[caption id="" align="alignnone" width="648"] Best Month To Sell[/caption] According to a newly released study by ATTOM Data Solutions, selling your home in the month of May will net you an average of 5.9% above estimated market value for your home. For the study, ATTOM performed an “analysis of 14.7 million home sales from 2011 to 2017” and found the average seller premium achieved for each month of the year. Below is a breakdown by month: ATTOM even went a step further and broke their results down by day.
Top 5 Days to Sell:
- June 28th – 9.1% above market
- February 15th – 9.0% above market
- May 31st – 8.3% above market
- May 29th – 8.2% above market
- June 21st – 8.1% above market
Bottom LineLet’s get together to discuss the market conditions in our area and get you the most exposure to the buyers who are ready and willing to buy!
[caption id="" align="alignnone" width="648"] Home Appreciation[/caption] Home appreciation has risen dramatically over the last twelve months. In CoreLogic’s most recent Home Price Index Report, they revealed that national home prices have increased by 6.7% year-over-year. CoreLogic broke down home appreciation even further into four price ranges, giving us a more detailed view than if we had simply looked at the year-over-year increases in national median home price. The chart below shows the four price ranges from the report, as well as each one’s year-over-year growth from February 2017 to February 2018 (the latest data available). It is important to pay attention to how prices are changing in your local market. The location of your home is not the only factor that determines how much your home has appreciated over the course of the last year. Lower-priced homes have appreciated at greater rates than homes at the upper ends of the spectrum due to demand from first-time home buyers and baby boomers looking to downsize.
Bottom LineIf you are planning to list your home for sale in today’s market, let’s get together to go over exactly what’s going on in your area and your price range.
- According to the latest Existing Home Sales Report from the National Association of Realtors, sales grew 1.1% in March to an annual pace of 5.60 million.
- This is the strongest pace since November of 2017.
- Inventory levels dropped year-over-year for the 34th consecutive month and are now 7.2% lower than March 2017 levels, representing a 3.6-month supply.
[caption id="" align="alignnone" width="648"] Why you need a Pro[/caption] With home prices on the rise and buyer demand strong, some sellers may be tempted to try and sell their homes on their own (FSBO) without using the services of a real estate professional. Real estate agents are trained and experienced in negotiation and, in most cases, the seller is not. Sellers must realize that their ability to negotiate will determine whether or not they get the best deal for themselves and their families.
Here is a list of some of the people with whom the seller must be prepared to negotiate if they decide to FSBO:
- 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 termite company if there are challenges
- The buyer’s lender if the structure of the mortgage requires the sellers’ participation
- The appraiser if there is a question of value
- The title company if there are challenges with certificates of occupancy (CO) or other permits
- The town or municipality if you need to get the CO permits mentioned above
- The buyer’s buyer in case there are challenges with the house your buyer is selling
- Your bank in the case of a short sale
Bottom LineThe percentage of sellers who have hired real estate agents to sell their homes has increased steadily over the last 20 years. Let’s get together and discuss all we can do to make the process easier for you.
[caption id="" align="alignnone" width="648"] Mortgage Debt[/caption] Some homeowners have recently done a “cash out” refinance and have taken a portion of their increased equity from their house. Others have sold their homes and purchased more expensive homes with larger mortgages. At the same time, first-time buyers have become homeowners and now have mortgage payments for the first time. These developments have caused concern that families might be reaching unsustainable levels of mortgage debt. Some are worried that we may be repeating a behavior that helped precipitate the housing crash ten years ago. Today, we want to assure everyone that this is not the case. Here is a graph created from data released by the Federal Reserve Board which shows the Household Debt Service Ratio for mortgages as a percentage of disposable personal income. The ratio is the total quarterly required mortgage payments divided by total quarterly disposable personal income. In other words, the percentage of spendable income people are using to pay their mortgage. Today’s ratio of 4.44% is nowhere near the ratio of 7.21% during the peak of the housing bubble and is instead at the lowest rate since 1980 (4.38%). Bill McBride of Calculated Risk recently commented on the ratio:
“The Debt Service Ratio for mortgages is near the low for the last 38 years. This ratio increased rapidly during the housing bubble and continued to increase until 2007. With falling interest rates, and less mortgage debt, the mortgage ratio has declined significantly.”
Bottom LineMany families paid a heavy price because of questionable practices that led to last decade’s housing crash. It seems the American people have learned a lesson and are not repeating that same behavior regarding their mortgage debt.
[caption id="" align="alignnone" width="648"] Cost of Living[/caption] It’s no mystery that cost of living varies drastically depending on where you live, so a new study by GOBankingRates set out to find out what minimum salary you would need to make in order to buy a median-priced home in each of the 50 states, and Washington, D.C. States in the Midwest came out on top as most affordable, requiring the smallest salaries in order to buy a median-priced home. States with large metropolitan areas saw a bump in the average salary needed to buy with California, Washington, D.C., and Hawaii edging out all others with the highest salaries required. Below is a map with the full results of the study: GoBankingRates gave this advice to anyone considering a home purchase,
“Before you buy a home, it’s important to find out if you can afford the monthly mortgage payment. To do this, some financial experts recommend your housing costs — primarily your mortgage payments — shouldn’t consume more than 30 percent of your monthly income.”As we recently reported, research from Zillow shows that historically, Americans had spent 21% of their income on owning a median-priced home. The latest data from the fourth quarter of 2017 shows that the percentage of income needed today is only 15.7%!
Bottom LineIf you are considering buying a home, whether it’s your first time or your fifth time, let’s get together to evaluate your ability to do so in today’s market!
[caption id="" align="alignnone" width="648"] Rising Prices[/caption] Over the next five years, home prices are expected to appreciate, on average, by 3.6% per year and to grow by 18.2% cumulatively, according to Pulsenomics’ most recent Home Price Expectation Survey.
So, what does this mean for homeowners and their equity position?As an example, let’s assume a young couple purchased and closed on a $250,000 home this January. If we only look at the projected increase in the price of that home, how much equity will they earn over the next 5 years? [caption id="attachment_37332" align="alignnone" width="650"] Rising Prices[/caption] Since the experts predict that home prices will increase by 5.0% in 2018, the young homeowners will have gained $12,500 in equity in just one year. Over a five-year period, their equity will increase by over $48,000! This figure does not even take into account their monthly principal mortgage payments. In many cases, home equity is one of the largest portions of a family’s overall net worth.
Bottom LineNot only is homeownership something to be proud of, but it also offers you and your family the ability to build equity you can borrow against in the future. If you are ready and willing to buy, find out if you are able to today!
- A trend that has been emerging for some time now is the contrast between inventory & demand in the Premium & Luxury Markets vs. the Starter & Trade-Up Home Markets and what that’s, in turn, doing to prices!
- Inventory continues to rise in the luxury & premium home markets which is causing prices to cool.
- Demand continues to rise with low inventory in the starter & trade-up home markets, causing prices to rise!
Mortgage Interest RatesWhether you are a first-time buyer or a homeowner looking to move up to your next home, you should pay attention to mortgage interest rates. Over the course of 2018, according to Freddie Mac’s Primary Mortgage Market Survey, rates have increased from 3.95% in the first week of January to 4.40% in the first week of April. At first glance, the difference between these numbers in such a short amount of time could be concerning. But if we look at the graph below, we’ll see that rates have already started to level off and return to the mark set in February. [caption id="attachment_37336" align="alignnone" width="650"] Mortgage Interest Rates[/caption] This is great news for anyone looking to buy a home this spring! The spring is always one of the busiest seasons for home buying. And with rates increasing even more, buyers have come off the fence to lock in great rates! This is still great advice as the experts believe that rates will continue to rise throughout the year. Every month, Freddie Mac, Fannie Mae, the Mortgage Bankers Association and the National Association of Realtors release their projections for where they believe mortgage rates will be in the coming months. If we take the average of what each of the four organizations is predicting for the second quarter, rates are expected to rise to about 4.48% by June.
That average climbs to 4.73% by the end of this year.
So, what does this mean?1Waiting until the end of the year to buy, with rates still projected to increase, will end up costing you more money on your monthly mortgage payment. For every $250,000 you need to borrow, you will spend $49.21 more per month, $590.52 per year, and over $17,700 by the end of your 30-year mortgage. And that’s just the impact of your interest rate going up!
Bottom LineIf you are ready and willing to purchase a home, find out if you’re able to. Let’s get together to evaluate your needs and help you with next steps! Feel free to call or text me at 516-429-9399. I'm only too glad to help!
[caption id="" align="alignnone" width="648"] House Prices: Simply a Matter of Supply & Demand[/caption] Why are home prices still rising? It is a simple answer. There are more purchasers in the market right now than there are available homes for them to buy. This is an example of the theory of “supply and demand” which is defined as:
“the amount of a commodity, product, or service available and the desire of buyers for it, considered as factors regulating its price.”When demand exceeds supply, prices go up. This is currently happening in the residential real estate market. Here are the numbers for supply and demand as compared to last year for the last three months (March numbers are not yet available): [caption id="attachment_37309" align="alignnone" width="650"] Simply a Matter of Supply & Demand[/caption] In each of the last three months, demand (buyer traffic) has increased as compared to last year while supply (number of available listings) has decreased. If this situation persists, home values will continue to increase.