The Cost of Renting vs. Buying Today [INFOGRAPHIC]

The Cost of Renting vs. Buying Today [INFOGRAPHIC] | Simplifying The Market

Some Highlights:

  • Historically, the choice between renting or buying a home has been a tough decision.
  • Looking at the percentage of income needed to rent a median-priced home today (28.9%) vs. the percentage needed to buy a median-priced home (15.7%), the choice becomes obvious.
  • Every market is different. Before you renew your lease again, find out if you can put your housing costs to work by buying this year!

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How Competitive Will The Spring Home Buying Market Be This Year?

How-Competitive-Will-The-Spring-Home-Buying-Market-Be-This-YearSpring is the most common time of the year when people shop for homes. Nonetheless, the spring home-buying season this year could be one of the more competitive in the last couple years. This means prospective home buyers who do not prepare adequately may find themselves in a distressing search.

 

Many housing markets all over the country have recorded fewer homes that are up for sale due to most existing homeowners not moving, and home builders having constructed fewer new homes. This tight housing inventory will increase the home prices and make things a bit harder for buyers. This is on top of mortgage rates having also been increasing steadily.         

 

All these factors are making it more difficult for many Americans to buy homes. The purchasing process is also more stressful than in previous years. So, if you are a prospective buyer and you would like to buy a home this year, it’s very important to prepare adequately!

 

Below are some essential steps housing experts recommend.

 

Getting your finances in order

Unless you have adequate funds to pay for the new house in cash, you need to opt for a mortgage. The process may be streamlined but you will still have to gather numerous documents to help the lender have your accurate financial status.

 

Have a look at your current credit report and ensure that there aren’t any errors that may affect your credit score before you can start house shopping. Pay off all delinquent bills including other debts you may owe. This way, you’ll have a favorable DTI (debt to income) ratio. Consider using a calculator to know your DTI and then make the necessary changes. You need to look very attractive to the lenders so that they can approve your application, and get you the best rates on your loan.

 

Find out if you qualify for a mortgage

To be eligible for a mortgage, lenders need to know if you are capable of meeting your monthly obligations. They will ask questions to understand your entire financial status including your salary, investments, employment history, savings, debts or anything else that determines your net worth. You can rely on a pre-qualifying mortgage calculator to know the size of loan you’ll qualify to get depending on your needs.

 

No matter how strong a candidate you think you are, do not assume you will automatically get a loan with the first lender you encounter. Due to the housing crisis that occurred in 2008, lenders rules have become very strict. You can easily lose out on your dream house if you are not capable of paying off your loan.

 

Get to know what you can afford

Most buyers find themselves in trouble because of flirting with prices that are vastly unaffordable to their economic situation. Your housing budget should include expenses such as utility payments, insurance, homeowner’s association dues, property taxes and maintenance cost. An excellent rule of thumb is to target a mortgage payment that doesn’t exceed 80% of the amount you pay in rent.

 

Choose a suitable realtor

Unless you are a seasoned professional, you need to have a realtor. Experienced and knowledgeable agents know how the industry is run including any likely mishaps and how to ensure they don’t happen.

 

You require more than the willingness to pay for the house to make an offer in a competitive market, which will see this year in the real estate market. If you have a good agent, it will be easy to present your offer, including any other items that will make you look more appealing than any other buyer.

 

Although the competition is high, you can rely on these tips to get a house this spring no matter how competitive the market becomes.

 

If You’re Looking At Buying Or Selling, Let’s Talk About What Your Options Are In Charleston.

99% of Experts Agree: Home Prices Will Increase

99% of Experts Agree: Home Prices Will Increase | Simplifying The Market

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 values 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%.

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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.

Be Thankful You Don’t Have to Pay Your Parents’ Interest Rate! | Simplifying The Market

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.

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Buyer Demand Still Outpacing the Supply of Homes for Sale

Buyer Demand Still Outpacing the Supply of Homes for Sale | Simplifying The Market

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?”

Buyer Demand Still Outpacing the Supply of Homes for Sale | Simplifying The Market

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 buyers 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!

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5 Reasons Why to Sell This Spring!

5 Reasons Why to Sell This Spring! | Simplifying The Market

Here are five reasons listing your home for sale this spring makes sense.

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.

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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%.

Freddie Mac: Rising Mortgage Rates DO NOT Lead to Falling Home Prices | Simplifying The Market

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.

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What’s The Best Way To Meet My Neighbors When I Move Into A New House?

Whats-The-Best-Way-To-Meet-Neighbors-When-I-Move-Into-A-New-House?

One of the hardest parts of moving to a new home (or even a new city like Charleston)  is getting socially acclimated when you move. This is especially true if you’ve lived in one location for many years and gotten to know your neighbors fairly well. Changing cities or even states uproots your entire social structure and it can be difficult starting over. As an adult with a family, work, and other responsibilities; meeting your neighbors and re-establishing that feeling of community you had before can present a challenge. Nonetheless, it is important to remember that you didn’t immediately know your neighbors when you first moved into your old neighborhood either. The following five steps can help you integrate into your new community and become well acquainted with your new neighbors.   

 

Be Approachable

Part of integrating yourself into a new neighborhood is making it possible for your new neighbors to meet you. If you never leave your home, then your chances of meeting new people is relatively low. So make it a point to be seen in your community by going outside, sitting on your porch (this is Charleston we’re talking about here), going for walks, walking your dog if you have one, and so on. Also, watch how you carry your body language or expressions that could possibly be interpreted as angry, grouchy, or closed off which will push people away. It can be very easy to think you don’t give off this type of vibe to people, but one quick audit from a friend can assure you of the truth. 

 

Familiarize Yourself With The Local Area

Every neighborhood has its local gathering places such as restaurants, parks, libraries, cafes, dog parks and so on. Going out into the community is one of the best ways to become a part of it. For example, getting to know that group of baristas or simply talking to other dog owners at a dog park will help expand your circle of acquaintances and build new friendships. Furthermore, you’d likely be surprised how much a couple nice interactions with strangers here in the Holy City will leave them wanting to possibly help you if you’re just willing to ask for advice on things to do or places to check out.  

 

Make Use Of Existing Connections

Nobody moves into a new area completely free of past connections and you can leverage these to start meeting people in your community. Local chapters of existing clubs you belong to, alumni associations, religious institutions, employer relocation programs, and even just advice from people you already know can be very useful.  

  

Common Interests

Nothing builds new relationships like a shared hobby or interest. A few of these like something as simple as a love of coffee and pet ownership have already been noted above. There are several different ways to meet new people through common interests  including online websites devoted to meetups, civic organizations, activities, charities, neighborhood groups, or even clubs devoted to specific sports leagues or teams. There may even be a local Facebook group for your neighborhood. Involving yourself in things that you were already passionate about allows you to meet new people who share that same interest.  

 

Be Proactive

Lastly, remember that it takes effort to accomplish anything, this includes meeting new people. When moving to a new neighborhood it can be daunting to reach out because you’re new and don’t feel like you’ve integrated yourself into the local community yet.

 

Be sure to start with the basics as simple as waving or making small talk with your neighbors, which are perfectly normal starting points. Don’t be afraid that you’ll be perceived as intruding as many of your new neighbors likely want to meet you as well. Be ready to take that first step, Charleston isn’t heralded for it’s southern charm and hospitality for nothing.   

 

If you’ve been considering real estate moves lately, let’s talk about your options. 

How Will Artificial Intelligence In Real Estate Affect Buyers And Sellers?

How-Will-Artificial-Intelligence-In-Real-Estate-Affect-Buyers-And-Sellers? 

Artificial intelligence. These recently reoccurring buzzwords might conjure up benevolent images like C3PO, R2D2 or even Watson on Jeopardy; while on the other hand they may highlight more malevolent images like the Terminator. Advancements in artificial intelligence are striking and are pointing to changes in several different industries as this technology develops, including even real estate. While AI has lead to some unease due to people fearing their job replacement by AI technology, there are a number of advantages to be gained from it’s use (and humans are not in danger of being simply replaced). Here’s a brief overview of 4 ways AI is already being used in real estate and why the human factor will still be vastly important when it comes to real estate.     

 

AI Advancements In Real Estate

The real estate industry is already seeing the use of AI and some of these you may already be making use of. Many of these uses improve both the customer experience and the business side as well. The four most common implementations are listed below.

 

  • Chatbots: You’ve likely already run into these on websites or Facebook , as they can handle basic questions and general inquiries. Chatbots can prove useful in information gathering and customer interaction. From the customer side, they can get easy to answer questions (such as the cost of a property) answered at any time without having to wait for a person to respond or for the office to open (in case you’re maybe looking for a property at 9pm after you just put the kids to sleep). From the realtor side, this frees up time and allows for useful information gathering about potential customers for future follow-ups.    
  • Search Engines: AI can also work behind the scenes by improving search engine results. Search engines, in general, are getting more accurate due to AI. By tracking past results, several key variables, and consumer behavior patterns; search results for property are becoming far more accurate.   
  • Property Suggestions: Another area of improvement is property suggestions for potential buyers. A bot versus broker test proved that the AI backed suggestions were high-quality ones. This works on the basis of using previous search results to drill down common themes and recurring elements in customer preferences and searches.  
  • Monetary Aspects: Nonetheless, not all AI improvements are on the customer side. AI is also being used to estimate the odds of a customer defaulting on a loan, predicting lifetime earnings of a property, and even creating timetables for the odds of major repair needs. This helps take the uncertainty out of the financial side of real estate.    

 

The Human Element Is Still Required

Despite the fears that machines will displace and disrupt entire industries, this is unfounded according to many industry experts such as Peter Thiel and Zillow co-founder Rich Barton. While AI can certainly automate many aspects of industry, the human element is still a requirement. While AI can answer basic questions with exact answers or give a virtual home tour (without needing human interaction) it can’t quite hold a conversation (understanding full semantics), answer questions that are more nuanced, or give an in-person tour. The human element is absolutely still a requirement and much of the data AI produces requires human review to make proper use of. Also, AI implementations such as search engines require regular updates and review to ensure correct operations and overall efficiency.

     

Final Thoughts

Artificial intelligence is changing some of the ways realtors and clients operate in the real estate industry. Nonetheless, it will not replace humans entirely. Artificial intelligence still can’t make judgment calls or relate to people on a personal or emotional level. AI above all is a tool and one you can make use of to improve performance, but it is not is a replacement for what knowledgeable, experienced and professionally experienced realtors bring to the table.

 

If you’re considering making real estate decisions in Charleston, let’s talk about what’s available.