, providing flexible down payment options can help renters with solid earnings purchase a home – and gain a fixed-rate mortgage with principal and interest payments that will not increase over the life of the loan.”

If the prospect of having to pay PMI is holding you back from buying a home today, Freddie Mac has this advice,

“It’s no doubt an added cost, but it’s enabling you to buy now and begin building equity versus waiting 5 to 10 years to build enough savings for a 20% down payment.”

Based on results of the most recent Home Price Expectation Survey, a homeowner who purchased a $250,000 home in January would gain $50,000 in equity over the next five years based on home price appreciation alone (shown below).

The Cost of NOT Paying PMI | MyKCM

Bottom Line

If you have questions about whether you should buy now or wait until you’ve saved a larger down payment, let’s get together to discuss our market’s conditions and help you make the best decision for you and your family.

featured, Home Owners, Joplin, MO Real Estate, Real Estate, Sellers

4 Reasons to Sell This Fall

4 Reasons to Sell This Fall [INFOGRAPHIC] | MyKCM

Some Highlights:

  • Housing inventory is still under the 6-month supply that is needed for a normal housing market.
  • Buyers are often competing with one another for the listings that are available.
  • Perhaps the time has come for you and your family to move on and start living the life you desire.
Buyers, featured, Home Owners, Joplin, MO Real Estate, Renters, Sellers

Home Prices Have Appreciated 6.9% in 2018

Home Prices Have Appreciated 6.9% in 2018 | MyKCM

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!

featured, Home Owners, Joplin, MO Real Estate, Real Estate, Renters, Sellers

Home Prices Up 6.49% Across the Country!

Home Prices Up 6.49% Across the Country! [INFOGRAPHIC] | MyKCM

Some Highlights:

  • The Federal Housing Finance Agency (FHFA) recently released their latest quarterly Home Price Index report.
  • In the report, home prices are compared both regionally and by state.
  • Based on the latest numbers, if you plan on relocating to another state, waiting to move may end up costing you more!
Buyers, featured, Joplin, MO Real Estate, Real Estate, Renters

Having Trouble Saving Enough for Your Down Payment? Crowdfund It!

Having Trouble Saving Enough for Your Down Payment? Crowdfund It! | MyKCM

You read that right! First-time buyers across the country are getting creative when it comes to saving the necessary down payment to buy a home.

Many couples are asking their wedding guests to contribute to their “Down Payment Fund” rather than fulfilling a traditional registry. This is fueled by the fact that many couples live together prior to marriage and already have the necessary items to make a house a home…they just need the house!

The average wedding in the United States has 120 guests who give wedding gifts valued, on average, at $186. This means that couples could walk away from their nuptials with over $22,000 towards their down payment!

Services like HomeFundMe allow friends, family members, and almost anyone else in a buyer’s network to contribute funds toward the buyer’s down payment. Contributors can determine, at the time of their donation, if their gifts are ‘conditional’ or ‘non-conditional’ on the beneficiary buying a home.

According to a recent Wall Street Journal article“about 400 borrowers have used HomeFundMe to help buy homes since the program launched in October and on average, they raise about $2,500.” The article went on to explain that most borrowers use these funds in combination with their personal savings to shorten the time needed to achieve their goal of homeownership.

There are more and more programs surfacing from lenders that allow buyers to put down as little as 3% to buy their dream home. Fannie Mae and Freddie Mac loan programs require 3% down payments, while FHA programs require as little as 3.5%, and VA Loans are often approved with 0% down!

Bottom Line

Gone are the days of 20% down or no loan! If your dreams include buying a home of your own in the next year, you can get creative with your down payment savings to make it happen!

Buyers, featured, home buyers, Home Owners, Joplin, MO Real Estate, Real Estate, Renters, Sellers

The Net Worth of a Homeowner is 44x Greater Than A Renter!

The Net Worth of a Homeowner is 44x Greater Than A Renter! | MyKCM

Every three years, the Federal Reserve conducts their Survey of Consumer Finances in which they collect data across all economic and social groups. Their latest survey data, covering 2013-2016 was recently released.

The study revealed that the median net worth of a homeowner was $231,400 – a 15% increase since 2013. At the same time, the median net worth of renters decreased by 5% ($5,200 today compared to $5,500 in 2013).

These numbers reveal that the net worth of a homeowner is over 44 times greater than that of a renter.

Owning a home is a great way to build family wealth

As we’ve said before, simply put, homeownership is a form of ‘forced savings.’ Every time you pay your mortgage, you are contributing to your net worth by increasing the equity in your home.

That is why, for the fifth year in a row, Gallup reported that Americans picked real estate as the best long-term investment. This year’s results showed that 34% of Americans chose real estate, followed by stocks at 26% and then gold, savings accounts/CDs, or bonds.

Greater equity in your home gives you options

If you want to find out how you can use the increased equity in your home to move to a home that better fits your current lifestyle, let’s get together to discuss the process.

featured, Joplin, MO Real Estate, Real Estate, Sellers

Are You Thinking of Selling Your Home? Competition Is Coming!

Are You Thinking of Selling Your Home? Competition Is Coming! | MyKCM

The number of building permits issued for single-family homes is the best indicator of how many newly built homes will rise over the next few months. According to the latest U.S. Census Bureau and U.S. Department of Housing & Urban Development Residential Sales Report, the number of building permits issued in June was 850,000, a 0.8% increase from May.

How will this impact buyers?

More inventory means more options. Mark Fleming, First American’s Chief Economist, explained that this is good news for the housing market – especially for those looking to buy:

“The continued year-over-year growth in completions means more homes on the market in the short-term, offering some immediate relief in alleviating housing supply shortages.”

How will this impact sellers?

More inventory means more competition. Today, because of the tremendous lack of inventory, a seller can expect:

  1. A great price on their home as buyers outbid each other for it.
  2. A quick sale as buyers have such little inventory to choose from.
  3. Fewer hassles as buyers don’t want to “rock the boat” on the deal.

Bottom Line

If you are considering selling your house, you’ll want to beat this new competition to market to ensure that you get the most attention on your listing and the best price for your house.

Buyers, featured, Home Owners, Joplin, MO Real Estate, Real Estate, Renters, Sellers

The Cost of Waiting: Interest Rates Edition

The Cost of Waiting: Interest Rates Edition [INFOGRAPHIC] | MyKCM

Some Highlights:

  • Interest rates are projected to increase steadily heading into 2019.
  • The higher your interest rate, the more money you end up paying for your home and the higher your monthly payment will be.
  • Rates are still low right now – don’t wait until they hit 5% to start searching for your dream home!
featured, Home Owners, Joplin, MO Real Estate, Real Estate, Renters, Sellers

Homebuyers Willing to Sacrifice ‘Must-Haves’ in Favor of Good School Districts

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It should come as no surprise that buying a home in a good school district is important to homebuyers. According to a report from Realtor.com, 86% of 18-34 year-olds and 84% of those aged 35-54 indicated that their home search areas were defined by school district boundaries.

What is surprising, however, is that 78% of recent homebuyers sacrificed features from their “must-have” lists in order to find homes within their dream school districts.

The top feature sacrificed was a garage at 19%, followed closely by a large backyard, an updated kitchen, the desired number of bedrooms, and an outdoor living area. The full results are shown in the graph below.

 

Homebuyers Willing to Sacrifice ‘Must-Haves’ in Favor of Good School Districts | MyKCM

Buyers are attracted to schools with high test scores, accelerated academic programs, art and music programs, diversity, and before and after-school programs.

With a limited number of homes available to buy in today’s real estate market, competition is fierce for homes in good school districts. Danielle Hale, Chief Economist for Realtor.com, explained further,

“Most buyers understand that they may not be able to find a home that covers every single item on their wish list, but our survey shows that school districts are an area where many buyers aren’t willing to compromise.

For many buyers and not just buyers with children, ‘location, location, location,’ means ‘schools, schools, schools.’” (emphasis added)

Bottom Line

For buyers across the country, the quality of their children’s (or future children’s) education ranks highest on their must-have lists. Before you start the search for your next home, let’s get together to discuss the market conditions in our area.