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 Report, home prices will appreciate by 4.8% over the next 12 months.
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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.
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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 greaterthan that of a renter.
There are many who see that statistic and point toward how broad the range of respondents are for the Federal Reservesurvey. 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 Studiesat Harvard Universityfocused on homeowners and renters over the age of 65. Their studyrevealed that the difference in net worth between homeowners and renters at this age group was actually 47.5 times greater!
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Home sales numbers are leveling off, the rate of price appreciation has slowed to more historically normal averages, and inventory is finally increasing. We are headed into a more normal housing market.
However, some are seeing these adjustments as red flags and are suggesting that we are headed back to the same challenges we experienced in 2008. Today, let’s look at one set of statistics that prove the current market is nothing like the one that preceded the housing crash last decade.
The previous bubble was partially caused by unhealthy levels of mortgage debt. New purchasers were putting down the minimum down payment, resulting in them having little if any equity in their homes.
Existing homeowners were using their homes as ATMs by refinancing and swapping their equity for cash. When prices started to fall, many homeowners found themselves in a negative equity situation (where their mortgage was higher than the value of their home) so they walked away which caused prices to fall even further. When this happened, even more homeowners found themselves in negative equity situations which caused them to walk away as well, and so a vicious cycle formed.
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Many homebuyers think that saving for their down payment is enough to buy the house of their dreams in Bulverde|Spring Branch, TX, but what about the closing costs that are required to obtain a mortgage?
By law, a homebuyer will receive a loan estimatefrom their lender 3 days after submitting their loan application and they should receive a closing disclosure3 days before the scheduled closing on their home. The closing disclosure includes final details about the loan and the closing costs.
But what are closing costs anyway?
According to Trulia:
“Closing costs are lender and third-party fees paid at the closing of a real estate transaction, and they can be financed as part of the deal or be paid upfront. They range from 2% to 5% of the purchase price of a home. (For those who buy a $150,000 home, for example, that would amount to between $3,000 and $7,500 in closing fees.)”
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Every year at this time there are many homeowners who decide to wait until after the holidays to list their homes for the first time, while others who already have their homes on the market decide to take them off until after the holidays.
Here are seven great reasons not to wait:
- Relocation buyers are out there. Many companies are still hiring throughout the holidays and need their new employees in their new positions as soon as possible.
- Purchasers who are looking for homes during the holidays are serious buyers and are ready to buy now.
- You can restrict the showings on your home to the times you want it shown. You will remain in control.
- Homes show better when decorated for the holidays.
- There is minimal competition for you as a seller right now. Inventory of homes for sale traditionally slows in the late fall, early winter. Let’s take a look at listing inventory as compared to the same time last year:
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Everyone knows that housing affordability has been negatively impacted by rising prices and increasing mortgage rates, but there is another piece to the affordability equation – wages.
How much a family earns obviously impacts how easy or difficult it is for them to afford to own a home. Because of an improving economy, wages are finally beginning to increase – and that dramatically affects home affordability.
According to the National Association of Realtors’ (NAR) September 2018 Housing Affordability Index,wages have increased in every region of the country:
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Gorgeous home in River Crossing at Spring Branch, TXis located on a cul-de-sac with 180-degree views of the spectacular Texas Hill Country! Step inside to a curved staircase, 20’ ceilings, an open floor plan and sunlit-filled rooms. Freshly painted, new flooring and decorative ceiling treatments enhance the beauty of this custom-built home. Enjoy views of the outdoors from the family room, kitchen, breakfast room and a bonus sunroom with a dual staircase leading to the second floor. The inviting kitchen includes an island, stainless steel appliances, expansive granite counters with a butler’s pantry area and rock arch opening to the sunroom. The private master suite includes a spa-like bath, separate vanities plus a large snail shower with dual shower heads. The suite opens to an oversized master closet with built-ins and access to the handsome study. Upstairs there are two secondary bedrooms with private bathrooms and a game room that includes a wet bar and flex space for a media area or can be closed off for a 4thbedroom. The attached balcony overlooks Twin Sisters with some of the best views in the neighborhood. You will also love the multi-level patio with a Hot Tub, plenty of room for entertaining and overlooking two private acres of beautiful mature oak trees and more views. If you’re ready for this to be your dream home, let’s get together!
58 Auburn Ridge, Spring Branch, TX 78666 – MLS#1349947
Over the past few years, two trends have emerged in the housing market:
- Home renovations have shot up
- Inventory of homes available for sale on the market has dropped
A ‘normal’ housing market is defined by having a 6-month supply of homes for sale. According to the latest Existing Home Sales Reportfrom the National Association of Realtors, we are currently at a 4.4-month supply.
This low inventory environment has many current homeowners worried that they would be unable to find a home to buy if they were to list and sell their current houses, which is causing many homeowners to instead renovate their homes in an attempt to fit their needs.
According to Home Advisor, homeowners spentan average of $6,649 on home improvements over the last 12 months. If that number seems high, it also includes homeowners who recently bought fixer-uppers.
A new studyfrom Zillow asked the question…
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