The Mortgage Process Doesn’t Have To Be Scary

Some Highlights Applying for a mortgage is a big step towards homeownership, but it doesn’t need to be one you fear. Here are some tips to help you prepare. Know your credit score and work to build strong credit. When you’re ready, lean on your agent to connect you with a lender so you can get pre-approved and begin your home search. Any major life change can be scary, and buying a home is no different. Let’s connect so you have an advisor by your side to take the fear out of the equation.

Housing Challenge or Housing Opportunity? It Depends.

The biggest challenge in real estate today is the lack of available homes for sale. The low housing supply has caused homes throughout the country to appreciate at a much faster rate than what we’ve experienced historically. There are many reasons for the limited number of homes on the market, but as you can see in the graph below, we’re well below where we’ve been for most of the past 10 years. Today, across the country, there is only a 2.4-month supply of homes available for sale.Housing Challenge or Housing Opportunity? It Depends. | MyKCM The Opportunity This lack of homes for sale is creating a challenge for many buyers who are growing frustrated in their search. On the other hand, this is a huge opportunity for sellers as low supply is driving up home values. According to CoreLogic, the average home has appreciated by more than $50,000 over the past year. And for many homeowners, that’s opening new doors as they re-think their needs and use their equity to move up or downsize. According to Dr. Frank Nothaft, Chief Economist at CoreLogic: “The average homeowner with a mortgage has more than $200,000 in home equity as of mid-2021.” Today, many sellers are taking advantage of low interest rates and the equity they have in their homes to make a move. Bottom Line The biggest challenge in real estate is the lack of homes for sale, but this challenge is also an opportunity for sellers. If you’re thinking about selling your house, let’s connect to start the process.

There Are More Homes Available Now than There Were This Spring

There’s a lot of talk lately about how challenging it can be to find a home to buy. While housing inventory is still low, there are a few important things to understand about the supply of homes for sale as we move into the end of the year. The Number of Homes for Sale Usually Peaks in the Fall In the residential real estate market, trends generally follow a predictable and seasonal pattern. Typically, the number of homes available for sale (or active monthly listings) peaks in the fall. But in a chapter where so little feels normal, the question becomes: should we expect a fall peak this year? If we look at the active monthly listings for 2021 (shown in the chart below), we’ll see that the number of homes on the market has increased fairly steadily since spring this year. The realtor.com data shows we’re still seeing an increase in active inventory month-over-month. While that gain is a bit smaller month-to-month (see August to September in the chart), September numbers are still up from the month prior.There Are More Homes Available Now than There Were This Spring | MyKCMThe important takeaway here is the latest monthly numbers show growth. At the end of September, buyers had more options to pick from than they did this spring. That’s encouraging for buyers who may have paused their search months ago because they had trouble finding a home. Danielle Hale, Chief Economist at realtor.com, sums this up nicely: “Put simply, this September buyers had more options than they've had all year and while that's typical of early fall, that's not what happened in 2020. Still, it's important to remember that while buyers may have an easier time this fall than they did in the spring, the market remains more competitive than it has been historically at this time of year.” As Hale says, a fall peak in inventory is in line with typical seasonal trends. While it’s impossible to say for certain what the future holds for housing inventory, we do know both buyers and sellers have opportunities this season based on the latest data. What Does That Mean for You? If you’re thinking of buying a home, rest assured you do have more options now than you did earlier this year – and that’s a welcome relief. That said, today’s market is still highly competitive. This isn’t the time to slow your search. It’s actually the season when the number of homes available for sale tends to peak. Focus on the additional options with renewed energy this season and be prepared for ongoing competition from other buyers. If you’re considering selling your house, realize that while growing, inventory is still low. Selling now means you’ll be in a great position to negotiate with buyers – and competition among buyers is good news for your bottom line. Eager buyers will likely be motivated to act before the holidays, giving you the benefit of a fast sale. Bottom Line Whether you’re buying or selling, there’s still a chance to make your goals a reality this season. Let’s connect so we can discuss what’s going on with the local market and current trends and what they mean for you.

Knowledge Is Power When It Comes to Appraisals and Inspections

Buyers in today’s market often have questions about the importance of getting a home appraisal and an inspection. That’s because high buyer demand and low housing supply are driving intense competition and leading some buyers to consider waiving those contingencies to stand out in the crowded market. But is that the best move? Buying a home is one of the most important transactions in your lifetime, and it’s critical to keep your best interests in mind. Here’s a breakdown of what to expect from the appraisal and the inspection, and why each one can potentially save you a lot of time, money, and headaches down the road. Home Appraisal The home appraisal is a critical step for securing a mortgage on your home. As Home Light explains: “. . . lenders typically require an appraisal to ensure that your loan-to-value ratio falls within their underwriting guidelines. Mortgages are secured loans where the lender uses your home as collateral in case you default on the agreed-upon payments.” Put simply: when you apply for a mortgage, an unbiased appraisal – typically required by your lender – is the best way to verify the value of the home. That appraisal ensures the lender doesn’t loan you more than what the home is worth. When buyers are competing like they are today, bidding wars and market conditions can push prices up. A buyer’s contract price may end up higher than the value of the home – this is known as an appraisal gap. In today’s market, it’s common for the seller to ask the buyer to make up the difference when an appraisal gap occurs. That means, as a buyer, you may need to be prepared to bring extra money to the table if you really want the home. Home Inspection Like the appraisal, the inspection is important because it gives an impartial evaluation of the home. While the appraisal determines the current value of the home, the inspection determines the current condition of the home. As the American Society of Home Inspectors puts it: “Home inspections are the opportunity to discover major defects that were not apparent at a buyer’s showing. . . . Your home inspection is to help you make an informed decision about the house, including its condition.” If there are any concerns during the inspection – an aging roof, a malfunctioning HVAC system, or any other questionable items – you have the option to discuss and negotiate any potential issues with the seller. Your real estate advisor can help you navigate this process and negotiate what, if any, repairs need to be made before the sale is finalized. Keep in mind – home inspections are critical because they can shed light on challenges you may face as the new homeowner. Without an inspection, serious, sometimes costly issues could come as a surprise later on. Bottom Line Both the appraisal and the inspection are important steps in the homebuying process. They protect your best interests as a buyer by providing unbiased information about the home’s value and condition. Let’s connect so you have an expert guiding you throughout the entire process.

If you’re a homeowner, today’s rising equity is great news. On average, homeowners have gained $51,500 in equity since this time last year. Whether it’s funding an education, fueling your next move, or starting a business, your home equity is a great tool you can use to power your dreams. Ready to sell? Let’s connect to talk about how you can take advantage of your rising equity to reach your goals.

Important Distinction: Homes Are Less Affordable, Not Unaffordable

It’s impossible to research the subject of buying a home without coming across a headline declaring that the fall in home affordability is a crisis. However, when we add context to the most recent affordability statistics, we soon realize that, though homes are less affordable than they have been over the last few years, they are more affordable than they historically have been. Black Knight, a premier provider of data and analytics for the mortgage industry, just released their latest Monthly Mortgage Monitor which includes a new analysis of the affordability situation. Here’s what the report reveals: “The monthly payment required to purchase the average priced home with a 20% down 30-year fixed rate mortgage increased by nearly 20% (+$210) over the first nine months of 2021, . . . It now requires 21.6% of the median household income to make the monthly mortgage payment on the average home purchase, the least affordable housing has been since 30-year rates rose to nearly 5% back in late 2018.” Basically, the report shows that homes are less affordable today than at any other time in the last three years. However, in a previous report earlier this year, Black Knight calculated that the percentage of the median household income to make the monthly mortgage payment on the average home purchase over the last 25 years was 23.6% (see graph below):Important Distinction: Homes Are Less Affordable, Not Unaffordable | MyKCMToday’s payment-to-income ratio is more affordable than the average over the last 25 years. Given that context, we can see that American households still have the same ability to be homeowners as their parents did 20 years ago. This confirms the recent analysis of ATTOM Data resources where Todd Teta, Chief Product and Technology Officer, explains: “The typical median-priced home around the U.S. remains affordable to workers earning an average wage, despite prices that keep going through the roof. Super-low interests and rising pay continue to be the main reasons why.” Bottom Line It’s true that it’s less affordable to buy a home today than it has been the last few years. However, it’s more affordable to buy today than the average over the last 25 years. In other words, homes are less affordable, but they’re not unaffordable. That’s an important distinction.

How Supply and Demand Can Tip the Pricing Scales in Todays Market

Looking To Move? It Could Be Time To Build Your Dream Home.

While today’s supply of homes for sale is still low, the number of newly built homes is increasing. If you’re ready to sell but have held off because you weren’t sure you’d be able to find a home to move into, newly built homes and those under construction can provide the options you’ve been waiting for. The latest Census data shows the inventory of new homes is increasing this year (see graph below):Looking To Move? It Could Be Time To Build Your Dream Home. | MyKCMWith more new homes coming to the market, this means you’ll have more options to choose from if you’re ready to buy. Of course, if you do consider a newly built home, you’ll want to keep timing in mind. The supply shown in the graph above includes homes at various stages of the construction process – some are near completion while others may be months away. According to Robert Dietz, Chief Economist and Senior VP for Economics and Housing Policy for the National Association of Home Builders (NAHB): “28% of new home inventory consists of homes that have not started construction, compared to 21% a year ago.” Buying a home near completion is great if you’re ready to move. Alternatively, a home that has yet to break ground might benefit you if you’re ready to sell and you aren’t on a strict timeline. You’ll have an even greater opportunity to design your future home to suit your needs. No matter what, your trusted real estate advisor can help you find a home that works for you. Bottom Line If you want to take advantage of today’s sellers’ market, but you’re not sure if you’ll be able to find a home to move into, consider a newly built home. Let’s connect today so you have a trusted real estate advisor to guide you through the sale of your house and discuss your homebuying options.

What Does the Future Hold for Home Prices?

If you’re looking to buy or sell a house, chances are you’ve heard talk about today’s rising home prices. And while this increase in home values is great news for sellers, you may be wondering what the future holds. Will prices continue to rise with time, or should you expect them to fall? To answer that question, let’s first understand a few terms you may be hearing right now. Appreciation is an increase in the value of an asset. Depreciation is a decrease in the value of an asset. Deceleration is when something happens at a slower pace. It’s important to note home prices have increased, or appreciated, for 114 straight months. To find out if that trend may continue, look to the experts. Pulsenomics surveyed over 100 economists, investment strategists, and housing market analysts asking for their five-year projections. In terms of what lies ahead, experts say the market may see some slight deceleration, but not depreciation. Here’s the forecast for the next few years:What Does the Future Hold for Home Prices? | MyKCMAs the graph above shows, prices are expected to continue to rise, just not at the same pace we’ve seen over the last year. Over 100 experts agree, there is no expectation for price depreciation. As the arrows indicate, each number is an increase, which means prices will rise each year. Bill McBride, author of the blog Calculated Risk, also expects deceleration, but not depreciation: “My sense is the Case-Shiller National annual growth rate of 19.7% is probably close to a peak, and that year-over-year price increases will slow later this year.” Ivy Zelman of Zelman & Associates agrees, saying: “. . . home price appreciation is on the cusp of flipping to a decelerating trend.” A recent article from realtor.com indicates you should expect: “. . . annual price increases will slow to a more normal level, . . .” What Does This Deceleration Mean for You? What experts are projecting for the years ahead is more in line with the historical norm for appreciation. According to data from Black Knight, the average annual appreciation from 1995-2020 is 4.1%. As you can see from the chart above, the expert forecasts are closer to that pace, which means you should see appreciation at a level that’s aligned with a more normal year. If you’re a buyer, don’t expect a sudden or drastic drop in home prices – experts say it won’t happen. Instead, think about your homeownership goals and consider purchasing a home before prices rise further. If you’re a seller, the continued home price appreciation is good news for the value of your house. Work with an agent to list your house for the right price based on market conditions. Bottom Line Experts expect price deceleration, not price depreciation over the coming years. Let’s connect to talk through what’s happening in the housing market today, where things are headed, and what it means for you.

Sellers: Your House Could Be an Oasis for Buyers Seeking More Options

Sellers have a great opportunity this season as buyer demand still heavily outweighs the current supply of homes for sale. According to the National Association of Realtors (NAR), today’s housing inventory sits at only a 2.6-month supply. To put that into perspective, a neutral market typically features a 6-month supply. That places today’s market firmly in the sellers’ market category. That same NAR data also shows today’s inventory of single-family homes is trailing behind the level we saw last year (see graph below):Sellers: Your House Could Be an Oasis for Buyers Seeking More Options | MyKCMBecause of the ongoing supply challenges, buyers can feel like they’re wandering across a vast, empty desert when searching for their next home. That means your house could provide an oasis for buyers thirsty for options – and it could increase the chances of buyers entering a bidding war for your home. The latest Realtors Confidence Index Survey from NAR shows houses are receiving an average of 3.8 offers. A multiple-offer scenario lets you select the best offer and gives you incredible leverage when you sell this fall. Bottom Line Buyers today are looking for relief as they wander today’s inventory desert. Listing your house this fall – before more options appear – gives your house the best chance to be noticed by multiple buyers. Let’s connect today so your house can stand out as the oasis it truly is.

Homebuyer Tips for Finding the One

The best advice carries across multiple areas of life. When it comes to homebuying, a few simple tips can help you stay on track. Because of increased demand, you’ll need to be patient and embrace compromises during your search. Then, once you’ve fallen in love, commit by putting your best offer forward. If you’re looking to buy a home this year, let’s connect so you have a dedicated partner and teammate to help you find the one.

What Do Past Years Tell Us About Today’s Real Estate Market?

As you follow the news, you’re likely seeing headlines discussing what’s going on in today’s housing market. Chances are high that some of the more recent storylines you’ve come across mention terms like cooling or slowing when talking about where the market is headed. But what do these terms mean? The housing market today is anything but normal, and it’s still an incredibly strong sellers’ market, especially when compared to the few years leading up to the pandemic. With that in mind, what can previous years tell us about today’s real estate market and if it’s truly slowing? We’re Still Seeing an Above Average Number of Sales You may see headlines about a drop in home sales. But are those headlines telling the full story? The most recent Existing Home Sales Report from the National Association of Realtors (NAR) does show a drop of about 2% from July to August. But the month-over-month decline doesn’t provide the full picture (see graph below):What Do Past Years Tell Us About Today’s Real Estate Market? | MyKCMAs the graph shows, historical context is key. Today’s home sales are well ahead of some of the more normal years that led up to the health crisis. That means buyers are still in the market, which is great news if you’re planning to list your home. Houses Are Selling Faster Than Usual When headlines mention the market is slowing, sellers may naturally wonder if their house will sell as quickly as they’d like. According to the most recent Realtors Confidence Index from NAR, homes are still selling at record speed (see graph below):What Do Past Years Tell Us About Today’s Real Estate Market? | MyKCMAgain, if we look back at data from previous years, we can see the average time on market – 17 days – means homes are selling faster than a normal pace. Bidding Wars Are Still the Norm The Realtors Confidence Index from NAR also shows a drop in the average number of offers homes are receiving in August, and many headlines may simply focus there without providing the important context (see graph below):What Do Past Years Tell Us About Today’s Real Estate Market? | MyKCMAgain, it’s important to compare today’s market to trends from recent years. Currently, the average number of offers per listing is higher than 39 of the previous 45 months. That means the likelihood of a bidding war on your home is still high. And the number of offers your house receives can have a major influence on the final sale price. So, Is the Market Slowing Down? While there are slight declines in various month-to-month data, it’s important to keep historical context in mind when determining what’s happening in today’s market. Odeta Kushi, Deputy Chief Economist at First American, put it best recently, saying: “It's not the white-hot market from earlier in the year & it's not the 2020 market benefiting from a wave of pent-up demand but make no mistake this is still a hot housing market.” Bottom Line Don’t let headlines make you rethink listing your home this fall. Selling today means you can still take advantage of high buyer demand, multiple offers, and a quick sale. If you’re thinking of selling your house, let’s connect and discuss why this fall is the perfect time to do so.

The Big Question: Should You Renovate or Move?

The last 18 months changed what many buyers are looking for in a home. Recently, the American Institute of Architects released their AIA Home Design Trends Survey results for Q3 2021. The survey reveals the following: 70% of respondents want more outdoor living space 69% of respondents want a home office (48% wanted multiple offices) 46% of respondents want a multi-function room/flexible space 42% of respondents want an au pair/in-law suite 39% of respondents want an exercise room/yoga space If you’re a homeowner who wants to add any of the above, you have two options: renovate your current house or buy a home that already has the spaces you desire. The decision you make could be determined by factors like: A possible desire to relocate The difference in the cost of a renovation versus a purchase Finding an existing home or designing a new home that has exactly what you want (versus trying to restructure the layout of your current house) In either case, you’ll need access to capital: the funds for the renovation or the down payment your next home would require. The great news is that the money you need probably already exists in your current home in the form of equity. Home Equity Is Skyrocketing The record-setting increases in home prices over the last two years dramatically improved homeowners’ equity. The graph below uses data from CoreLogic to show the average home equity gain in the first quarter of the last nine years:The Big Question: Should You Renovate or Move? | MyKCMOdeta Kushi, Deputy Chief Economist at First American, quantifies the amount of equity homeowners gained recently: “Remember U.S. households own nearly $35 trillion in owner-occupied real estate, just over $11 trillion in debt, and the remaining ~$24 trillion in equity. In inflation adjusted terms, homeowners in Q2 had an average of $280,000 in equity- a historic high.” As a homeowner, the money you need to purchase the perfect home or renovate your current house may be right at your fingertips. However, waiting to make your decision may increase the cost of tapping that equity. If you decide to renovate, you’ll need to refinance (or take out an equity loan) to access the equity. If you decide to move instead and use your equity as a down payment, you’ll still need to mortgage the remaining difference between the down payment and the cost of your next home. Mortgage rates are forecast to increase over the next year. Waiting to leverage your equity will probably mean you’ll pay more to do so. According to the latest data from the Federal Housing Finance Agency (FHFA), almost 57% of current mortgage holders have a mortgage rate of 4% or below. If you’re one of those homeowners, you can keep your mortgage rate under 4% by doing it now. If you’re one of the 43% of homeowners with a mortgage rate over 4%, you may be able to do a cash-out refinance or buy a more expensive home without significantly increasing your monthly payment. First Step: Determine the Amount of Equity in Your Home If you’re ready to either redesign your current house or find an existing or newly constructed home that has everything you want, the first thing you need to do is determine how much equity you have in your current home. To do that, you’ll need two things: The current mortgage balance on your home The current value of your home You can probably find the mortgage balance on your monthly mortgage statement. To find the current market value of your house, you can pay several hundreds of dollars for an appraisal, or you can contact a local real estate professional who will be able to present to you, at no charge, a professional equity assessment report. Bottom Line If the past 18 months have refocused your thoughts on what you want from your house, now may be the time to either renovate or make a move to the perfect home.

Don’t Wait for a Lower Mortgage Rate – It Could Cost You

Today’s housing market is truly one for the record books. Over the past year, we’ve seen the lowest mortgage rates in history. And while those rates seemed to bottom out in January of this year, the golden window of opportunity for buyers isn’t over just yet. If you’re one of the buyers who worry they’ve missed out, rest assured today’s mortgage rates are still worth taking advantage of. Even today, our mortgage rates are below what they’ve been in recent decades. So, while you may not be able to lock in the rate your friend got recently, you’re still in a great position to secure a rate well below what your parents and even grandparents got in years past. The key will be acting sooner rather than later. In late September, mortgage rates ticked above 3% for the first time in months. And according to experts throughout the industry, mortgage rates are projected to continue rising in the months ahead. Here’s where experts say rates are headed:Don’t Wait for a Lower Mortgage Rate – It Could Cost You | MyKCMWhile a projected half percentage point increase may not seem substantial, it does have an impact when you’re buying a home. When rates rise even slightly, it affects how much you’ll pay month-to-month on your home loan. The chart below shows how it works:Don’t Wait for a Lower Mortgage Rate – It Could Cost You | MyKCMIn this example, if rates rise to 3.55%, you’ll pay an extra $100 each month on your monthly mortgage payment if you purchase a home around this time next year. That extra money can really add up over the life of a 15 or 30-year loan. Clearly, today’s mortgage rates are worth taking advantage of before they climb further. The rates we’re seeing right now give you a unique opportunity to afford more home for your money while keeping your monthly payment down. Bottom Line Waiting for a lower mortgage rate could cost you. Experts project rates will continue to rise in the months ahead. Let’s connect so you can seize this opportunity before they increase further.

Experts Agree: Homeownership Provides a Path to Long-Term Wealth

A recent survey from LendingTree.com found there are multiple reasons why Americans would choose to purchase a home instead of renting. Some of the most popular non-financial reasons given include: The flexibility to make the space your own The pride homeownership offers The sense of stability In the same survey, 41% of respondents say they’d rather own a home than rent because of the unique way homeownership builds wealth over time. And experts agree – the home you own is an important tool for building your net worth. Here’s what many of those experts have to say about building long-term financial stability through homeownership. According to the National Association of Realtors (NAR): “Homeowners who purchased a typical single-family existing-home 30 years ago at the median sales price of $103,333 with a 10% down payment loan and who sold the property at the median sales price of $357,700 in 2021 Q2 accumulated housing wealth of $349,258, . . .” Mark Fleming, Chief Economist at First American, points out that a home is truly a one-of-a-kind asset. It’s the only asset that’s both an investment and a place for you to call your own. “The major financial advantage of homeownership is the accumulation of equity in the form of house price appreciation. . . . We won’t always have 17% house price appreciation, but we have to take into account the fact that the shelter that you're owning is an equity-generating or wealth-generating asset.” Homeowners can leverage the wealth they generate in several ways throughout their life. Tapping into accumulated equity has long been used to pay for the cost of an education, to start a business, or to fund various other expenses. The Joint Center of Housing Studies at Harvard points out: “. . . by paying down mortgage principal each month and participating in the long-term appreciation of home values, a family can build wealth that can be used for retirement or other needs, including helping the next generation.” Bottom Line With home prices expected to continue to appreciate in coming years, homebuyers have an opportunity to start the long-term wealth-building process right now. Let’s connect today if you’re ready to begin your journey on the path to becoming a homeowner.

What’s Causing Today’s Competitive Real Estate Market?

Today’s strong sellers’ market is the direct result of high demand and low supply. Low mortgage rates and generational trends have created an increased demand for homes. Meanwhile, the slower pace of new home construction and homeowners staying in their homes longer have both led to today’s low supply. If you’re thinking of selling, let’s connect to talk about our local area and how you can take advantage of today’s housing market.

111,285 Reasons You Should Buy a Home This Year

The financial benefits of buying a home versus renting one are always up for debate. However, one element of the equation is often ignored – the ability to build wealth as a homeowner. According to the latest research from the National Association of Realtors (NAR): “Homeownership is a key pathway to building wealth and narrowing the racial income and wealth inequality gap. Housing wealth (equity) accumulation takes time and is built up by price appreciation and paying off the mortgage.” An increase in equity builds the wealth of the individual that owns it. This wealth can be passed down to future generations. The Federal Reserve in an addendum to their Survey of Consumer Finances explains: “There are numerous ways families can transmit wealth and resources across generations. Families can directly transfer their wealth to the next generation in the form of a bequest. They can also provide the next generation with inter vivos transfers (gifts), for example, providing down payment support to enable a home purchase or a substantial wedding gift.” The Federal Reserve also explains another way wealth (including the additional net worth generated by an increase in home equity) can benefit future generations: “In addition to direct transfers or gifts, families can make investments in their children that indirectly increase their wealth. For example, families can invest in their children's educational success by paying for college or private schools, which can in turn increase their children's ability to accumulate wealth.” Here’s a look at how equity can build your wealth over time when you own a home. Equity over the Last 30 Years The NAR research reveals that the average gain for homeowners over the last five years was $139,134 and over the last 10 years was $218,505. Looking even further back in time, the article says: “Homeowners who purchased a typical single-family existing-home 30 years ago at the median sales price of $103,333 with a 10% down payment loan and who sold the property at the median sales price of $357,700 in 2021 Q2 accumulated housing wealth of $349,258.” Homeownership builds household wealth which also enables households to more easily move to the home of their dreams. As Mark Fleming, the Chief Economist at First American, explains: “As homeowners gain equity in their homes, they are more likely to consider using that equity to purchase a larger or more attractive home – the wealth effect of rising equity.” If you missed out on the equity gains over the last 30 years, don’t fret. Experts are still calling for substantial growth in equity over the next five years. Looking Forward at the Equity To Come The most recent Home Price Expectation Survey, a survey of over one hundred economists, real estate experts, and investment and market strategists, expects home values (and therefore equity) to increase as follows: 2021: 11.74% 2022: 5.82% 2023: 3.94% 2024: 3.56% 2025: 3.55% The survey estimates a 31.8% cumulative appreciation over the next five years. Using their annual projections, the graph below shows the equity build-up a purchaser could earn, using a $350,000 home as an example:111,285 Reasons You Should Buy a Home This Year | MyKCMThat’s a potential increase in household wealth of $111,285 over five years. Bottom Line Owning a home is one of the best ways to grow your wealth over time. House wealth can impact generations. In many cases, the largest single investment a household has is their home. As that investment appreciates in value, the financial options also increase.

What Do Supply and Demand Tell Us About Today’s Housing Market?

There’s a well-known economic theory – the law of supply and demand – that explains what’s happening with prices in the current real estate market. Put simply, when demand for an item is high, prices rise. When the supply of the item increases, prices fall. Of course, when demand is very high and supply is very low, prices can rise significantly. Understanding the impact both supply and demand have can provide the answers to a few popular questions about today’s housing market: Why are prices rising? Where are prices headed? What does this mean for homebuyers? Why Are Prices Rising? According to the latest Home Price Insights report from CoreLogic, home prices have risen 18.1% since this time last year. But what’s driving the increase? Recent buyer and seller activity data from the National Association of Realtors (NAR) helps answer that question. When we take NAR’s buyer activity data and compare it to the seller traffic during the same timeframe, we can see buyer demand continues to outpace seller activity by a wide margin. In other words, the demand for homes is significantly greater than the current supply that’s available to buy (see maps below):What Do Supply and Demand Tell Us About Today’s Housing Market? | MyKCMThis combination of low supply and high demand is what’s driving home prices up. Bill McBride, author of the Calculated Risk blog, puts it best, saying: “By some measures, house prices seem high, but the recent price increases make sense from a supply and demand perspective.” Where Are Prices Headed? The supply of homes for sale will greatly affect where prices head over the coming months. Many experts forecast prices will continue to increase, but they’ll likely appreciate at a slower rate. Buyers hoping to purchase the home of their dreams may see this as welcome news. In this case, perspective is important: a slight moderation of home prices does not mean prices will depreciate or fall. Price increases may occur at a slower pace, but experts still expect them to rise. Five major entities that closely follow the real estate market forecast home prices will continue appreciating through 2022 (see graph below):What Do Supply and Demand Tell Us About Today’s Housing Market? | MyKCM What Does This Mean for Homebuyers? If you’re waiting to enter the market because you’re expecting prices to drop, you may end up paying more in the long run. Even if price increases occur at a slower rate next year, prices are still projected to rise. That means the home of your dreams will likely cost even more in 2022. Bottom Line The truth is, high demand and low supply are what’s driving up home prices in today’s housing market. And while prices may increase at a slower pace in the coming months, experts still expect them to rise. If you’re a potential homebuyer, let’s connect today to discuss what that could mean for you if you wait even longer to buy.

The Main Key To Understanding the Rise in Mortgage Rates

Every Thursday, Freddie Mac releases the results of their Primary Mortgage Market Survey which reveals the most recent movement in the 30-year fixed mortgage rate. Last week, the rate was announced as 3.01%. It was the first time in three months that the mortgage rate surpassed 3%. In a press release accompanying the survey, Sam Khater, Chief Economist at Freddie Mac, explains: “Mortgage rates rose across all loan types this week as the 10-year U.S. Treasury yield reached its highest point since June.” The reason Khater mentions the 10-year U.S. Treasury yield is because there has been a very strong relationship between the yield and the 30-year mortgage rate over the last five decades. Here’s a graph showing that relationship:The Main Key To Understanding the Rise in Mortgage Rates | MyKCMThe relationship has also been consistent throughout 2021 as evidenced by this graph:The Main Key To Understanding the Rise in Mortgage Rates | MyKCMThe graph also reveals the most recent jump in mortgage rates was preceded by a jump in the 10-year Treasury rate (called out by the red circles). So, What Impacts the Yield Rate? According to Investopedia: “There are a number of economic factors that impact Treasury yields, such as interest rates, inflation, and economic growth.” Since there are currently concerns about inflation and economic growth due to the pandemic, the Treasury yield spiked last week. That spike impacted mortgage rates. What Does This Mean for You? Khater, in the Freddie Mac release mentioned above, says: “We expect mortgage rates to continue to rise modestly which will likely have an impact on home prices, causing them to moderate slightly after increasing over the last year.” Nadia Evangelou, Senior Economist and Director of Forecasting for the National Association of Realtors (NAR), also addresses the issue: “Consumers shouldn't panic. Keep in mind that even though rates will increase in the following months, these rates will still be historically low. The National Association of REALTORS forecasts the 30-year fixed mortgage rate to reach 3.5% by mid-2022.” Bottom Line Forecasting mortgage rates is very difficult. As Mark Fleming, Chief Economist at First American, once quipped: “You know, the fallacy of economic forecasting is don't ever try and forecast interest rates and or, more specifically, if you're a real estate economist mortgage rates, because you will always invariably be wrong.” That being said, if you’re either a first-time homebuyer or a current homeowner thinking of moving into a home that better fits your current needs, keep abreast of what’s happening with mortgage rates. It may very well impact your decision.

Even in a hot sellers’ market like today’s in which homes are selling so quickly, it’s still important to make a good first impression on potential buyers. Taking the time upfront to prep your house appropriately can bring in the greatest return on your investment. Here are four simple tips to make sure you maximize the sale of your house this fall. 1. Price It Right One of the first things buyers will notice is the price of your house. That’s why it’s important to price it right. Your goal in pricing your house is to draw attention from competing buyers and let bidding wars push the final sales price up. Pricing your house too high to begin with could put you at a disadvantage by discouraging buyers from making an offer. Your trusted real estate advisor can help you find the price for your home that reflects the current market value. Lean on your agent to help you with this crucial first step. 2. Keep It Clean It may sound simple, but keeping your house clean is key to making sure it gets the attention it deserves. As realtor.com says in the Home Selling Checklist: “When selling your home, it’s important to keep everything tidy for buyers. . . . Remember to take special care with the bathroom, making sure the tile, counters, shower, and floors shine.” Before each buyer visits, assess your space and determine what needs your attention. Wash the dishes, make the beds, and put away any toys. Doing these simple things can reduce any potential distractions for buyers. 3. Make It Easy To Visit Giving buyers the opportunity to see your house on their schedule can be a true game-changer. Buyers are less likely to make an offer if it’s difficult to plan a tour or they can’t easily fit it into their schedule. Making your house available as often as possible helps create opportunities for more buyers to fall in love with your house. Rest assured your trusted real estate advisor will keep your health and safety top of mind when buyers tour your home. Agents use the latest guidance to stay up to date on any protocols and sanitization recommendations. 4. Help Buyers Feel at Home Finally, it’s important for buyers to see all the possible ways they can make your house their next home. As the realtor.com article puts it: “The goal is to create a blank canvas on which buyers can project their own visions of living there, and loving it.” An easy first step to create this blank canvas is removing personal items – pictures, awards, and sentimental belongings – from your space. If you’re unsure what should be packed away and what can stay, consult your trusted real estate advisor. Spending the time on this step can pay off in the long run, as the 2021 Profile of Home Staging from the National Association of Realtors notes: “Eighteen percent of sellers’ agents said home staging increased the dollar value of a residence between 6% and 10%.” Bottom Line To make the most of today’s sellers’ market, avoid the temptation to skip over the essential preparation steps. Let’s connect today to discuss all the ways you can maximize your home sale.

Reasons Renters Buy

Some Highlights When deciding whether you should rent or buy, make sure you’re considering these factors. Buying a home means consistent monthly payments. Homeownership also helps to build your wealth. And owning a home gives you greater flexibility than renting. If you’re ready to take advantage of the perks of homeownership, let’s connect to explore your options.

As Home Equity Rises, So Does Your Wealth

Homeownership is still a crucial part of the American dream. For those people who own a home (and those looking to buy one), it’s clear that being a homeowner has considerable benefits both emotionally and financially. In addition to long-term stability, buying a home is one of the best ways to increase your net worth. This boost to your wealth comes in the form of equity. Equity is the difference between what you owe on the home and its market value based on factors like price appreciation. The best thing about equity is that it often grows without you even realizing it, especially in a sellers’ market like we’re in now. In today’s real estate market, the combination of low housing supply and high buyer demand is driving home values up. This is giving homeowners a significant equity boost. According to the latest data from CoreLogic, the amount of equity homeowners have has continued to grow as home values appreciate. Here are some key takeaways from the Homeowner Equity Insights Report: The average homeowner gained $51,500 in equity over the past year There was a 29.3% increase in national homeowner equity year over year To give you an idea of what that looks like in your area, the map below shows the average equity gains by state.As Home Equity Rises, So Does Your Wealth | MyKCM What does all of that mean for you? If you’re already a homeowner, you likely have more equity in your house than you realize. The numbers in the map above reflect year-over-year growth. If you’ve been in your home for longer than a year, you’ll likely have even more equity than that. That equity can take you places. You can use the equity you’ve gained to fuel your next move, achieve other life goals, and more. On the other hand, if you haven’t purchased a home yet, understanding equity can help you realize why homeownership is a worthwhile goal. Homeowners across the nation gained an average of over $50,000 in equity this year. Don’t miss out on this chance to grow your net worth. Bottom Line If you want to learn more, let's connect. A trusted advisor can help you understand where home prices are today, how they contribute to a homeowner’s net worth, and the impact equity can have when you own a home.