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Experts Agree: Home Prices Will Increase

[caption id="" align="alignnone" width="648"]Experts Agree: Home Prices Will Increase | Simplifying The Market Home Prices[/caption] Some believe that the combined effects of the new tax code and rising mortgage rates will have an adverse impact on residential real estate prices in 2018. However, the clear majority of recently surveyed housing experts believe that home prices will continue to rise this year. What is the Home Price Expectation Survey? Each quarter, Pulsenomics surveys a nationwide panel of economists, real estate experts and investment & market strategists. Those surveyed include experts such as:
  • Daniel Bachman, Senior Manager, U.S. Economics at Deloitte Services, LP
  • Kathy Bostjancic, Head of U.S. Macro Investors Service at Oxford Economics
  • David Downs, Real Estate Finance Professor at VCU
  • Edward Pinto, Resident Fellow at American Enterprise Institute
  • Albert Saiz, Director at MIT Center for Real Estate
Where do these experts see home values headed in 2018? Here is a breakdown of where they see home values twelve months from now:
  • 21.6% believe prices will appreciate by 6% or more
  • 71.6% believe prices will appreciate between 3 and 5.99%
  • 5.7% believe prices will appreciate between 0 and 2.99%
  • Only 1.1% believe prices will depreciate

Bottom Line

Almost ninety-nine percent of the top experts studying residential real estate believe that prices will appreciate this year, and over 93% believe home values will appreciate by at least 3%.  It is important to remember that this is a national projection.  Just how home prices will fare in New York State and Nassau and Suffolk counties remain to be seen!

Be Thankful You Don’t Have to Pay Your Parents’ Interest Rate!

Be Thankful You Don’t Have to Pay Your Parents’ Interest Rate! | Simplifying The Market Interest rates hovered around 4% for the majority of 2017, which gave many buyers relief from rising home prices and helped with affordability. In the first quarter of 2018, rates have increased from 3.95% up to 4.45% and experts predict that rates will increase even more by the end of the year. The rate you secure greatly impacts your monthly mortgage payment and the amount you will ultimately pay for your home. 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. [caption id="attachment_37266" align="alignnone" width="650"]Be Thankful You Don’t Have to Pay Your Parents’ Interest Rate! | Simplifying The Market Interest Rates[/caption]

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. If you are thinking about purchasing a home, stop thinking and start acting! Remember, your buying power decreases 10% for every 1% rise in interest rate.

Buyer Demand Still Outpacing Home Supply

[caption id="" align="alignnone" width="648"]Buyer Demand Still Outpacing the Supply of Homes for Sale | Simplifying The Market Buyer Demand[/caption] The price of any item is determined by the supply of that item, as well as market demand. The National Association of REALTORS (NAR) surveys “over 50,000 real estate practitioners about their expectations for home sales, prices and market conditions” for their monthly REALTORS Confidence Index. Their latest edition sheds some light on the relationship between Seller Traffic (supply) and Buyer Traffic (demand).

Buyer Demand

The map below was created after asking the question: “How would you rate buyer traffic in your area?” [caption id="attachment_37261" align="alignnone" width="650"]Buyer Demand Still Outpacing the Supply of Homes for Sale | Simplifying The Market Buyer Demand[/caption] The darker the blue, the stronger the demand for homes in that area. Only four states had a ‘stable’ demand level.

Seller Supply

The index also asked: “How would you rate seller traffic in your area?” As you can see from the map below, 25 states reported ‘weak’ seller traffic, 21 states reported ‘stable’ seller traffic, 3 states and Washington D.C. reported ‘strong’ seller traffic, and only 1 state reported ‘very strong’ seller traffic. This means there are far fewer homes on the market than what is needed to satisfy the buyer demand, those who are out looking for their dream homes. Buyer Demand Still Outpacing the Supply of Homes for Sale | Simplifying The Market

Bottom Line

Looking at the maps above, it is not hard to see why prices are appreciating in many areas of the country. Until the supply of homes for sale starts to meet buyer demand, prices will continue to increase. If you are debating listing your home for sale, let’s get together to help you capitalize on the demand in the market now!

5 Reasons to Sell This Spring!

[caption id="" align="alignnone" width="648"]5 Reasons Why to Sell This Spring! | Simplifying The Market Reasons to sell this spring[/caption]

Here are five reasons to sell this spring.

1. Demand Is Strong

The latest Buyer Traffic Report from the National Association of Realtors (NAR) shows that buyer demand remains very strong throughout the vast majority of the country. These buyers are ready, willing and able to purchase…and are in the market right now! More often than not, multiple buyers are competing with each other to buy a home. Take advantage of the buyer activity currently in the market.

2. There Is Less Competition Now

Housing inventory has declined year over year for the last 32 months and is still under the 6-month supply needed for a normal housing market. This means that, in the majority of the country, there are not enough homes for sale to satisfy the number of buyers in the market. This is good news for homeowners who have gained equity as their home values have increased. However, additional inventory could be coming to the market soon. Historically, the average number of years a homeowner stayed in their home was six but has hovered between nine and ten years since 2011. 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. As home values continue to appreciate, more and more homeowners will be given the freedom to move. The choices buyers have will continue to increase. Don’t wait until this other inventory comes to market before you decide to sell.

3. The Process Will Be Quicker

Today’s competitive environment has forced buyers to do all they can to stand out from the crowd, including getting pre-approved for their mortgage financing. This makes the entire selling process much faster and much simpler as buyers know exactly what they can afford before home shopping. According to Ellie Mae’s latest Origination Insights Report, the average time it took to close a loan was 45 days.

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

If your next move will be into a premium or luxury home, now is the time to move up! The inventory of homes for sale at these higher price ranges has forced these markets into a buyer’s market. This means that if you are planning on selling a starter or trade-up home, your home will sell quickly, AND you’ll be able to find a premium home to call your own! Prices are projected to appreciate by 4.8% over the next year according to CoreLogic. 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.

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 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.

Freddie Mac: Rising Mortgage Rates DO NOT Lead to Falling Home Prices

Freddie Mac: Rising Mortgage Rates DO NOT Lead to Falling Home Prices | Simplifying The Market Recently, Freddie Mac published an Insight Report titled Nowhere to go but up? How increasing mortgage rates could affect housing. The report focused on the impact the projected rise in mortgage rates might have on the housing market this year. Many believe that an increase in mortgage rates will cause a slowdown in purchases which would, in turn, lead to a fall in house values. Ultimately, however, prices are determined by supply and demand and while rising mortgage rates may slow demand, they also affect supply. From the report:
 “For current homeowners, the decision to buy a new home is typically linked to their decision to sell their current home… Because of this link, the financing costs of the existing mortgage are part of the homeowner’s decision of whether and when to move. Once financing costs for a new mortgage rise above the rate borrowers are paying for their current mortgage, borrowers would have to give up below-market financing to sell their home. Instead, they may choose to delay both the sale of their existing home and the purchase of a new home to maintain the advantageous financing.”
The Freddie Mac report, in acknowledging this situation, concluded that prices are not adversely impacted by higher mortgage rates. They explained:
“While there is a drop in the demand for homes, there is an associated drop in the supply of homes from the link between the selling and buying decisions. As both supply and demand move together in this way they have offsetting effects on price—lower demand decreases price and lower supply increases price.
They went on to reveal that the Freddie Mac National House Price Index is…
“…unresponsive to movements in interest rates. In the current housing market, the driving force behind the increase in prices is a low supply of both new and existing homes combined with historically low rates. As mortgage rates increase, the demand for home purchases will likely remain strong relative to the constrained supply and continue to put upward pressure on home prices.”
The following graph, based on data from the report, reveals what happened to home prices the last six times mortgage rates rose by at least 1%. [caption id="attachment_37220" align="alignnone" width="650"]Freddie Mac: Rising Mortgage Rates DO NOT Lead to Falling Home Prices | Simplifying The Market Home Prices[/caption]

Bottom Line

Whether you are a move-up buyer or first-time buyer, waiting to purchase your next home based on the belief that prices will fall because of rising mortgage rates makes no sense.

Is a Major Home Renovation Worth It in the Long Run?

[caption id="" align="alignnone" width="648"]Is a Major Home Renovation Worth It in the Long Run? | Simplifying The Market Home Renovation[/caption] Last week, we shared 7 Factors To Consider When Choosing A Home To Retire In.For some homeowners, these seven factors can be taken into account with a home renovation, but is it worth it to remodel or change floor plans?

Let’s look at this example.

Let’s say you have a 4-bedroom colonial style home in a great school district. The neighborhood is amazing, and you are very comfortable there, but your kids are all grown up and the original benefits of the home no longer apply. You’ve always wanted a huge master suite and are considering merging 3 of the smaller bedrooms on the second floor to achieve this dream. In the short term, you are over the moon excited about your newly renovated oasis. In the long term, when you go to sell your home down the road, you’ve now taken a 4-bedroom home in a great school district and turned it into a 2-bedroom home. Your pool of potential buyers has shrunk significantly and so has the value of your home (unless you are able to find someone who has the exact needs you have today!). Why not consider listing your 4-bedroom home now and moving into a gorgeous 2-bedroom with a master suite? Your house can become a home for the next family looking for that perfect neighborhood with a great school district to raise their kids in! You may even be able to achieve your dream in the same area you love, without having to give up your favorite restaurants and grocery stores.

Bottom Line

If you are debating a major renovation that would change the layout of your home, before you pick up that sledgehammer, let’s get together and discuss the available listings in our area that might meet your needs today!

Is a Major Home Renovation Worth It in the Long Run?

[caption id="" align="alignnone" width="648"]Is a Major Home Renovation Worth It in the Long Run? | Simplifying The Market Home Renovation[/caption] Last week, I shared 7 Factors To Consider When Choosing A Home To Retire In.For some homeowners, these seven factors can be taken into account with a home renovation, but is it worth it to remodel or change floor plans?

Let’s look at this example.

Let’s say you have a 4-bedroom colonial style home in a great school district. The neighborhood is amazing, and you are very comfortable there, but your kids are all grown up and the original benefits of the home no longer apply. You’ve always wanted a huge master suite and are considering merging 3 of the smaller bedrooms on the second floor to achieve this dream. In the short term, you are over the moon excited about your newly renovated oasis. In the long term, when you go to sell your home down the road, you’ve now taken a 4-bedroom home in a great school district and turned it into a 2-bedroom home. Your pool of potential buyers has shrunk significantly and so has the value of your home (unless you are able to find someone who has the exact needs you have today!). Why not consider listing your 4-bedroom home now and moving into a gorgeous 2-bedroom with a master suite? Your house can become a home for the next family looking for that perfect neighborhood with a great school district to raise their kids in! You may even be able to achieve your dream in the same area you love, without having to give up your favorite restaurants and grocery stores.

Bottom Line

If you are debating a major home renovation that would change the layout of your home, before you pick up that sledgehammer, let’s get together and discuss the available listings in our area that might meet your needs today!

The Cost of Waiting: Interest Rates Edition [INFOGRAPHIC]

[caption id="" align="alignnone" width="648"]The Cost of Waiting: Interest Rates Edition [INFOGRAPHIC] | Simplifying The Market Cost of Waiting[/caption][caption id="attachment_37182" align="alignnone" width="650"]The Cost of Waiting: Interest Rates Edition [INFOGRAPHIC] | Simplifying The Market Cost of Waiting[/caption]

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 rates hit 5% to start searching for your dream home!

Bottom Line:

Don't allow the cost of waiting to keep you from buying the home you've always dreamed about!  Call me today.

Moving up Is MORE Affordable Now

[caption id="" align="alignnone" width="648"]Moving up Is MORE Affordable Now Than Almost Any Other Time in 40 Years | Simplifying The Market Moving Up[/caption] If you are considering selling your current home, to either moving up to a larger home or into a home in an area that better suits your current family needs, great news was just revealed. Last week, Trulia posted a blog, Not Your Father’s Housing Market, which examined home affordability over the last 40+ years (1975-2016). Their research revealed that:
“Nationally, homes are just about the most affordable they’ve been in the last 40 years… the median household could afford a home 1.5 times more expensive than the median home price. In 1980, the median household could only afford about 3/4 of the median home price. Despite relatively stagnant incomes, affordability has grown due to the sharp drop in mortgage rates over the last 30 years – from a high of over 16% in the 1980s to under 4% by 2016. Of the nation’s 100 largest metros, only Miami became unaffordable between 1990 and 2016. Meanwhile, 22 metros have flipped from being unaffordable to becoming affordable in that same time frame.”
Here is a graph showing the Affordability Index compared to the 40-year average: [caption id="attachment_37198" align="alignnone" width="650"]Moving up Is MORE Affordable Now Than Almost Any Other Time in 40 Years | Simplifying The Market Affordability Index[/caption]

The graph shows that housing affordability is better now than at any other time in the last forty years, except during the housing crash last decade.

(Remember that during the crash you could purchase distressed properties – foreclosures and short sales – at 20-50% discounts.) There is no doubt that with home prices and mortgage rates on the rise, the affordability index will continue to fall. That is why if you are thinking of moving up, you probably shouldn’t wait.

Bottom Line

If you have held off on moving up to your family’s dream home because you were hoping to time the market, that time has come.

You Can Save for a Down Payment Faster Than You Think!

[caption id="" align="alignnone" width="648"]Save for a Down Payment Faster Than You Think! Save for a down payment[/caption] Saving for a down payment is often the biggest hurdle for a first-time homebuyer. Depending on where you live, median income, median rents, and home prices all vary. So, we set out to find out how long it would take to save for a down payment in each state. Using data from the United States Census Bureau and Zillow, we determined how long it would take, nationwide, for a first-time buyer to save enough money for a down payment on their dream home. There is a long-standing ‘rule’ that a household should not pay more than 28% of their income on their monthly housing expense. By determining the percentage of income spent renting in each state, and the amount needed for a 10% down payment, we were able to establish how long (in years) it would take for an average resident to save enough money to buy a home of their own. According to the data, residents in Ohio can save for a down payment the quickest in just under 3 years (2.44). Below is a map that was created using the data for each state: You Can Save for a Down Payment Faster Than You Think! | Simplifying The Market

What if you only needed to save 3%?

What if you were able to take advantage of one of Freddie Mac’s or Fannie Mae’s 3%-down programs? Suddenly, saving for a down payment no longer takes 5 or 10 years, but becomes possible in a year or two in many states as shown on the map below. [caption id="attachment_37177" align="alignnone" width="650"]You Can Save for a Down Payment Faster Than You Think! | Simplifying The Market Save for a down payment[/caption]

Bottom Line

Whether you have just started to save for a down payment, or have been saving for years, you may be closer to your dream home than you think! Let’s meet up so I can help you evaluate your ability to buy today.