lake county real estate. and then some…

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Mortgage availability, demand for housing, and new home starts are all increasing. Positive signs for a strengthening housing market…

5 Stats That Prove the Real Estate Market Is Getting Stronger

5 Stats that Prove the Real Estate Market is Getting Stronger | MyKCM

Whenever there is talk about an improving housing market, some begin to show concern that we may be headed toward another housing bubble that will be followed by a crash similar to the one we saw last decade.

Here are five data points that show the housing market will continue to recover, and that a new housing crisis is not about to take shape.

1) Mortgage availability is increasing, but is nowhere near the levels we saw in 2004-2006.

A buyer’s chances of being approved for a mortgage have increased over the last three years; That’s good news for the market. This is not a precursor to another challenge, as many experts maintain that it is still too difficult for many buyers to attain house financing.

As Jonathan Smoke, the Chief Economist of realtor.com, recently explained:

“The havoc during the last cycle was the result…of speculation fueled by loose credit. That’s the exact opposite of what we have today.”

2) The Housing Affordability Index, which measures whether or not a typical family earns enough income to qualify for a mortgage loan on a typical home, based on the most recent price and income data. The current index shows that it is more affordable to buy a home today than at any other time between 1990 and 2008. With median incomes finally beginning to rise, houses should continue to remain affordable and housing demand should remain strong.

3) Home prices are well within historic norms. Prices have increased substantially over the last several years; However, those increases followed the housing crash of 2008 and national prices are still not back to 2006 levels. If there were no bubble (and subsequent bust), today’s prices would actually be lower than if they were measured by historic appreciation levels from 1987-1999.

4) Demand for housing, as measured by new household formations, is growing. The Urban Land Institute projects that 5.95 million new households will be formed over the next three years. Even if the homeownership rate drops to 60%, that would be over 3.5 million new homeowners entering the market.

5) New home starts are finally beginning to increase. This helps eliminate the number one challenge in the industry – lack of inventory. And it does so in two ways:

  1. Some first time buyers will, in fact, purchase a newly constructed home.
  2. Many current homeowners will move-up (or move-down) to a new construction and then put their current home on the market.

This means that there will be an increase in both new construction and existing home inventories.


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Historically low interest rates are expected to climb in 2017. Considering making a move? Doing it sooner than later may save you a lot of money…

Interest Rates Remain at Historic Lows… But for How Long?

Interest Rates Remain at Historic Lows… But for How Long? | MyKCM

The interest rate you pay on your home mortgage has a direct impact on your monthly payment; The higher the rate, the greater your payment will be. That is why it is important to look at where the experts believe rates are headed when deciding to buy now or wait until next year.

The 30-year fixed mortgage rate has fallen half a percentage point since the beginning of the year and has remained at or below 3.5% for the last 11 weeks according to Freddie Mac’s Primary Mortgage Market Survey.

The chart below shows how far rates have fallen this year (on the left), and uses an average of the projections from Freddie Mac, Fannie Mae, the Mortgage Bankers Association and National Association of Realtors (on the right). As you can see, interest rates are projected to increase steadily over the course of the next 12 months.

Mortgage Rates - 30-Year Fixed Rate | MyKCM

How Will This Impact Your Mortgage Payment?

Depending on the amount of the loan that you secure, a half of a percent (.5%) increase in interest rate can increase your monthly mortgage payment significantly.

According to CoreLogic’s latest Home Price Index, national home prices have appreciated 6.0% over the last year and are predicted to be 5.4% higher next year.

If both the predictions of home prices and interest rate increases become a reality, families will wind up paying considerably more for their next home.

Bottom Line

Even a small increase in interest rate can impact your family’s wealth. Let’s get together to evaluate your ability to purchase your dream home.


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Looks like Brexit may not have the impact on the US housing market, that was initially predicted…

Brexit 1 Month Later: The Impact on Mortgage Rates

Brexit 1 Month Later: The Impact on Mortgage Rates | My KCM

Just over a month ago, the United Kingdom decided to withdraw from the European Union in a decision commonly known as Brexit. At that time there was a lot of speculation on how that decision would impact the U.S. residential mortgage market. Today, we want to look at the impact of the first 30 days.

Most believed that the Brexit decision would drive mortgage rates down and keep them down for some time. As CoreLogic reported:

 “First-time buyers can count on continued low mortgage rates to help with affordability issues. Similarly, re-setting adjustable rate loans will have less of a rate shock, and in some cases may even go down.”

What has actually happened?

Initially, rates did fall. However, Freddie Mac has reported that rates have stabilized and have actually increased marginally each of the last two weeks. This prompted Freddie Mac Chief Economist Sean Beckett to say:

“Post-Brexit volatility tapered off over the last two weeks, allowing interest rates to bounce back a bit from their near-record 30-year mortgage rate lows.”

And, Capital Economics Property Economist Matthew Pointon believes rates will continue to increase:

“Given we expect Brexit will have a minimal impact on the U.S. economy, we see no reason to change our forecast for mortgage rates to reach 3.85% by the end of this year, and 5.0% by the middle of 2018.”

For now, it appears that the impact of Brexit on the U.S. housing market was not as dramatic as some thought it could be.


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Interesting observation on selling, as we head into the summer market…

Sell NOW Before Competition Hits the Market

20160525-Share-STM

In their current edition of the Home Price Expectation Survey released last week, Pulsenomics asked this question of the 100+ economists, real estate experts and investment & market strategists they surveyed:

“In your opinion, what is the primary driver of recent home value growth in the U.S.?”

Here are the top four reasons given by those surveyed:

Sell NOW Before Competition Hits the Market | Simplifying The Market

As we have stated before, the current lack of inventory in most housing markets has caused home appreciation to increase at greater percentages than historical averages. This means that this is a great time to sell your home as supply is low and demand is high.

However, things may be about to change…

The fortuitous situation sellers see themselves in may soon change for three reasons:

  1. As more homeowners realize their equity situation has dramatically improved over the last four years, they will be more likely to put their homes on the market.
  2. With the residential real estate sector outperforming a sluggish economy, more home builders will be looking to add new construction inventory to a depleted supply of housing stock.
  3. Many banks are just now foreclosing on loans that have been delinquent since the housing bust. These houses will also be coming to market.

According to Daren Blomquist, senior vice president of RealtyTrac, in the Q2 2016 U.S. Residential Property Vacancy and Zombie Foreclosure Report:

“Lenders have been taking advantage of the strong seller’s market to dispose of lingering foreclosure inventory.” 

Bottom Line

In most housing markets, don’t wait for this additional competition to hit the market. If you are considering selling your house, now may be the time.


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Where are home values headed?

Where Are Home Values Headed Over the Next 5 Years?

20160524-Share-STM

Today, many real estate conversations center on housing prices and where they may be headed. That is why we like the Home Price Expectation Survey.

Every quarter, Pulsenomics surveys a nationwide panel of over one hundred economists, real estate experts and investment & market strategists about where they believe prices are headed over the next five years. They then average the projections of all 100+ experts into a single number.

The results of their latest survey:

Home values will appreciate by 4.0% over the course of 2016, 3.4% in 2017 and 3.0% in the next two years, and finally 2.8% in 2020 (as shown below). That means the average annual appreciation will be 3.2% over the next 5 years.

Where Are Home Values Headed Over the Next 5 Years? | Simplifying The Market

The prediction for cumulative appreciation slowed slightly from 25.0% to 24.7% by 2020. The experts making up the most bearish quartile of the survey are still projecting a cumulative appreciation of 9.9%.

Where Are Home Values Headed Over the Next 5 Years? | Simplifying The Market

Bottom Line

Individual opinions make headlines. We believe the survey is a fairer depiction of future values.


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Vacation home sales are making a comeback…

Looking for somewhere warm for next winter?  I have connections throughout the US who can help you!


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Not everyone thinks that there is a housing bubble…

Further Proof This Isn’t a Housing Bubble | Keeping Current Matters

Two weeks ago, we posted a blog which explained that current increases in home prices were the result of the well-known concept of supply & demand and should not lead to conversations of a new housing bubble. Today, we want to look at home prices as compared to current incomes.

Here is a graph showing the monthly mortgage payment on a median priced home in the U.S. over the last 25 years:

Further Proof This Isn’t a Housing Bubble | Keeping Current Matters

Mortgage payments are currently well below the historic average over that time period. Purchasers are not overextending themselves to buy a home like they did on the run-up to the housing crash.

Lawrence Yun, the Chief Economist at the National Association of Realtors, recently explained in a Forbes article:

“Even though home prices are climbing far above people’s income, exceptionally low mortgage rates have permitted people to buy a home without overstretching their budget. For someone making a 20% down payment, the monthly mortgage payment at today’s mortgage rates would take up 15% of a person’s gross income. During the bubble years, it was reaching 25% of income. The long-term historical average is around 20%. Therefore, a middle-income household does not need to overstretch their budget much if at all to buy a typical home.”

Bottom Line

Due to low interest rates, demand for housing has dramatically increased. This has caused a jump in home prices. However, low interest rates have also allowed the monthly cost of buying a home to remain well below historic norms. We are in a strong housing market, not a housing bubble.


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Illinois is posting a lower average than the nation, however homeowners are regaining equity in their homes….

91.5% of Homes in the US have Positive Equity | Keeping Current Matters

CoreLogic’s latest Equity Report revealed that one million borrowers regained equity in their homes in 2015. The outlook for 2016 remains positive as well, as an additional 850,000 properties would regain equity if home prices rose another 5% this year. 

The study also revealed:

  • 95% of homes valued over $200,000 now have a positive equity position
  • 87% of homes valued under $200,000 have entered a positive position
  • The 11.5% growth in home equity in Q4 marked the 13th consecutive quarter of double digit gains

Below is a map showing the percentage of homes with a mortgage, in each state, that have positive equity. (The states in gray have insufficient data to report.)

91.5% of Homes in the US have Positive Equity | Keeping Current Matters

Significant Equity Is On The Rise

Anand Nallathambi, President & CEO of CoreLogic, believes this is great news for the “long-term health of the U.S. economy.” He went on to say:

“The number of homeowners with more than 20% equity is rising rapidly. Higher prices driven largely by tight supply are certainly a big reason for the rise, but continued population growth, household formation and ultralow interest rates are also factors.”

Of the 91.5% of homeowners with positive equity in the US, 72.6% have significant equity (defined as more than 20%). This means that nearly three out of four homeowners with a mortgage could use the equity in their current home to purchase a new home now.

The map below shows the percentage of homes with a mortgage, in each state, with significant equity.

91.5% of Homes in the US have Positive Equity | Keeping Current Matters

Bottom Line

If you are one of the many homeowners who is unsure of how much equity you have in your home and are curious about your ability to move, meet with a local real estate professional who can help evaluate your situation.


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After the brutal downturn in the housing market 8 years ago, where do analysts think we are headed?

Future Home Values: Where Do The Experts Think They Are Headed? | Keeping Current Matters

Today, many real estate conversations center on housing prices and where they may be headed. That is why we like the Home Price Expectation Survey.

Every quarter, Pulsenomics surveys a nationwide panel of over one hundred economists, real estate experts and investment & market strategists about where they believe prices are headed over the next five years. They then average the projections of all 100+ experts into a single number.

The results of their latest survey:

Home values will appreciate by 3.7% over the course of 2016, 3.3% in 2017 and 3.2% in the next two years, and finally 3.1% in 2020 (as shown below). That means the average annual appreciation will be 3.3% over the next 5 years.

Future Home Values: Where Do The Experts Think They Are Headed? | Keeping Current Matters

The prediction for cumulative appreciation slowed slightly from 21.6% to 17.7% by 2020. The experts making up the most bearish quartile of the survey still are projecting a cumulative appreciation of 10.9%.

Future Home Values: Where Do The Experts Think They Are Headed? | Keeping Current Matters

Bottom Line

Individual opinions make headlines. We believe the survey is a fairer depiction of future values.


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Housing inventory is it’s lowest point since when?!

The National Association of Realtors issued their most recent housing report, at the end of last week.  Thinking of selling?  The housing inventory is at it’s lowest point in 10 years.  While that is good news for sellers, it will make buying a home a bit more challenging.  Buyer demand is expected to be greater than seller supply.  Exposing your property to the market before the spring rush may help you achieve top dollar as a seller.  And starting the search property earlier may help a buyer beat the competitive spring market.  Not sure what to do?  Call me, and we will discuss your options.

Existing Home Sales Rebound in December | Keeping Current Matters

The National Association of Realtors (NAR) just released their latest Existing Home Sales Report on Friday. Sales of existing homes rose by the largest increase ever recorded as they rebounded 14.7% over November’s numbers and now stand at 7.7% higher than a year ago.

While this is great news for the housing market, let’s take a look at one of the main reasons why there was such a large increase in sales.

As we explained last month, the implementation of the “Know Before You Owe” (TRID) initiative delayed some closings, pushing a portion of November’s would-be transactions to close in December.

“December’s rebound in sales is reason for cautious optimism that the work to prepare for ‘Know Before You Owe’ is paying off,” says NAR President Tom Salomone.

Lawrence Yun, NAR’s Chief Economist, had this to say about the surge in December sales:

“While the carryover of November’s delayed transactions into December contributed greatly to the sharp increase, the overall pace taken together indicates sales these last two months maintained the healthy level of activity seen in most of 2015. Additionally, the prospect of higher mortgage rates in coming months and warm November and December weather allowed more homes to close before the end of the year.”

The most important realization to come out of the report is the fact that inventory of existing homes for sale dropped dramatically from a 5.1-month supply in November to the lowest figure since January 2005, at a 3.9-month supply.

A normal market, where prices rise with inflation, is defined as having a 6-7-month supply of homes for sale. As you can see in the chart below, inventory levels in 2015 were at or below a 5.2-month supply for the entire year.

2015 Months Inventory of Homes For Sale | Keeping Current Matters

If inventory levels do not recover, this could be a challenge for sales moving forward as buyer demand remains strong and competition for the homes that are on the market continues to rise.

Bottom Line

If you are considering listing your home for sale in 2016, now is the time! With inventory levels at their lowest mark in over 10 years, listing your home for sale before the busy spring buying season will give you the most exposure to buyers and allow you to get the best price for your home.