Alton Clark Realty

The most recent Pending Homes Sales Index from the National Association of Realtors revealed a slight bump in contracts with an increase of 1.6% in December. This news comes as existing home sales are also forecasted to be on pace for 5.54 million in 2017, a 1.7% increase over 2016, which was the best year for sales in a decade.

The Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed.

According to NAR’s Chief Economist, Lawrence Yun,

“Pending sales bounded last month as enough buyers fended off rising mortgage rates and alarmingly low inventory levels to sign a contract.”

So, what’s the problem?

Buyers are searching for existing homes, but supply is not keeping up with their demand!

Yun went on to explain,

“The main storyline in the early months of 2017 will be if supply can meaningfully increase to keep price growth at a moderate enough level for households to absorb higher borrowing cost. Sales will struggle to build on last year’s strong pace if inventory conditions don’t improve.” (emphasis added)

Bottom Line

Buyers are out in force right now! If you are considering selling your home this year, the early months of 2017 will be your best option. Let’s get together to discuss how you can capitalize on current market conditions.

Source: KCM

The most recent Housing Pulse Survey released by the National Association of Realtors revealed that the two major reasons Americans prefer owning their own home instead of renting are:

1. They want the opportunity to build equity.
2. They want a stable and safe environment.

Building Equity

In a recent article by The Mortgage Reports, they report that “buying and owning a home is the essence of ‘The American Dream.’ Each month, your housing payments go toward owning your home instead of renting it; building your personal wealth and assets instead of someone else’s.

History has shown that homeownership is a clear path to wealth-building, with homeowners boasting a net worth [that is] multiples higher than the net worth of renters.”  

Family Stability 

Does owning your home really create a more stable environment for your family?

A survey of property managers conducted by rent.com disclosed two reasons tenants should feel less stable with their housing situation:

• 68% of property managers predict that rental rates will continue to rise in the next year by an average of 8%.
• 53% of property managers said that they were more likely to bring in a new tenant at a higher rate than to negotiate and renew a lease with a current tenant they already know.

We can see from these survey results that renting will provide anything but a stable environment in the near future.

Bottom Line

Homeowners enjoy a more stable environment, and at the same time are given the opportunity to build their family’s net worth.

Source: KCM

The housing crisis is finally in the rear-view mirror as the real estate market moves down the road to a complete recovery. Home values are up. Home sales are up. Distressed sales (foreclosures and short sales) have fallen dramatically. It seems that 2017 will be the year that the housing market races forward again.

However, there is one thing that may cause the industry to tap the brakes: a lack of housing inventory. While buyer demand looks like it will remain strong throughout the winter, supply is not keeping up.

Here are the thoughts of a few industry experts on the subject:

National Association of Realtors

“Total housing inventory at the end of December dropped 10.8%…which is the lowest level since NAR began tracking the supply of all housing types in 1999. Inventory has fallen year-over-year for 19 straight months and is at a 3.6-month supply at the current sales pace.”

Jonathan Smoke, Chief Economist for Realtor.com

“More than two-thirds of the markets are seeing less inventory now compared to a year ago.”

Lawrence Yun, Chief Economist at NAR:

“The dismal number of listings in the affordable price range is squeezing prospective first-time buyers the most. As a result, young households are missing out on the wealth gains most homeowners have accrued from the 41% cumulative rise in existing home prices since 2011.”

Sam Khater, Deputy Chief Economist at CoreLogic

“The lack of affordable supply is really driving up home prices.”

Peter Muoio, Chief Economist at Auction.com

“Tight housing inventory remains a constraining factor limiting stronger sales growth…

We expect further price growth to entice more homeowners to list their homes, particularly as existing homeowners have greater equity.”

Bottom Line 

If you are thinking of selling, now may be the time. Demand for your house will be strong at a time when there is very little competition. That could lead to a quick sale for a really good price.

Source: KCM

In this day and age of being able to shop for anything anywhere, it is really important to know what you’re looking for when you start your home search.

If you’ve been thinking about buying a home of your own for some time now, you’ve probably come up with a list of things that you’d LOVE to have in your new home. Many new homebuyers fantasize about the amenities that they see on television or Pinterest, and start looking at the countless homes listed for sale through rose-colored glasses.

Do you really need that farmhouse sink in the kitchen in order to be happy with your home choice? Would a two-car garage be a convenience or a necessity? Could the ‘man cave’ of your dreams be a future renovation project instead of a make-or-break right now?

The first step in your home buying process should be to get pre-approved for your mortgage. This allows you to know your budget before you fall in love with a home that is way outside of it.

The next step is to list all the features of a home that you would like, and to qualify them as follows:

• ‘Must Haves’ – if this property does not have these items, then it shouldn’t even be considered. (ex: distance from work or family, number of bedrooms/bathrooms)
• ‘Should Haves’ – if the property hits all of the ‘must haves’ and some of the ‘should haves,’ it stays in contention but does not need to have all of these features.
• ‘Absolute Wish List’ – if we find a property in our budget that has all of the ‘must haves,’ most of the ‘should haves,’ and ANY of these, it’s the winner!

Bottom Line

Having this list flushed out before starting your search will save you time and frustration, while also letting your agent know what features are most important to you before starting to show you houses in your desired area.

Source: KCM

Highlights:

• Watching the Big Game at home with your friends & family offers many advantages.
• There’s more room to entertain a large crowd, and you don’t have to worry about complaints to your landlord if you cheer too loudly!
• The kitchen is big enough to make as many appetizers as you want, and if some of your guests are only there to watch the commercials, they can do so on a different TV in another room!

Source: KCM

Is spring closer than we think? Depending on which groundhog you listen to today, you may have less time than you think to get your home on the market before the busy spring season.

Many sellers feel that the spring is the best time to place their homes on the market as buyer demand traditionally increases at that time of year. However, the next six weeks before spring hits also have their own advantages.

Here are five reasons to sell now.

1. Demand is Strong 

Foot traffic refers to the number of people who are out, physically looking at homes right now. The latest foot traffic numbers from the National Association of Realtors (NAR) show that the number of buyers out looking for their dream homes in December reached the highest mark since February 2016.

These buyers are ready, willing and able to buy…and are in the market right now! Take advantage of the strong buyer activity currently in the market.

2. There Is Less Competition Now 

Housing inventory just dropped to a 3.6-month supply, which is well under the 6-month supply needed for a normal housing market. This means, in many areas, 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 four years. Many of these homes will be coming to market soon.

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 increase in the spring. Don’t wait for this other inventory to come to market before you sell.

3. The Process Will Be Quicker

One of the biggest challenges of the housing market has been the length of time it takes from contract to closing. Banks are requiring more and more paperwork before approving a mortgage. There is less overall business done in the winter. Therefore, the process will be less onerous than it will be in the spring. Getting your house sold and closed before the spring delays begin will lend 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 4.7% over the next 12 months 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. You can also lock-in your 30-year housing expense with an interest rate around 4% right now. Rates are projected to rise by half a percentage point by the end of 2017.

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.

Source: KCM

The price of any item is determined by the supply of that item, as well as the 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?”

The darker the blue, the stronger the demand for homes in that area. Only six states had a weak 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, the majority of the country has weak Seller Traffic, meaning there are far fewer homes on the market than what is needed to satisfy the buyers who are out looking for their dream homes.

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 the 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!

Source: KCM

So you’ve been searching for that perfect house to call a ‘home,’ and you finally found one! The price is right, and in such a competitive market that you want to make sure you make a good offer so that you can guarantee your dream of making this house yours comes true!

Freddie Mac covered “4 Tips for Making an Offer” in their latest Executive Perspective. Here are the 4 Tips they covered along with some additional information for your consideration:

1. Understand How Much You Can Afford

“While it’s not nearly as fun as house hunting, fully understanding your finances is critical in making an offer.”

This ‘tip’ or ‘step’ really should take place before you start your home search process.

As we’ve mentioned before, getting pre-approved is one of many steps that will show home sellers that you are serious about buying, and will allow you to make your offer with the confidence of knowing that you have already been approved for a mortgage for that amount. You will also need to know if you are prepared to make any repairs that may need to be made to the house (ex: new roof, new furnace).

2. Act Fast

“Even though there are fewer investors, the inventory of homes for sale is also low and competition for housing continues to heat up in many parts of the country.”

According to the latest Existing Home Sales Report, the inventory of homes for sale is currently at a 3.6-month supply; This is well below the 6-month supply that is needed for a ‘normal’ market. Buyer demand has continued to outpace the supply of homes for sale, causing buyers to compete with each other for their dream homes.

Make sure that as soon as you decide that you want to make an offer, you work with your agent to present it as soon as possible.

3. Make a Solid Offer

Freddie Mac offers this advice to help make your offer the strongest it can be:

“Your strongest offer will be comparable with other sales and listings in the neighborhood. A licensed real estate agent active in the neighborhoods you are considering will be instrumental in helping you put in a solid offer based on their experience and other key considerations such as recent sales of similar homes, the condition of the house and what you can afford.”

Consider ways of making your offer stand out! Many buyers write a personal letter to the seller letting them know how much they would love to be the new homeowners. Your agent will be able to help you figure out if there are any other ways your offer could stand out above the rest.

4. Be Prepared to Negotiate

“It’s likely that you’ll get at least one counteroffer from the sellers so be prepared. The two things most likely to be negotiated are the selling price and closing date. Given that, you’ll be glad you did your homework first to understand how much you can afford.

Your agent will also be key in the negotiation process, giving you guidance on the counteroffer and making sure that the agreed-to contract terms are met.”

If your offer is approved, Freddie Mac urges you to “always get an independent home inspection, so you know the true condition of the home.” If the inspection uncovers undisclosed problems or issues, you can discuss any repairs that may need to be made, with the seller, or cancel the contract.

Bottom Line 

Whether buying your first home or your fifth, having a local professional on your side who is an expert in their market is your best bet to make sure the process goes smoothly. Happy House Hunting!

Source: KCM

Fannie Mae’s article, “What Consumers (Don’t) Know About Mortgage Qualification Criteria,” revealed that “only 5 to 16 percent of respondents know the correct ranges for key mortgage qualification criteria.”

Myth #1: “I Need a 20% Down Payment”

Fannie Mae’s survey revealed that consumers overestimate the down payment funds needed to qualify for a home loan. According to the report, 76% of Americans either don’t know (40%) or are misinformed (36%) about the minimum down payment required.

Many believe that they need at least 20% down to buy their dream home, but many programs actually let buyers put down as little as 3%.

Below are the results of a Digital Risk survey of Millennials who recently purchased a home.

As you can see, 64.2% were able to purchase their home by putting down less than 20%, with 43.8% putting down less than 10%!

Myth #2: “I need a 780 FICO Score or Higher to Buy”

The survey revealed that 59% of Americans either don’t know (54%) or are misinformed (5%) about what FICO score is necessary to qualify.

Many Americans believe a ‘good’ credit score is 780 or higher.

To help debunk this myth, let’s take a look at Ellie Mae’s latest Origination Insight Report, which focuses on recently closed (approved) loans. As you can see below, 54.7% of approved mortgages had a credit score of 600-749.

Bottom Line

Whether buying your first home or moving up to your dream home, knowing your options will make the mortgage process easier. Your dream home may already be within your reach.

Source: KCM

So you made an offer, it was accepted, and now your next task is to have the home inspected prior to closing. More often than not, your agent may have made your offer contingent on a clean home inspection.

This contingency allows you to renegotiate the price paid for the home, ask the sellers to cover repairs, or even, in some cases, walk away. Your agent can advise you on the best course of action once the report is filed.

How to Choose an Inspector

Your agent will most likely have a short list of inspectors that they have worked with in the past that they can recommend to you. Realtor.com suggests that you consider the following 5 areas when choosing the right home inspector for you:

1. Qualifications – find out what’s included in your inspection & if the age or location of your home may warrant specific certifications or specialties.
2. Sample Reports – ask for a sample inspection report so you can review how thoroughly they will be inspecting your dream home. The more detailed the report, the better in most cases.
3. References – do your homework – ask for phone numbers and names of past clients that you can call to ask about their experience.
4. Memberships – Not all inspectors belong to a national or state association of home inspectors, and membership in one of these groups should not be the only way to evaluate your choice. Membership in one of these organizations often means that there is continued training and education provided.
5. Errors & Omission Insurance – Find out what the liability of the inspector or inspection company is once the inspection is over. The inspector is only human after all, and it is possible that they might miss something they should have seen.

Ask your inspector if it’s ok for you to tag along during the inspection, that way they can point out anything that should be addressed or fixed.

Don’t be surprised to see your inspector climbing on the roof, crawling around in the attic, and on the floors. The job of the inspector is to protect your investment and find any issues with the home, including but not limited to: the roof, plumbing, electrical components, appliances, heating & air conditioning systems, ventilation, windows, the fireplace & chimney, the foundation and so much more!

Bottom Line

They say ‘ignorance is bliss,’ but not when investing your hard-earned money in a home of your own. Work with a professional you can trust to give you the most information possible about your new home so that you can make the most educated decision about your purchase.

Source: KCM