More Boomerang Buyers Are about to Enter the Market

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We previously informed you about a study conducted by TransUnion titled, “The Bubble, the Burst and Now – What Happened to the Consumer?” The study revealed that 1.5 million homeowners who were negatively impacted by the housing crisis could re-enter the housing market between 2016-2019.

Recently, HousingWire analyzed data from the US Bankruptcy Courts and revealed that 6 million Americans will have their bankruptcies disappear off their credit reports over the next five years and that this could “ possibly send a flood of more homebuyers into the housing market.

The chart below shows the total number of bankruptcies filed by year in the US over the last 10 years. The light blue bars represent over 3.3 million people who have already waited the 7 years necessary for their reports to no longer include their bankruptcies.

More Boomerang Buyers Are about to Enter the Market | MyKCM

 

How would this “ send a flood of more homebuyers into the housing market”?

As the article mentioned, in 2010 the number of chapter 7 bankruptcies increased to nearly 1.14 million. Now, 7 years later, they will begin to fade from credit histories, enabling prospective buyers to become homeowners again once their credit scores improve.

As we can see from both reports, the homeownership rate has the opportunity to increase drastically over the next few years with all of these boomerang buyers returning to the market.

Bottom Line

If your family was negatively impacted by the housing bust, here is the light at the end of the tunnel! You may be able to purchase your dream home faster than you think!

58% of Homeowners See a Drop in Home Values Coming

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According to the recently released Modern Homebuyer Survey from ValueInsured, 58 percent of homeowners think there will be a “housing bubble and price correction” within the next 2 years.

After what transpired just ten years ago, we can understand the concern Americans have about the current increase in home prices. However, this market has very little in common with what happened last decade.

The two major causes of the housing crash were:

  1. A vast oversupply of housing inventory caused by home builders building at a pace that far exceeded historical norms.
  2. Lending standards that were so relaxed that unqualified buyers could easily obtain financing thus enabling them to purchase a home.

Today, housing inventory is at a 20-year low with new construction starts well below historic norms and financing a home is anything but simple in the current mortgage environment. The elements that precipitated the housing crash a decade ago do not exist in today’s real estate market.

The current increase in home prices is the result of a standard economic equation: when demand is high and supply is low, prices rise.

If you are one of the 58% of homeowners who are concerned about home values depreciating over the next two years and are hesitant to move up to the home of your dreams, take comfort in the latest Home Price Expectation Survey.

Once a quarter, a nationwide panel of over one hundred economists, real estate experts and investment & market strategists are surveyed and asked to project home values over the next five years. The experts predicted that houses would continue to appreciate through the balance of this year and in 2018, 2019, 2020 and 2021. They do expect lower levels of appreciationduring these years than we have experienced over the last five years but do not call for a decrease in values ( depreciation) in any of the years mentioned.

Bottom Line

If you currently own a home and are thinking of moving-up to the home your family dreams about, don’t let the fear of another housing bubble get in the way as this housing market in no way resembles the market of a decade ago.

As a working agent in the Orlando area of Central Florida, I do NOT see a drop in prices soon. In fact, I only see an increase in high demand areas. Call me if you want to discuss my observations at 407-925-7721.

Rising Home Prices Mean Great News for Homeowners

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Recently there has been a lot of talk about home prices and if they are accelerating too quickly. As we mentioned before, in some areas of the country, seller supply (homes for sale) cannot keep up with the number of buyers who are out looking for homes, which has caused prices to rise.

The great news about rising prices, however, is that according to CoreLogic’s Homeowner Equity Report, the average American household gained over $14,000 in equity over the course of the last year, largely due to home value increases.

The map below was created using the same report from CoreLogic and shows the average equity gain per mortgaged home during the 1st quarter of 2017 (the latest data available).

Rising Home Prices Mean Great News for Homeowners | MyKCM

For those who are worried that we are doomed to repeat 2006 all over again, it is important to note that homeowners are investing their new-found equity in their homes and themselves, not in depreciating assets.

The added equity is helping families put their children through college, invest in starting small businesses, pay off their mortgages sooner and even move up to the home that will better suit their needs now.

Bottom Line

If you are a homeowner looking to take advantage of your home equity by moving up to your dream home, let’s get together to discuss your options!

3 Questions to Ask Before You Buy Your Dream Home

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If you are debating purchasing a home right now, you are probably getting a lot of advice. Though your friends and family will have your best interests at heart, they may not be fully aware of your needs and what is currently happening in the real estate market.

Ask yourself the following 3 questions to help determine if now is a good time for you to buy in today’s market.

1. Why am I buying a home in the first place?

This is truly the most important question to answer. Forget the finances for a minute. Why did you even begin to consider purchasing a home? For most, the reason has nothing to do with money.

For example, a survey by Braun showed that over 75% of parents say, “their child’s education is an important part of the search for a new home.”

This survey supports a study by the Joint Center for Housing Studies at Harvard University which revealed that the top four reasons Americans buy a home have nothing to do with money. They are:

  • A good place to raise children and for them to get a good education
  • A place where you and your family feel safe
  • More space for you and your family
  • Control of that space

What does owning a home mean to you? What non-financial benefits will you and your family gain from owning a home? The answer to that question should be the biggest reason you decide to purchase or not.

2. Where are home values headed?

According to the latest Existing Home Sales Report from the National Association of Realtors(NAR), the median price of homes sold in May (the latest data available) was $252,800, which is up 5.8% from last year. This increase also marks the 63rd consecutive month with year-over-year gains.

If we look at home prices year over year, CoreLogic is forecasting an increase of 5.3% over the next twelve months. In other words, a home that costs you $250,000 today will cost you an additional $13,250 if you wait until next year to buy it.

What does that mean to you?

Simply put, with prices increasing each month, it might cost you more if you wait until next year to buy. Your down payment will also need to be higher in order to account for the higher price of the home you wish to buy.

3. Where are mortgage interest rates headed?

A buyer must be concerned about more than just prices. The ‘long-term cost’ of a home can be dramatically impacted by even a small increase in mortgage rates.

The Mortgage Bankers Association (MBA), NAR, and Fannie Mae have all projected that mortgage interest rates will increase over the next twelve months, as you can see in the chart below:

3 Questions to Ask Before You Buy Your Dream Home | MyKCM

Bottom Line

Only you and your family will know for certain if now is the right time to purchase a home. Answering these questions will help you make that decision.

Quartz in the Kitchen

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After several years of declining use, the day has come: another surface has officially surpassed granite in terms of popularity. Any guesses as to what the new countertop du jour might be?

It’s quartz, otherwise known as engineered stone. The National Kitchen & Bath Association (NKBA) reports that while granite is less desirable these days, the use of quartz is on the rise (by kitchen designers anyway.

http://www.apartmenttherapy.com/quartz-vs-granite-countertops-which-is-more-popular-242008?utm_source=at_daily&utm_medium=email&utm_campaign=06232017

Housing Market Expected to “Spring Forward”

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Just like our clocks this weekend in the majority of the country, the housing market will soon “spring forward!” Similar to tension in a spring, the lack of inventory available for sale in the market right now is what is holding back the market.

Many potential sellers believe that waiting until Spring is in their best interest, and traditionally they would have been right.

Buyer demand has seasonality to it, which usually falls off in the winter months, especially in areas of the country impacted by arctic temperatures and conditions.

That hasn’t happened this year.

Demand for housing has remained strong as mortgage rates have remained near historic lows.

The National Association of Realtors (NAR) recently reported that the top 10 dates sellers listed their homes in 2016 all fell in April, May or June.

Those who act quickly and list now could benefit greatly from additional exposure to buyers prior to a flood of more competition coming to market in the next few months.

Bottom Line

If you are planning on selling your home in 2017, let’s get together to evaluate the opportunities in our market. Call me at 407-925-7721

The Connection Between Home Prices & Family Wealth

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Over the next five years, home prices are expected to appreciate 3.22% per year on average and to grow by 17.3% 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 in January. If we look at only the projected increase in the price of that home, how much equity will they earn over the next 5 years?

The Connection Between Home Prices & Family Wealth | MyKCM

Since the experts predict that home prices will increase by 4.4% this year alone, the young homeowners will have gained $11,000 in equity in just one year.

Over a five-year period, their equity will increase by nearly $43,000! 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 Line

Not 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!