NAR Reports Reveal Two Reasons to Sell This Winter

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.

Let’s look at the data covered by 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 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.

Bottom Line

If you are going to sell, now may be the time.

Prices & Mortgage Rates Going Up in 2016

The monthly mortgage payment on a home is determined by two elements: the price of the house and the interest rate you pay on your mortgage. Recently released reports are revealing that the experts expect both elements to increase in 2016.

HOME PRICES

CoreLogic has projected a nationwide 5.2% home value appreciation for the next twelve months. Here is their breakdown by state:

MORTGAGE INTEREST RATES

All four of the entities that provide projections on mortgage interest rates agree: they’re going up in 2016. Here are the predictions over the next four quarters:

Bottom Line

With both home values and interest rates projected to increase over the next twelve months, buying (or moving-up), sooner rather than later, makes sense.

What Are the Benefits of Selling During the Holidays in Southeast Michigan

Selling your Southeast Michigan home? Get a home value report.

Buying a Southeast Michigan home? Get full MLS access. 

Many sellers are unaware that the holiday season is one of the best times of year to sell a home. Today we’re going to prove it by giving you the top 9 reasons to list your home during the holidays. They are:

1. The buyers out there are more serious than your typical looky-loo.
2. These serious buyers have fewer options, meaning less competition for your home.
3. The supply of listings will dramatically increase in January, and demand will go down.
4. Homes show better when decorated for the holidays.
5. Buyers are more emotional during the holidays and more likely to pay your price.
6. Buyers have more time during the holidays to look for homes.
7. Some people need to buy before January 1 for tax reasons.
8. January is when most employee transfers happen. Those looking for homes can’t wait until spring to buy, so if your home is on the market now you can capture those buyers.
9. You can still be on the market during the holidays while restricting showings during family events.

There you have it, nine great reasons to sell this holiday season. If you’re interested in putting your home on the market, or if you have any other questions, give us a call or send us an email. We look forward to hearing from you!

How we made the moving process easy for Paul

"I thought it was an excellent experience. I got everything I was asking for and he gave me a lot of information that I wasn't aware of. He was able to arrange getting everything moved from my old home to my new home and he made the transition very easy for me." 

Where Are Mortgage Rates Headed? This Winter? Next Year?

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.

Bottom Line

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.

Slaying Myths About Buying A Home [INFOGRAPHIC]

Some Highlights:

• Interest Rates are still below historic numbers.
• 88% of property managers raised their rent in the last 12 months!
• Credit score requirements to be approved for a mortgage continue to fall. The 723 average score is the lowest since Ellie Mae began reporting on scores in August 2011.
• The average first-time home buyer down payment was 6% in 2015 according to NAR.

Why You Should Sell Now… Before Winter Hits

People across the country are beginning to think about what their life will look like next year. It happens every Fall. We ponder whether we should relocate to a different part of the country to find better year-round weather or perhaps move across the state for better job opportunities.

Homeowners in this situation must consider whether they should sell their house now or wait. If you are one of these potential sellers, here are five important reasons to do it now versus the dead of winter.

1. Demand is Strong

Foot traffic refers to the number of people out actually physically looking at home right now. The latest foot traffic numbers show that buyers are still out in force looking for their dream home. These buyers are ready, willing and able to buy…and are in the market right now!

As we get later into the year, many people have other things (weather, holidays, etc.) that distract them from searching for a home. Take advantage of the buyer activity currently in the market.

2. There Is Less Competition Now

Housing supply is still well under the 6 months’ supply necessary for a normal market. This means that, in many markets, there are not enough homes for sale to satisfy the number of buyers in that market. This is good news for home prices. However, additional inventory is about to come to market.

There is a pent-up desire for many homeowners to move as they were unable to sell over the last few years because of a negative equity situation. Homeowners are now seeing a return to positive equity as real estate values have increased over the last two years. Many of these homes will be coming to the market in the near future.

Also, new construction of single-family homes is again beginning to increase. A study by Harris Poll revealed that 41% of buyers would prefer to buy a new home while only 21% prefer an existing home (38% had no preference).

The choices buyers have will continue to increase over the next few months. Don’t wait until all this other inventory of homes comes to market before you sell.

3. The Process Will Be Quicker

One of the biggest challenges of the housing market in recent times has been the length of time it takes from contract to closing. Banks are requiring more and more paperwork before approving a mortgage. Any delay in the process is always prolonged during the winter holiday season. Getting your house sold and closed before those delays begin will lend itself to a smoother transaction.

4. There Will Never Be a Better Time to Move-Up

If you are moving up to a larger, more expensive home, consider doing it now. Prices are projected to appreciate by over 18.1% from now to 2019. If you are moving to a higher priced home, it will wind-up costing you more in raw dollars (both in down payment and mortgage payment) if you wait. You can also lock-in your 30-year housing expense with an interest rate below 4% right now. Rates are projected to rise by this time next year.

5. It’s Time to Move On with Your Life

Look at the reason you decided to sell in the first place and determine whether it is worth waiting. Is money more important than being with family? Is money more important than your health? Is money more important than having the freedom to go on with your life the way you think you should?

Only you know the answers to the questions above. You have the power to take back control of the situation by putting your home on the market. Perhaps, the time has come for you and your family to move on and start living the life you desire.

That is what is truly important.

Where Are Mortgage Rates Headed? This Winter? Next Year?

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.

Bottom Line

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.

Picking a Real Estate Agent through Facebook

According to a joint study released by Google and the National Association of Realtors, 2 of 3 people searching for a prospective real estate professional research them “extensively online prior to working with them". And, that number is probably increasing every day.

Are social media channels such as Facebook really a good place to gather information about an agent before using them? If so, what should you look for?

There is a plethora of information on any subject available on social media sites such as Facebook. A recent study by the Pew Research Center revealed that 63% of Americans now even get their news from Facebook (up from 47% in 2013).

It is no different for both buyers and sellers of real estate. Yes, Facebook is a good place to gather information about the housing market and “checkout” an agent you are considering hiring to help buy or sell a home.

What should you be looking for in an agent’s Facebook presence?

You want an agent that cares more about you and your family than they care about bragging about themselves. One way to determine this is to look at what they post on their Facebook page. Are they more interested in ‘hawking’ a listing or bragging about their accomplishments or are they trying to post insightful information that will help you make the best decision for you and your family?

At a recent real estate conference, Guy Kawasaki, an executive fellow at the Haas School of Business at U.C. Berkeley, gave the following advice to the Realtors in attendance:

“Value comes in the form of information and assistance. You want to establish a position where people see - through your social media efforts - that you know what you’re doing and are helpful…The point is to make yourself useful and valuable. To build credibility; to build trust…”

You should look for an agent that follows that advice!

Homeownership is Still a Huge Part of the “American Dream”

There have been some who have voiced doubt as to whether or not the younger generations still consider buying a home as being part of the “American Dream”. A study by Merrill Lynch puts that doubt to rest.

According to their research, every living generation still maintains that owning a home is in fact important. Here are the numbers:

This should not surprise us as many studies have revealed the benefits enjoyed by the families who own their own home. One such study was done by the Joint Center of Housing Studies at Harvard University that addressed a major financial benefit to owning your own home: forced savings. The report explains:

“Since many people have trouble saving and have to make a housing payment one way or the other, owning a home can overcome people’s tendency to defer savings to another day.”

The Merrill Lynch study proves this point with the following data on home equity (a form of savings):

Bottom Line

There are many reasons that owning a home makes sense. The financial reasons are powerful. As one participant in the Merrill Lynch study put it:

“When I was younger, I always worried about that monthly mortgage payment. Now that I am retired, I have the peace of mind of knowing I own my home free and clear.”

Nine Reasons Why Your Southeast Michigan Home Hasn't Sold

Selling your Southeast Michigan home? Get a home value report.

Buying a Southeast Michigan home? Get full MLS access. 

If your home isn't getting enough attention from buyers, there could be multiple reasons why it's not selling. Today I'll be speaking about nine different reasons why this might be happening to you.

1. Your photos are terrible. Buyers go online to look at homes these days, and if your pictures aren't high quality, they're not going to stand out and your home will be lost in a sea of listings. Your first showing is now on the Internet.

2. It's overpriced. Buyers are aware of when they're getting a good deal or not. Don't test the market.

3. It doesn't show well. Buyers want turn-key homes that are ready to move into.

4. It's invisible online. Your home needs to be featured on Trulia, Realtor.com, Zillow, and we even put your property on Craigslist. We even market your home on international websites!

5. Your listing is stale. If you've had your home on the market for longer than a few months, people may think that something is wrong with it. This will cause your home to sit without offers, and you will net less money than if you had sold quickly.

6. Your house won't appraise. This comes back to pricing your home correctly so that it sells for top dollar.

7. Your property is unavailable to show. You need to be flexible as a seller if you want your home to sell quickly. Buyers need to come look at it, and you have to allow them that privilege.

8. You have the heat and power turned off. You need buyers to feel comfortable in your home and you need the lights turned on so that they can actually see the property.

9. The Flintstones live next door to you, and their property is degrading yours. Everyone has this problem, but you can offer to mow their lawn or perhaps bribe them with some food and drinks. At the very worst you can just construct a fence to obscure the view of their home.

Hopefully these nine issues have brought clarity to you as to why your home isn't selling. If you have any further questions, please don't hesitate to contact me!

Why Aren’t Millennials Buying Homes More Frequently?

Selling your Southeast Michigan home? Get a home value report.

Buying a Southeast Michigan home? Get full MLS access. 

One thing we know for certain about the real estate market is that it is never going to stay the same for long. Today we want to talk about an interesting trend we’ve noticed in real estate: millennials are waiting longer to purchase their first homes than their parents did.

The typical first-time buyer now rents for an average of 6 years before buying a home, which is up from 2.6 years in the early 1970’s, according to Zillow.

We came across this great video from CNBC. I will give you my three biggest takeaways from the article.

1. Down payments are a huge factor

Renters in today’s market are struggling to save for down payments and qualify for mortgages. Most first-time buyers still depend on personal savings for at least some of their down payments, but rising rental prices have complicated the task of socking away money for a down payment.

2. Rising rental rates are complicating things as well

Rental rates are causing 46% of renters aged 25-34, to spend more than 40% of their incomes on rent, up from 30% a decade earlier.

3. Job security is important to millennial buyers

The Money Source, a mortgage lender, examined applications from 5,404 millennial buyers and found that these buyers averaged nearly 4.5 years in their field of work and had held their current job for slightly more than three years. Those figures point to how critical career stability is to a younger generation.

Is it Time to Downsize your Home?

A recent study by Edelman Berland revealed that of homeowners who are contemplating selling their house in the near future 33% plan to scale down. Let’s look at a few reasons why that would make sense to many Americans.

In a recent blog post, Dave Ramsey, the financial guru, discussed the advantages of selling your current house and downsizing into a smaller home that better serves your current needs. Ramsey explains three potential financial advantages to downsizing:

1. A smaller home means less space, but it also means less time, stress and money spent on upkeep
2. Let’s assume you save $500 a month on your mortgage payment. In 30 years, you could have an additional $1–1.6 million in the bank to get you through your golden years.
3. Use the proceeds from selling your current home to pay cash for a smaller one. Just imagine what you could do with no mortgage holding you down! If you can’t pay cash, aim for a 15-year fixed rate mortgage and put at least 10–20% down on your new home. Apply the $500 you saved from downsizing to your new monthly payment. At 3% interest, you could pay off a $200,000 mortgage in less than 10.5 years, saving almost $16,000 in the process.

Realtor.com also addressed downsizing in a recent article. They suggest you ask yourself some questions before deciding if downsizing is right for you and your family. Here are two of their questions followed by their answers (in italics) and some additional information that could help.

Q: What kind of lifestyle do I want after I downsize?

A: “For some folks, it’s a matter of living a simpler life focused on family. Some might want to cross off travel destinations on their bucket lists. Some might want a low-maintenance community with high-end upgrades and social events. Decide what you want to achieve from your move first, and you’ll be able to better narrow down your housing options.”

Comments: Many homeowners are taking the profit from the sale of their current home and splitting it to put down payments on a smaller home in their current location and a vacation/retirement home where they plan to live when they retire.

This allows them to lock in the home price and mortgage interest rate at today’s values. This makes sense financially as both home prices and interest rates are projected to rise.

Q: Have I built up enough equity in my current home to make a profit?

A: “For most homeowners, the answer is yes. This is if they’ve held on to their properties long enough to have positive equity that will be sizable enough to put a large down payment on their next home.”

Comments: A recent study by Fannie Mae revealed that only 37% of Americans believe they have significant equity (> 20%) in their current home. In actually, 69% have greater than 20% equity. That equity could enable you to build a life you have always dreamt about.

Bottom Line

If you are debating downsizing your home and want to evaluate the options you currently have, let's get together to talk about the process.

#1 Reason to List Your House Today

If you are debating listing your house for sale this year or even early next year, here is the #1 reason not to wait!

Buyer Demand Continues to Outpace the Supply of Homes For Sale

According to the National Association of REALTORS’ (NAR) Foot Traffic report, there are more buyers out in the market right now than at any other time in the past three years.

The graph below shows the significant increase in foot traffic experienced this year compared to 2014.

The latest Existing Home Sales report shows that there is currently a 5.2-month supply of homes for sale. This remains lower than the 6-month supply necessary for a normal market and well below August 2014 numbers.

The chart below details the year-over-year inventory shortages experienced so far in 2015:

Bottom Line

Let's get together to discuss the inventory levels in your neighborhood and discuss a plan to help you gain access to the buyers who are ready, willing and able to buy today!

How Much Must You Trust Your Listing Agent?

You and your family have decided to sell your house. It is now time to choose a real estate professional to help with the process. One of the major attributes this agent must possess is trustworthiness. To what degree do you need to trust them?

You must have enough trust in them that you feel comfortable they will accomplish all four things below:

1. Sell possibly the largest asset your family owns

In many cases, a home is the largest asset a family has. Studies have shown that the equity many families have in their home is the largest percentage of that family’s overall wealth.

2. Set the correct market value on that asset

Pricing is crucial even in the best of markets. You want to get the best price for your home without putting your house at a value that buyers will have little interest.

3. Set the time schedule for the liquidation of that asset

Your family probably has a certain timetable for the sale of your house and the move into your next home. Coordinating the home selling process to meet certain schedules can be tricky.

4. Set a fair fee for the services required to liquidate that asset

You will need to pay a commission to an agent for selling the home and coordinating all elements of the selling transaction including possible future negotiations (ex. with a home inspector or appraiser).

That’s a lot of trust. Make sure you pick a true professional to help with the sale of your home.

Thinking of Selling? 5 Reasons You Shouldn’t For Sale By Owner

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

Here are five reasons:

1. 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

 2. Exposure to Prospective Purchasers

Recent studies have shown that 88% of buyers search online for a home. That is in comparison to only 21% looking at print newspaper ads. Most real estate agents have an internet strategy to promote the sale of your home. Do you?

3. Results Come from the Internet

Where do buyers find the home they actually purchased?

• 43% on the internet
• 9% from a yard sign
• 1% from newspaper

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.

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 9% over the last 20+ years.

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.

Studies have shown that the typical house sold by the homeowner sells for $208,000 while the typical house sold by an agent sells for $235,000. This doesn’t mean that an agent can get $27,000 more for your home as studies have shown that people are more likely to FSBO in markets with lower price points. However, it does show that selling on your own might not make sense.

Bottom Line

Before you decide to take on the challenges of selling your house on your own, let's get together and discuss your options.

Credit Score Requirements LOWER As Interest Rates CREEP UP!

Some Highlights:

• The average 30-year rate for all loans closed in August eclipsed 4.3% for the first time since October 2014.
• The average FICO score for all closed loans in August reached a new yearly low at 724 (the lowest since February 2014!)
• The average down payment of FHA loans closed was just 4%!

3 Graphs That Scream List Your House Today!

In school we all learned the Theory of Supply and Demand. When the demand for an item is greater than the supply of that item, the price will surely rise.

SUPPLY

The National Association of Realtors (NAR) recently reported that the inventory of homes for sale stands at a 4.8-month supply. This is significantly lower than the 6 months inventory necessary for a normal market.

DEMAND

Every month NAR reports on the amount of buyers that are actually out in the market looking for homes, or foot traffic. As seen in the graph below, buyer demand this year has significantly surpassed the levels reached in 2014.

Many buyers are being confronted with a very competitive market in which they must compete with other buyers for their dream home (if they even are able to find a home they wish to purchase).

Listing your house for sale now will allow you to capitalize on the shortage of homes for sale in the market, which will translate into a better pricing situation.

HOME EQUITY

Many homeowners underestimate the amount of equity they currently have in their home. According to a recent Fannie Mae study, 37% of homeowners believe that they have more than 20% equity in their home. In reality 69% of homeowners actually do!

Many homeowners who are undervaluing their home equity may feel trapped in their current home, which may be contributing to the lack of inventory in the market.

Bottom Line

If you are debating selling your home this year, let's get together to evaluate the equity you have in your home and the opportunities available in our market.