This coming year the housing market will be defined by 3 things- inventory, interest rates, and appreciation.  But the biggest issue the housing market will face in 2020 is an inventory shortage.  There aren’t enough homes on the market for buyers, especially on the lower end of the market. This is a topic that has come up frequently within the past several months.

Based on what is forecasted, we know that interest rates are projected to remain low and that appreciation is expected to continue as we move into 2020.  Additionally, the upcoming election will provoke many unique perspectives on the health of the US housing market. The challenge will be understanding what is actually happening and how you can best position yourself if you are thinking of buying or selling your home.

Here are several perspectives to consider on the inventory issue facing housing next year:

According to realtor.com:

“Despite increases in new construction, next year will once again fail to bring a solution to the inventory shortage that has plagued the housing market since 2015. Inventory could reach a historic low as a steady flow of demand, especially for entry level homes, and declining seller sentiment combine to keep a lid on sales transactions.”

Diana Olick at CNBC:

“Inventory has been falling annually for five straight months, after it recovered slightly toward the end of last year, due to a spike in mortgage rates. Rates began falling again by spring of this year. Homebuilders have been increasing production slowly, but it’s not enough to meet the increasingly strong demand.”

George Ratiu, Senior Economist with realtor.com

“As millennials — the largest cohort of buyers in U.S. history — embrace homeownership and take advantage of this year’s unexpectedly low mortgage rates, demand is outstripping supply, causing inventory to vanish. The housing shortage is felt acutely at the entry-level of the market, where most millennials are looking to break into the market for their first home.”

Bottom Line

The most important thing you can do is understand what is happening in your local market by with me.  You may not be able to avoid some of the issues brought on by low inventory, but you can be educated and prepared.

SOURCE: Keeping Current Matters

For buyers, there's snow place like the housing market in the winter.

If you're willing to handle the challenges that come with moving in slushy streets and nippy temps, you might just catch a deal that will melt away as soon as the weather — and the housing market — heats up in the spring. Here's why you should consider buying in the next few months.

Prices are typically lower, and sellers are motivated.

People who list their home in the depths of winter are usually in a time crunch to sell. With less buyer competition, you're in a good place to arrange a deal. Work with your real estate agent to determine a negotiation strategy that gets you in the door at the price you want to pay.

Everything tends to move faster.

Though things seem to lose steam when snow begins to fall, the homebuying process can accelerate. Fewer houses on the market, less buyer interest and an increase in motivation to close deals by year's end create the perfect scenario for a speedy and more tailored experience. That means you'll probably close quicker than if you buy in the primetime spring and summer months.

You can see homes at their best and how they fair in the worst.

There's nothing like a little holiday cheer to brighten everything up. Sellers will dress their homes to the nines to reel you in, which means you'll get to see just how cozy and charming your future home can be.

On the flip side, you'll be able to evaluate how the home holds up in the wintry weather. Be sure to check for drafts and temperature imbalances as well as if any ice dams are forming or have formed on the roof. Shopping in the winter allows you to learn things about the property that you wouldn't have noticed during warmer months.

SOURCE: FreddieMac.com

Success is something often worth repeating, and Brent Sutherland, a Certified Financial Planner and Real Estate Investor, has certainly made his way in a momentum-driving direction. Here are 3 tips he shares from a recent piece in Business Insider on the benefits of owning real estate:

1. Real estate diversifies your income

“While it is certainly important to be properly diversified with your investments, it is even more important to be diversified with your income. This is because the largest financial risk for most of you is the loss of your primary source of income, which is typically in the form of a day job.”

The article highlights how having multiple sources of income, such as those derived from real estate investments, can eventually lead to relying less and less on a day job. Sound dreamy? It can be. When done well, real estate investments may eventually open up your time and the financial freedom to explore other things, like travel and other aspirations you may have for the future, particularly in the golden years of retirement.

2. Real estate produces near-immediate results

“You can achieve and feel the results almost immediately. Property improvements are visible and tangible. You can cash, spend, and invest rent payments. Today! Not 30 years in the future.”

Currently, home prices are appreciating in all price ranges, and just last week CoreLogic announced their 12-month home value projection at 5.6%, an increase from 4.5% noted earlier this summer. With that in mind, real estate today is definitely driving immediate results!

3. Passive income can help you become financially independent sooner

“If you need $40,000 a year to live, you could alternatively invest in assets that generate an 8% cash-on-cash return. This is a very reasonable assumption. And it means you would only need to save a total of $500,000 (instead of $1 million). Yet, your investments would still meet your annual household living needs.

While returns, taxes, and inflation can, of course, affect your timeline, cash-flowing real-estate is a clear asset.”

Homeownership is a form of ‘forced savings.’ Every time you pay your mortgage, you’re contributing to your net worth by increasing the equity in your home, bringing you one step closer to true financial independence.

Bottom Line

If you want to increase your savings and overall net worth, real estate is a great way to go. To learn how you can make it happen, let’s talk, I can help guide you through the process.

Now that daylight savings time is over, signaling the onset of longer nights and colder weather, it's the perfect time to prepare your home for the coming winter.

Outdoor Maintenance

Turn off exterior water valves and faucets. To prevent pipes from bursting and damaging your home, shut off your exterior water valves (typically found inside your home) and detach hoses and store them in a covered space. Don't forget to drain your hose bibbs completely before you turn them off for the winter.

Clean your gutters to protect against ice damming. Ice dams form when water in your gutters, trapped by leaves and debris, freezes. Dams force water down under your roof shingles and into your home, which can lead to mold and other problems.

Seal all windows and doors. Air leaks can create unwelcome drafts in your home and cause your energy bills to skyrocket. Keep warm air in and cold air out by caulking around windows and doors and adding or replacing the weather stripping in your window frames.

Indoor Maintenance

Check your furnace and air filters. Have your furnace inspected and cleaned to get rid of build-up, which can become a serious fire hazard. Don't forget to replace dirty filters to ensure proper air flow as you head into the winter months.

Adjust your dampers and ceiling fans. Because heat rises, you'll want to change your dampers to push more warm air to the bottom floors to evenly heat your home. If you don't have dampers, simply close the registers in the upper floors of your home. In addition, set your ceiling fans to turn clockwise. This will pull cold air up and force warm air down, helping to redistribute heat and potentially save on energy costs.

Flush your water heater. Draining water heaters is often an overlooked task—that is, until you're stuck with shampoo in your hair in an ice-cold shower. Water heaters should be flushed once a year to prevent sediment from building up in the bottom of the tank and causing heating problems.

Winter Essentials

After you've completed your winterization checklist, consider stocking up on these items for colder months and winter storms:

• Batteries

• Blankets and warm coats

• Firewood

• Flashlights or battery-powered lanterns

• Generator

• Generator fuel

• Ice scraper and snow brush for your car

• Jugs of water

• Nonperishable foods

• Snow melt

• Snow shovels

Here are four great reasons to consider buying a home today, instead of waiting.

1. Prices Will Continue to Rise

CoreLogic’s latest Home Price Insights Report shows that home prices have appreciated by 3.6% over the last 12 months. The same report predicts prices will continue to increase at a rate of 5.8% over the next year.

The bottom in home prices has come and gone. Home values will continue to appreciate for years. Waiting no longer makes sense.

2. Mortgage Interest Rates Are Projected to Increase Next Year

The Primary Mortgage Market Survey from Freddie Mac indicates that interest rates for a 30-year mortgage have recently hovered just above 3.5%. This is great news for buyers in the market right now, because low interest rates increase your purchasing power – but don’t wait! Most experts predict rates will rise over the next 12 months. The Mortgage Bankers Association, Fannie Mae, Freddie Mac, and the National Association of Realtors are in unison, projecting that rates will increase by this time next year.

An increase in rates will impact your monthly mortgage payment. A year from now, your housing expense will increase if a mortgage is needed to buy your next home.

3. Either Way, You Are Paying a Mortgage 

There are some renters who haven’t purchased a home yet because they’re uncomfortable taking on the obligation of a mortgage. Everyone should realize that, unless you’re living rent-free with your parents, you are paying a mortgage – either yours or that of your landlord.

As an owner, your mortgage payment is a form of ‘forced savings’ that allows you to have equity in your home you can tap into later in life. As a renter, you guarantee your landlord is the person with that equity.

Are you ready to put your housing costs to work for you?

4. It’s Time to Move on With Your Life

The ‘cost’ of a home is determined by two major components: the price of the home and the current mortgage rate. It appears both are on the rise.

But what if they weren’t? Would you wait?

Look at the actual reason you’re buying and decide if it is worth waiting. Whether you want to have a great place for your children to grow up, you want your family to be safer, or you just want to have control over custom renovations, maybe now is the time to buy.

Bottom Line

Buying a home sooner rather than later could lead to substantial savings. Reach out to me to determine if homeownership is the right choice for you and your family this fall.

With the fall season upon us, change is in the air. For many families, children are growing up and moving out of the house, maybe leaving for college or taking a jump into the working world. Parents are finding themselves as empty nesters for the first time. The question inevitably arises: is it finally time to downsize?

If you’re pondering that thought, you may also be wondering if you should fix-up your house before you sell it, or go straight to the market as-is, allowing a potential buyer to do the updates and remodeling. If you’re one of the many homeowners this camp, here are a few tips to help you decide which way to go.

1. Analyze Your Market 

A real estate professional can help you to understand your market and the potential level of buyer interest and demand for your home. Are you in a seller’s market or a buyer’s market? This can change based on the price range of your home, too. A professional can also give you some insight on what you can change or remodel, and how to declutter your house to make it attractive to buyers in your area.

2. Get an Inspector

Right now, the average length of time a family stays in a home is between 9-10 years. That’s a little longer than the historical average, so if you’ve been living in your home for a while, it might be time to make some significant improvements. Think: electrical system, HVAC units, roof, siding, etc. An inspector can give you a better idea of the condition of your home, if it is up to current code standards, and recommendations on how to have your house ready before you put it on the market.

3. Decide If You Need to Remodel 

You may also be thinking about driving buyer appeal with something like a kitchen or a bathroom remodel. If so, first dig into the market value of your home, and compare it to the actual cost of the remodel. A local real estate professional can help you determine your home’s market value, and you’ll want to get a few quotes from contractors on the potential remodel pricing as well. Once you have those two factors narrowed down, you can to decide if a remodel will give you a return on your investment when you sell. Oftentimes, it is actually more advantageous to price your house to sell, list it competitively, and then let the buyer pick the colors they want for their bathroom tiles and the type of countertop they prefer. The 2019 Cost vs. Value Report in Remodeling Magazine compares the average cost for remodeling projects with the value those projects typically retain at resale.

Bottom Line

Nationwide, inventory is low, meaning there is less than the 6-month housing supply needed for a normal market. This drives buyer demand, creating a perfect time to sell. If you’re considering selling your house, sit down with a me. I can help you confidently determine what will be the best choice for you and your family.

SOURCE: Keeping Current Matters

The homebuying process is full of acronyms and if you're unfamiliar with them, it can be hard to understand what you're agreeing to. PMI, APR, LTV… say what? Don't stress when you hear acronyms you don't recognize – I’m here to help! Let's get started with some of the most important acronyms and their definitions, so you can sound like a pro as you go through the homebuying process.

• APR (Annual Percentage Rate): The annual percentage rate tells you the annual cost of borrowing money based on the loan amount interest rate, and certain others fees. The APR is the bottom-line number you can use to shop and compare rates among lenders.

• FRM (Fixed-Rate Mortgage): A fixed-rate mortgage has an interest rate that does not change during the entire term of your loan. This is the most common type of mortgage, giving you certainty and stability over the life of the loan.

• ARM (Adjustable-Rate Mortgage): A adjustable-rate mortgage usually give you lower monthly payments at the onset, but over time your payments will change with interest rates. With this type of mortgage your interest rate adjusts after an initial period — typically 3, 5 or 7 years — and resets periodically.

• LTV (Loan-to-Value): The loan-to-value ratio divides the amount of money borrowed by the appraised value of the home and tells you how much of your home you own versus how much you owe on your mortgage. Lenders use it to help evaluate the risk and terms of your loan.

• DTI (Debt-to-Income): The debt-to-income is the percentage of your monthly income that goes toward your monthly debt payments. Lenders typically use this to measure your ability to manage monthly payments and repay debts.

• PMI (Private Mortgage Insurance): Private mortgage insurance is an insurance that protects lenders from losses if a homeowner is unable to pay their mortgage. It is required for homebuyers who make down payments that are less than 20% of the home purchase price. Typically, PMI will be incorporated into your monthly mortgage payment.

• P&I (Principal and Interest): Principal and interest are the portion of your monthly mortgage payment that goes toward paying off the money you borrowed to buy your home. For most homeowners your principal and interest make up the majority of your monthly mortgage payment — but not all of it.

• PITI (Principal, Interest, Taxes and Insurance): Together, principal, interest, taxes and insurance make up your total monthly mortgage payment. Calculating your total monthly payment, not just principal and interest, is an essential part of the loan approval process because it will give you a more accurate picture of the costs of homeownership.

• UPB (Unpaid Principal Balance): The unpaid principal balance is the amount of principal still owed on a loan. On a typical monthly mortgage payment, a portion of your payment is applied to the interest and a portion is applied to the principal. The following month's interest is based on your UPB. You can check how much how much of your payment is going towards your principal by looking at your amortization schedule.

• HOA (Homeowners Association): 20% of America's homeowners that live within a community governed by a Homeowners Association. If you are considering buying in one of these communities, it's important that you pay your fees as scheduled – typically monthly, quarterly, or annually. HOA fees vary from community to community and may cover services such as trash removal, lawn care and maintenance for common areas, pest control.

Words matter! Learn your homebuying lingo now so that when it's time buy a home you can talk with confidence about one of the most important investments you'll ever make. To learn more about the homebuying process call me!

Source: Freddie Mac

Unfortunately, our homes don’t always grow with us. What may have initially worked fine for a single person, a young couple’s starter home, or a family with a newborn can quickly become too small as families expand and multiple generations live under one roof.

Remodeling and adding to your home is one option for creating more space, but it can be costly, and the size of your property may be prohibitive. That’s when moving to a bigger home becomes the best solution.

WHERE DO YOU NEED MORE SPACE?

The first thought when upsizing your home is to simply consider square footage, bedrooms, and bathrooms. But it’s important to take a more critical approach to how your space will actually be used. If you have younger children (or possibly more on the way), then focusing on bedrooms and bathrooms makes sense. But if your children are closer to heading off to college or starting their own families, it may be better to prioritize group spaces like the kitchen, dining room, living room, and outdoor space—it’ll pay off during the holidays or summer vacations, when everyone is coming to visit for big gatherings.

MOVING OUTWARD

If you need more space, but don’t necessarily want a more expensive home, you can probably get a lot more house for your money if you move a little further from a city center. While the walkability and short commutes of a dense neighborhood or condo are hard to leave beyond, your lifestyle—and preferences for hosting Thanksgiving, barbecues, and birthdays—might mean that a spacious home in the suburbs makes the most sense. It’s your best option for upsizing while avoiding a heftier price tag.

If you have any questions about this next step, call me anytime, I am here to help!