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Buyers, home buyers, Local Real Estate, Real Estate, Renters

Don’t Get Caught in the Rental Trap in 2019

Don't Get Caught in the Rental Trap in 2019 | MyKCM

Every year around this time, we take time to reflect and plan for next year. If you are renting your current home but have dreams of homeownership, your plan for the new year may include buying, and you wouldn’t be alone!

According to the 2018 Bank of America Homebuyer Insights Report, 74% of renters plan on buying in the next 5 years, with 38% planning to buy in the next 2 years!

When those same renters were asked why they disliked renting, 52% said that rising rental costs were their top reason, and 42% of renters believe that their rent will rise every year. The full results of the survey can be seen below:

Don't Get Caught in the Rental Trap in 2019 | MyKCM

It’s no wonder that rising rental costs came in as the top answer! The median asking rent price has risen steadily over the last 30 years, as you can see below!

Don't Get Caught in the Rental Trap in 2019 | MyKCM

There is a long-standing rule that a household should not spend more than 28% of its income on housing expenses. With nearly half of renters (48%) surveyed already spending more than that, and with their rents likely to rise again… why are they renting?

When asked why they haven’t purchased a home yet, not having enough saved for a down payment (44%) came in as the top response. The report went on to reveal that nearly half of all respondents believe that “a 20% down payment is required to buy a home.”

If the majority of those who believe they haven’t saved a large enough down payment believe that they need 20% down to buy, that means a large number of renters may be able to buy now!

Bottom Line

If you are one of the many renters who is fed up with rising rents but may be confused about what is required to buy in today’s market, let’s get together to help you on your path to homeownership.

Buyers, featured, home buyers, Home Owners, Local Real Estate, Real Estate, Renters

How to Simply Increase Your Family Wealth by Paying for Housing

Everyone should realize that unless you are living somewhere rent-free, you are paying a mortgage – either yours or your landlord’s. Buying your own home provides you with a form of ‘forced savings’that allows you to use your monthly housing costs to increase your family’s wealth.

Every month that you pay your mortgage, you are paying off a portion of the debt that you took on to purchase your home. Therefore, you own a little bit more of your home every month in the form of home equityAs your home’s value increases you also gain home equity.

Every quarter, Pulsenomics surveys a nationwide panel of over 100 economists, real estate experts, and investment and market strategists and asks them to project how residential home prices will appreciate over the next five years for their Home Price Expectation Survey (HPES).

The latest data from their Q4 2018 Survey revealed that home prices are expected to round out the year 5.8% higher than they were in January. For the next 5 years, home values will appreciate by an average of nearly 3% a year.

This is still great news for homeowners!

For example, let’s assume a young couple purchases and closes on a $250,000 home in January. Simply through their home appreciating in value, those homeowners can build their home equity by nearly $40,000 over the next five years.

How to Simply Increase Your Family Wealth by Paying for Housing | MyKCM

Let’s look at the potential equity gained over the same period of time at some higher price points:

How to Simply Increase Your Family Wealth by Paying for Housing | MyKCM

In many cases, home equity is a large portion of a family’s overall net worth.

Bottom Line

If your plan for 2019 includes entering the housing market to purchase a home, whether it’s your first or your fifth, let’s get together to make your plan a reality!

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

What If I Wait A Year to Buy a Home?

What If I Wait A Year to Buy a Home? | MyKCM

National home prices have increased by 5.4% since this time last year. Over that same time period, interest rates have remained near historic lows which has allowed many buyers to enter the market and lock in low rates.

As a seller, you will likely be most concerned about ‘short-term price’ – where home values are headed over the next six months. As a buyer, however, you must not be concerned about price but instead about the ‘long-term cost’ of the home.

The Mortgage Bankers Association (MBA), Freddie Mac, and Fannie Mae all project that mortgage interest rates will increase by this time next year. According to CoreLogic’s most recent Home Price Insights Reporthome prices will appreciate by 4.8% over the next 12 months.

What Does This Mean as a Buyer?

If home prices appreciate by 4.8% over the next twelve months as predicted by CoreLogic, here is a simple demonstration of the impact that an increase in interest rate would have on the mortgage payment of a home selling for approximately $250,000 today:

What If I Wait Until 2019 To Buy A Home? | MyKCM

Bottom Line

If buying a home is in your plan for this year, doing it sooner rather than later could save you thousands of dollars over the terms of your loan.

featured, home buyers, Home Owners, Local Real Estate, Real Estate

The Tale of Two Markets

The Tale of Two Markets [INFOGRAPHIC] | MyKCM

Some Highlights:

  • An emerging trend for some time now has been the difference between available inventory and demand in the premium and luxury markets and that in the starter and trade-up markets and what those differences are doing to prices!
  • Inventory continues to rise in the luxury and premium home markets which is causing prices to cool.
  • Demand continues to rise with lower-than-normal inventory levels in the starter and trade-up home markets, causing prices to rise on a year-over-year basis for 80 consecutive months.
featured, Home Owners, Joplin, MO Real Estate, Local Real Estate

2008 vs. Now: Are Owners Using Their Homes as ATMs Again?

2008 vs. Now: Are Owners Using Their Homes as ATMs Again? | MyKCM

Over the last six years, we have experienced strong price appreciation which has increased home equity levels dramatically. As the number of “cash-out” refinances begins to approach numbers last seen during the crash, some are afraid that we may be repeating last decade’s mistake.

However, a closer look at the numbers shows that homeowners are being much more responsible with their home equity this time around.

What happened then…

When real estate values began to surge last decade, people started using their homes as personal ATMs. Homeowners would refinance their houses and convert their equity into instant cash (known as “cash-out” refinances). Because homes were appreciating so rapidly, many homeowners tapped into their equity multiple times.

This left homeowners with little-or-no equity left in their homes, so when prices started to fall many homeowners found their houses in a negative equity situation (where the mortgage amount was greater than the value of the home). When some of these homeowners saw that there was no value left in their houses, they just stopped paying their mortgages altogether.

Banks eventually foreclosed on those homes and the foreclosures drove prices down even further and put more homes in the negative equity category. This cycle continued, leading to the worst housing crash in almost one hundred years.

What’s happening now…

Again, Americans are seeing their home equity grow. Today, over 48% of all single-family homes in the country have over 50% equity, and yes, some families are tapping into that equity. However, this time around, homeowners are not making irresponsible decisions. According to the latest information from Freddie Mac, the total equity being “cashed out” is a fraction of what it was leading up to the crash. Here are the numbers:

2008 vs. Now: Are Owners Using Their Homes as ATMs Again? | MyKCM

Bottom Line

The recklessness that accompanied the build-up in equity prior to the last crash does not exist today. That makes this housing market much more secure than the one we had heading into 2008.

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

Where Are Interest Rates Headed in 2019?

Where Are Interest Rates Headed in 2019? | MyKCM

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 know where rates are headed when deciding to start your home search.

Below is a chart created using Freddie Mac’s U.S. Economic & Housing Marketing Outlook. As you can see, interest rates are projected to increase steadily throughout 2019.

Where Are Interest Rates Headed in 2019? | MyKCM

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. But don’t let the prediction that rates will increase stop you from purchasing your dream home this year!

Let’s take a look at a historical view of interest rates over the last 45 years.

Where Are Interest Rates Headed in 2019? | MyKCM

Bottom Line

Be thankful that 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.

Buyers, featured, home buyers, Home Owners, Local Real Estate, Real Estate

Homeowners Aged 65+ Have 48x More Net Worth Than Renters

Homeowners Aged 65+ Have 48x More Net Worth Than Renters | 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 covers responses from 2013-2016.

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.

There are many who see that statistic and point toward how broad the range of respondents are for the Federal Reserve survey. Their study includes all economic and social groups and also includes all age groups. The argument is that older respondents have a higher likelihood of being homeowners, while the homeownership rate among younger survey takers is much lower.

Recently, the Joint Center for Housing Studies at Harvard University focused on homeowners and renters over the age of 65. Their study revealed that the difference in net worth between homeowners and renters at this age group was actually 47.5 times greater!

Homeowners Aged 65+ Have 48x More Net Worth Than Renters | MyKCM

Homeowners over the age of 65 are much more financially prepared for retirement and often own their homes outright if they were fortunate enough to purchase their homes before the age of 36. Their 30 years of mortgage payments have paid off as they gained equity through their monthly payments and as home values appreciated.

It is no surprise that lifelong-renters have had a hard time accruing net worth as the latest Censusreport shows that the Median Asking Rent has been climbing consistently over the last 30 years.

Homeowners Aged 65+ Have 48x More Net Worth Than Renters | MyKCM

Bottom Line

As a homeowner you put your monthly mortgage payment to work for you, building your net worth with every payment.

Buyers, featured, Local Real Estate, Real Estate

4 Reasons to Buy A Home This Winter!

4 Reasons to Buy A Home This Winter! | MyKCM

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 Insight report revealed that home prices have appreciated by 5.6% 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 4.8%. 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 in 2019.

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 that you can 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.

Better Living Tips and Hints, Home Owners

Holiday Fire Safety Tips

The holiday season is one of the most dangerous times of the year for household fires, so take note of these tips to reduce your risk.

Residential fires during the holiday season are more frequent, more costly, and more deadly than at any other time of the year. The U.S. Fire Administration (USFA) reports more than double the number of open-flame fires on Christmas Day than on an average day, and about twice as many on New Year’s Day. And when those fires occur, they do more damage: Property loss during a holiday fire is 34% greater than in an average fire, and the number of fatalities per thousand fires is nearly 70% higher. When the source of the fire is a highly flammable Christmas tree, the toll in property and lives is even greater.

To keep your household from becoming a holiday fire statistic, here are some safety tips to follow.

Cooking

Cooking is the top cause of holiday fires, according to the USFA. The most common culprit is food that’s left unattended. It’s easy to get distracted; take a pot holder with you when you leave the kitchen as a reminder that you have something on the stove. Make sure to keep a kitchen fire extinguisher that’s rated for all types of fires, and check that smoke detectors are working. 

If you’re planning to deep-fry your holiday turkey, do it outside, on a flat, level surface at least 10 feet from the house.

Candles

The incidence of candle fires is four times higher during December than during other months. According to the National Fire Protection Association, four of the five most dangerous days of the year for residential candle fires are Christmas/Christmas Eve and New Year’s/New Year’s Eve. (The fifth is Halloween.)

To reduce the danger, maintain about a foot of space between the candle and anything that can burn. Set candles on sturdy bases or cover with hurricane globes. Never leave flames unattended. Before bed, walk through each room to make sure candles are blown out. For atmosphere without worry, consider flameless LED candles.

Christmas Trees

It takes less than 30 seconds for a dry tree to engulf a room in flames, according to the Building and Fire Research Laboratory of the National Institute for Standards and Technology. “They make turpentine out of pine trees,” notes Tom Olshanski, spokesman for the USFA. “A Christmas tree is almost explosive when it goes.” 

To minimize risk, buy a fresh tree with intact needles, get a fresh cut on the trunk, and water it every day. A well-watered tree is almost impossible to ignite. Keep the tree away from heat sources, such as a fireplace or radiator, and out of traffic patterns. If you’re using live garlands and other greenery, keep them at least three feet away from heating sources.

No matter how well the tree is watered, it will start to dry out after about four weeks, Olshanski says, so take it down after the holidays. Artificial trees don’t pose much of a fire hazard; just make sure yours is flame-retardant.

Decorative Lights

Inspect light strings, and throw out any with frayed or cracked wires or broken sockets. When decorating, don’t run more than three strings of lights end to end. “Stacking the plugs is much safer when you’re using a large quantity of lights,” explains Brian L. Vogt, director of education for holiday lighting firm Christmas Décor. Extension cords should be in good condition and UL-rated for indoor or outdoor use. Check outdoor receptacles to make sure the ground fault interrupters don’t trip. If they trip repeatedly, Vogt says, that’s a sign that they need to be replaced. 

When hanging lights outside, avoid using nails or staples, which can damage the wiring and increase the risk of a fire. Instead, use UL-rated clips or hangers. And take lights down within 90 days, says John Drengenberg, director of consumer safety for Underwriters Laboratories.  “If you leave them up all year round, squirrels chew on them and they get damaged by weather.”

Kids Playing with Matches

The number of blazes — and, tragically, the number of deaths — caused by children playing with fire goes up significantly during the holidays. From January through March, 13% of fire deaths are the result of children playing with fire, the USFA reports; in December, that percentage doubles. So keep matches and lighters out of kids’ reach. “We tend to underestimate the power of these tools,” says Meri-K Appy, president of the nonprofit Home Safety Council. “A match or lighter could be more deadly than a loaded gun in the hands of a small child.”

Fireplaces

Soot can harden on chimney walls as flammable creosote, so before the fireplace season begins, have your chimney inspected to see if it needs cleaning. Screen the fireplace to prevent embers from popping out onto the floor or carpet, and never use flammable liquids to start a fire in the fireplace. Only burn seasoned wood — no wrapping paper.

When cleaning out the fireplace, put embers in a metal container and set them outside to cool for 24 hours before disposal. 

home buyers, Home Owners, Local Real Estate

Home Prices Up 6.34% Across the Country!

Home Prices Up 6.34% 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!