Buying Remains Cheaper Than Renting in 39 States!

In the latest Rent vs. Buy Report from Trulia, they explained that homeownership remains cheaper than renting with a traditional 30-year fixed rate mortgage in the 100 largest metro areas in the United States.

The updated numbers show that the range is an average of 3.5% less expensive in San Jose (CA), all the way up to 50.1% less expensive in Baton Rouge (LA), and 33.1% nationwide!

A study by GoBankingRates looked at the cost of renting vs. owning a home at the state level and concluded that in 39 states, it is actually ‘a little’ or ‘a lot’ cheaper to own (represented by the two shades of blue in the map below).

Buying Remains Cheaper Than Renting in 39 States! | Simplifying The Market

One of the main reasons owning a home has remained significantly cheaper than renting is the fact that interest rates have remained at or near historic lows. Freddie Mac reports that the current interest rate on a 30-year fixed rate mortgage is 3.91%.

Nationally, rates would have to reach 9.1%, a 128% increase over today’s average of 4.0%, for renting to be cheaper than buying. Rates haven’t been that high since January of 1995, according to Freddie Mac.

Bottom Line

Buying a home makes sense socially and financially. If you are one of the many renters who would like to evaluate your ability to buy this year, let’s get together and find you your dream home.

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4 Reasons to Sell This Fall [INFOGRAPHIC]

4 Reasons to Sell This Fall [INFOGRAPHIC] | Simplifying The Market

Some Highlights:

  • Buyer demand continues to outpace the supply of homes for sale! Buyers are often competing with one another for the listings that are available!
  • Housing inventory is still under the 6-month supply that is needed for a normal housing market.
  • Perhaps the time has come for you and your family to move on and start living the life you desire.

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Net Worth of Homeowners 44X Greater than Renters

Net Worth of Homeowners 44X Greater than Renters | Simplifying The Market

Every three years, the Federal Reserve conducts their Survey of Consumer Finances in which they collect data across all economic and social groups. The latest survey data, covering 2013-2016 was released two weeks ago.

The study revealed that the 2016 median net worth of homeowners was $231,400 – a 15% increase since 2013. At the same time, the median net worth of renters decreased by 5% ($5,200 today compared to $5,500 in 2013).

These numbers reveal that the net worth of a homeowner is over 44 times greater than that of a renter.

Owning a home is a great way to build family wealth

As we’ve said before, simply put, homeownership is a form of ‘forced savings.’ Every time you pay your mortgage, you are contributing to your net worth by increasing the equity in your home.

That is why, for the fourth year in a row, Gallup reported that Americans picked real estate as the best long-term investment. This year’s results showed that 34% of Americans chose real estate, followed by stocks at 26% and then gold, savings accounts/CDs, or bonds.

Greater equity in your home gives you options

If you want to find out how you can use the increased equity in your home to move to a home that better fits your current lifestyle, let’s get together to discuss the process.

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Builder Offering to Pay Off Student Loans for Buyers

Builder Offering to Pay Off Student Loans for Buyers | Simplifying The Market

Millennials are on track to become the most educated generation in history. This means they are also the generation with the most student debt. Depending on the type of degree earned, as well as the prestige of the institution attended, there are some millennials who graduate college with what equates to a mortgage payment.

For those first-time buyers, and even some move-up buyers, who took advantage of the First-Time Homebuyer Tax Credit in 2008, there is an interesting program being introduced by Lennar Home Builders and Eagle Home Mortgage.

“Borrowers with Eagle Home Mortgage’s Student Loan Debt Mortgage Program can direct up to 3% of the purchase price (up to $13,000) to pay their student loans when they buy a new home from Lennar, one of the nation’s largest homebuilders. The contribution doesn’t directly increase the purchase price of the home or add to the balance of the loan.”

The program allows borrowers, whose credit and income requirements qualify, to put down as low as 3% and have a maximum loan amount of $424,100. At the time of closing, Lennar contributes up to 3% to pay down student loans incurred while attending universities, colleges, community colleges, trade schools and other certificate-granting programs.

Jimmy Timmons, President of Eagle Home Mortgage, gave more context about the reasons behind the creation of the program,

“Americans are more burdened than ever by student loans, with $1.3 trillion in outstanding student loans spread out among 42 million borrowers.  

Particularly with millennial buyers, people who want to buy a home of their own are not feeling as though they can move forward. Our program is designed to relieve some of that burden and remove that barrier to owning a home.”

According to the Wall Street Journal, “housing observers said other builders are likely to look to mimic the program, which could help lure more of the critical first-time-buyer segment into home purchases.”

Bottom Line

If you are one of the many millennials who may have delayed purchasing your first home, or feel stuck in a house that no longer fits your needs, there are programs and options available to help you achieve your dream!

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Millionaire to Millennials: Buy a Home Now!

Millionaire to Millennials: Buy a Home Now! | Simplifying The Market

In a CNBC article, self-made millionaire David Bach explained that “the single biggest mistake millennials are making” is not purchasing a home because buying real estate is “an escalator to wealth.”

Bach went on to explain:

“If millennials don’t buy a home, their chances of actually having any wealth in this country are little to none. The average homeowner to this day is 38 times wealthier than a renter.”

In his bestselling book, “The Automatic Millionaire,” Bach does the math:

“As a renter, you can easily spend half a million dollars or more on rent over the years ($1,500 a month for 30 years comes to $540,000), and in the end wind up just where you started — owning nothing. Or you can buy a house and spend the same amount paying down a mortgage, and in the end wind up owning your own home free and clear!”

Who is David Bach?

Bach is a self-made millionaire who has written nine consecutive New York Times bestsellers. His book, “The Automatic Millionaire,” spent 31 weeks on the New York Times bestseller list. He is one of the only business authors in history to have four books simultaneously on the New York Times, Wall Street Journal, BusinessWeek and USA Today bestseller lists.

He has been a contributor to NBC’s Today Show, appearing more than 100 times, as well as a regular on ABC, CBS, Fox, CNBC, CNN, Yahoo, The View, and PBS. He has also been profiled in many major publications, including the New York Times, BusinessWeek, USA Today, People, Reader’s Digest, Time, Financial Times, Washington Post, the Wall Street Journal, Working Woman, Glamour, Family Circle, Redbook, Huffington Post, Business Insider, Investors’ Business Daily, and Forbes.

Bottom Line

Whenever a well-respected millionaire gives investment advice, people usually clamor to hear it. This millionaire gave simple advice – if you don’t yet live in your own home, go buy one.

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No… You Do Not Need 20% Down to Buy NOW!

No… You Do Not Need 20% Down to Buy NOW! | Simplifying The Market

The Aspiring Home Buyers Profile from the National Association of Realtors (NAR) found that the American public is still somewhat confused about what is required to qualify for a home mortgage loan in today’s housing market. The results of the survey show that non-homeowners cite the main reason for not currently owning a home, as not being able to afford one.

This brings us to two major misconceptions that we want to address today.

1. Down Payment

NAR’s survey revealed that consumers overestimate the down payment funds needed to qualify for a home loan. According to the report, 39% of non-homeowners say they believe they need more than 20% for a down payment on a home purchase. In actuality, there are many loans written with a down payment of 3% or less.

Many renters may actually be able to enter the housing market sooner than they ever imagined with new programs that have emerged allowing less cash out of pocket.

2. FICO® Scores

An Ipson survey revealed that 62% of respondents believe they need excellent credit to buy a home, with 43% thinking a “good credit score” is over 780. In actuality, the average FICO® scores of approved conventional and FHA mortgages are much lower.

The average conventional loan closed in August had a credit score of 752, while FHA mortgages closed with a score of 683. The average across all loans closed in August was 724. The chart below shows the distribution of FICO® Scores for all loans approved in August.

No… You Do Not Need 20% Down to Buy NOW! | Simplifying The Market

Bottom Line

If you are a prospective buyer who is ‘ready’ and ‘willing’ to act now, but are not sure if you are ‘able’ to, let’s sit down to help you understand your true options.

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A Tale of Two Markets: A 6-Month Update

A Tale of Two Markets: A 6-Month Update | Simplifying The Market

Six months ago, we reported that the mismatch between the type of inventory of homes for sale and the demand of buyers in the US was causing the formation of two markets.

In the starter and trade-up home categories, there were significantly more buyers than there were homes for sale, causing a seller’s market. In the premium, or luxury, home categories, the opposite was true as there was a surplus of these homes compared to the buyers that were out searching for their dream homes, which created a buyer’s market.

According to the National Association of Realtors latest Existing Home Sales Report, the inventory of existing homes for sale in today’s market is at a 4.2-month supply. Inventory is now 6.5% lower than this time last year, marking the 27th consecutive month of year-over-year decreases.

Looking at the latest report from Trulia, we can see that not much has changed, and in fact, recent natural disasters across the country have made inventory conditions even more dire.

Trulia’s market mismatch score measures the search interest of buyers against the category of homes that are available on the market. For example: “if 60% of buyers are searching for starter homes but only 40% of listings are starter homes, [the] market mismatch score for starter homes would be 20.”

The results of their latest analysis are detailed in the chart below.

A Tale of Two Markets: A 6-Month Update | Simplifying The Market

Nationally, buyers are searching for starter and trade-up homes and are coming up short with the listings available, which is leading to a highly competitive seller’s market in these categories.

Premium homebuyers, on the other hand, have the best chance of less competition and more inventory of listings in their price range with a 14.7-point surplus, which is creating more of a buyer’s market.

Bottom Line

Real estate is local. If you are thinking about buying OR selling this fall, let’s get together to discuss the exact market conditions in your area.

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You Don’t Want to Hear This from Your Listing Agent

You Don't Want to Hear This from Your Listing Agent | Simplifying The Market

You’ve decided to sell your house. You begin to interview potential real estate agents to help you through the process. You need someone you trust enough to:

  • Set the market value on possibly the largest asset your family owns (your home)
  • Set the time schedule for the successful liquidation of that asset
  • Set the fee for the services required to liquidate that asset

An agent must be concerned first and foremost with you and your family to garner that degree of trust. Make sure this is the case.

Be careful if the agent you are interviewing begins the interview by:

  • Bragging about their success
  • Bragging about their company’s success

An agent’s success and the success of their company can be important considerations when deciding on the right real estate professional to represent you in the sale of your house. However, you first need to know that they care about what you need and what you expect from the sale. If the agent is not interested in first establishing your needs, how successful they may seem is much less important.

Look for someone with the heart of a teacher’ who comes in prepared to explain the current real estate market to you, and is patient enough to take the time to show you how it may impact the sale of your home; not someone only interested in trying to sell you on how great they are.

You have many agents from which to choose. Pick someone who truly cares.

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Which Homes Have Increased in Value the Most?

Which Homes Have Increased in Value the Most? | Simplifying The Market

Home values have risen dramatically over the last twelve months. The latest Existing Home Sales Report from the National Association of Realtors puts the annual increase in the median existing-home price at 5.6%. CoreLogic, in their most recent Home Price Index Report, revealed that national home prices have increased by 6.7% year-over-year.

CoreLogic broke appreciation down ever further into four price ranges which gives a more detailed view than simply looking at the year-over-year increases of the national median home price.

The chart below shows the four tiers and each one’s growth from July 2016 to July 2017 (the latest data available).

Which Homes Have Increased in Value the Most? | Simplifying The Market

It is important to pay attention to how prices are changing in your local market. The location of your home is not the only factor in determining how much it has appreciated over the course of the last year. Lower priced homes have appreciated at greater rates than homes at the upper ends of the spectrum, due to demand from first-time home buyers and baby boomers looking to downsize.

Bottom Line

If you are planning on listing your home for sale in today’s market, let’s get together to go over exactly what’s going on in your area and your price range.

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Should I Buy a Home Now? Or Wait Until Next Year? [INFOGRAPHIC]

Should I Buy a Home Now? Or Wait Until Next Year? [INFOGRAPHIC]| Simplifying The Market

Should I Buy a Home Now? Or Wait Until Next Year? [INFOGRAPHIC]| Simplifying The Market

Some Highlights:

  • The Cost of Waiting to Buy is defined as the additional funds it would take to buy a home if prices & interest rates were to increase over a period of time.
  • Freddie Mac predicts interest rates to rise to 4.4% by next year.
  • CoreLogic predicts home prices to appreciate by 5.0% over the next 12 months.
  • If you are ready and willing to buy your dream home, find out if you are able to!

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