Glenview Real Estate News

Feb. 28, 2020

Housing wealth

Earlier this month, the National Association of Realtors (NAR) released a special study titled Single-Family Home Price Gains by Years of Tenure. The study estimates median home price appreciation over the last 30 years based on the length of homeownership.

Below are three graphs depicting the most important data revealed in the study.

How much have home prices increased?

One of the first measures of the financial benefits of homeownership is the net worth (in the form of equity) an owner can build over time. The study showed the average increase in home values based on how long homeowners stayed in a home.How Much “Housing Wealth” Can You Build in a Decade? | Keeping Current Matters

What was the percentage of appreciation?

Another way to look at this is by the percentage increase in value over time, called appreciation:How Much “Housing Wealth” Can You Build in a Decade? | Keeping Current Matters

Was this appreciation consistent throughout the country?

Today, when we think of markets that have done well over the last decade, we have a tendency to think about San Francisco, San Diego, Seattle, and other West Coast cities. Though it is true the West Region showed the highest price growth over the last three decades, we can see how every region of the country did quite well in ten-year increments:How Much “Housing Wealth” Can You Build in a Decade? | Keeping Current MattersThis data validates the claim that homeownership is great for building wealth. The importance of this information was highlighted in the study’s first sentence:

“Homeownership is an important source of wealth creation, enabling current homeowners and succeeding generations to move up the economic ladder.”

Bottom Line

Homeownership has many financial and non-financial benefits. The accumulation of “housing wealth” through increased equity is a major one. If you’re thinking of buying a home for the first time or moving up to your dream home, the sooner you make the move, the sooner your net worth will begin to grow.

Posted in Real Estate
Feb. 17, 2020

Renovate now & pay when you sell with Curbio

Posted in Home Improvement
Feb. 16, 2020

Growing equity

The Benefits of Growing Equity in Your Home

The Benefits of Growing Equity in Your Home | MyKCM

Over the last couple of years, we’ve heard quite a bit about rising home prices. Today, expert projections still forecast continued growth, just at a slower pace. One of the often-overlooked benefits of rising home prices is the positive impact they have on home equity. Let’s break down three ways this is a win for homeowners.

1. Move-Up Opportunity

With the rise in prices, homeowners naturally experience an increase in home equity. According to the Homeowner Equity Insights from CoreLogic,

“In the first quarter of 2019, the average homeowner gained approximately $6,400 in equity during the past year.”

This increase in profit means if homeowners decide to sell, they’ll be able to put their equity to work for them as they make plans to move up into their next home.

2. Gain in Seller’s Profit

ATTOM Data Solutions recently released their Q2 2019 Home Sales Report, indicating the seller’s profit jumped at one of the fastest rates since 2015. They said:

“A look at the national numbers showed that U.S. homeowners who sold in the second quarter of 2019 realized an average home price gain since the original purchase of $67,500...the average home seller gain of $67,500 in Q2 2019 represented an average 33.9 percent return as a percentage of the original purchase price.”

Looking at the amount paid when they bought their homes, and then the amount they received after selling, we can see that some homeowners were able to walk away with a significant gain.

3. Out of a Negative Equity Situation

Negative equity occurs when there is a decline in home value, an increase in mortgage debt, or both. Many families experienced these challenges over the last decade. According to the same report from CoreLogic,

“U.S. homeowners with mortgages (roughly 63% of all properties) have seen their equity increase by a total of nearly $485.7 billion since the first quarter 2018, an increase of 5.6%, year over year.

In the first quarter of 2019, the total number of mortgaged residential properties with negative equity decreased…to 2.2 million homes, or 4.1% of all mortgaged properties.”

The good news is, many families have moved beyond a negative equity situation, and no longer owe more on their mortgage than the value of their home.

Bottom Line

If you’re a current homeowner, you may have more equity than you realize. Your equity can open the door to future opportunities, such as moving up to your dream home. Let’s get together to discuss your options and start to put your equity to work for you.

Posted in Real Estate
Feb. 15, 2020

Home buyer myths

2 Myths Holding Back Home Buyers

2 Myths Holding Back Home Buyers | MyKCM

In a recent article, First American shared how millennials are not really any different from previous generations when it comes to the goal of homeownership; it is still a huge part of their American Dream. The piece, however, also reveals,

 “Saving for a down payment is one of the biggest obstacles faced by first-time home buyers. Dispelling the 20 percent down payment myth could open the path to homeownership for many more.”

 Myth #1: “I Need a 20% Down Payment”

Buyers often overestimate how much they need to qualify for a home loan. According to the same article:

“Americans still overestimate the qualifications needed to get a mortgage, resulting in qualified potential buyers not even considering homeownership. Indeed, the Urban Institute report revealed that 16 percent of consumers believed that the minimum down payment required by lenders is 20 percent or more, and another 40 percent didn’t know at all.”

While many potential buyers still think they need to put at least 20% down for the home of their dreams, they often don’t realize how many assistance programs are available with as little as 3% down. With a little research, many renters may actually be able to enter the housing market sooner than they ever imagined.

Myth #2: “I Need a 780 FICO® Score or Higher”

In addition to down payments, buyers are also often confused about the FICO® score it takes to qualify for a mortgage, believing a ‘good’ credit score is 780 or higher.

To debunk this myth, let’s take a look at Ellie Mae’s latest Origination Insight Report, which focuses on recently closed (approved) loans.2 Myths Holding Back Home Buyers | MyKCMAs indicated in the chart above, 50.23% of approved mortgages had a credit score of 500-749.

Bottom Line

Whether buying your first home or moving up to your dream home, knowing your options will make the mortgage process easier. Believe it or not – your dream home may already be within your reach.

Posted in Real Estate
Feb. 14, 2020

Feel like you've won

How to Avoid a Gender Gap When Investing in the Housing Market

How to Avoid a Gender Gap When Investing in the Housing Market | MyKCM

When buying a home, we all want to feel like we’re making the right decision, paying a fair price, and making the best investment of our lives. According to a recent gender-based study, men and women can unknowingly walk away with very different financial outcomes when the deal closes. Thankfully, if you follow some simple ways to arm yourself with the information you need to prepare in advance, you’re more likely to feel like you’ve won when the keys to your new house are in your pocket.

Kelly Shue and Paul Goldsmith-Pinkham of the Yale School of Management showed in their recent study The Gender Gap in Housing Returns, when single women invest in the housing market, they’re generally losing out compared to their male counterparts. The report explains,

“We find that single men earn one percentage point higher unlevered returns per year on housing investment relative to single women...The gender gap grows significantly larger after adjusting for mortgage borrowing: men earn 6 percentage points higher levered returns per year relative to women. Data on repeat sales reveal that women buy the same property for approximately 2% more and sell for 2% less.”

On National Public Radio (NPR), Kelly Shue elaborated by saying,

“Women are losing about $1,370 per year relative to men because they tend to buy the same house at a higher price and sell for a lower price.”

In the grand scheme of things, $1,370 a year could be as much as an entire month’s mortgage payment for many households in the United States.

How can you make sure this doesn’t happen to you?

The good news is, it doesn’t have to be this way for anyone, regardless of gender. Here are a few tips on how to make sure you’re prepped and ready to enter the housing market with your best foot forward.

1. Work with a Trusted Real Estate Professional

You need someone on your side who’s going to have your best interest in mind and support your unique homeownership goals. Hiring an agent who has a finger on the pulse of the market will make your buying experience an educated one. You need someone who’s going to tell you the truth, not just what they think you want to hear.

2. Understand the Homebuying Process

Know the key homebuying steps in advance, so you have the best context for how the process works from pre-approval to budgeting, inspections, and more. Have a price range in mind that you can realistically afford, too, so you’re ready to make an offer that positions you for success. Ask your agent questions along the way, and partner together so you feel confident and prepared at every turn.

3. Research the Current Market

Make sure you know the current trends and insights of the housing market as well. When you find a home that’s the perfect fit, determine what other homes are selling for in the neighborhood. These numbers can vary over time based on market conditions such as inventory, appreciation, and many other economic factors. A great agent will provide you with this information and guide you through every step from start to finish.

Bottom Line

When you have a trusted advisor on your side and you’re confident you know exactly what’s happening in the market, you’ll be in a great position to negotiate effectively. Let’s get together today to make sure you’re ready to win the homebuying deal.

Posted in Real Estate
Feb. 13, 2020

Good new whether you're buying or selling a home

Strength of the Economy Is Surprising the Experts

Strength of the Economy Is Surprising the Experts | MyKCM

We’re currently in the longest economic recovery in U.S. history. That has caused some to ask experts to project when the next economic slowdown (recession) could occur. Two years ago, 67% of the economists surveyed by the Wall Street Journal (WSJ) for the Economic Forecasting Survey predicted we would have a recession no later than the end of this year (2020). The same study done just three months ago showed more than one third of the economists still saw an economic slowdown right around the corner.

The news caused concern among consumers. This is evidenced by a recent survey done by realtor.com that shows 53% of home purchasers (first-time and repeat buyers) currently in the market believe a recession will occur by the end of this year.

Wait! It seems the experts are changing their minds….

Now, in an article earlier this month, the Wall Street Journal (WSJ) revealed only 14.3% of those economists now believe we’re in danger of a recession occurring this year (see graph below):Strength of the Economy Is Surprising the Experts | MyKCMThe WSJ article strongly stated,

“The U.S. expansion, now in its 11th year, will continue through the 2020 presidential election with a healthy labor market backing it up, economists say.”

This optimism regarding the economy was repeated by others as well.

CNBC, quoting Goldman Sachs economists:

“Just months after almost everyone on Wall Street worried that a recession was just around the corner, Goldman Sachs said a downturn is unlikely over the next several years. In fact, the firm’s economists stopped just short of saying that the U.S. economy is recession-proof.”

Barron’s:

“When Barron’s gathers some of Wall Street’s best minds—as we do every January for our annual Roundtable—we expect some consensus, some disagreement…But the 10 veteran investors and economists who convened in New York on Jan. 6 at the Barron’s offices agree that there’s almost no chance of a recession this year.”

Washington Post:

“The U.S. economy is heading into 2020 at a pace of steady, sustained growth after a series of interest rate cuts and the apparent resolution of two trade-related threats mostly eliminated the risk of a recession.”

Robert A. Dye, Chief Economist at Comerica Bank:

"I expect that the U.S. economy will avoid a recession in 2020."

Bottom Line

There probably won’t be a recession this year. That’s good news for you, whether you’re looking to buy or sell a home.

Posted in Real Estate
Feb. 12, 2020

What is the best option?

Does “Aging in Place” Make the Most Sense?

Does “Aging in Place” Make the Most Sense? | MyKCM

A desire among many seniors is to “age in place.” According to the Senior Resource Guide, the term means,

“…that you will be remaining in your own home for the later years of your life; not moving into a smaller home, assisted living, or a retirement community etcetera.”

There is no doubt about it – there’s a comfort in staying in a home you’ve lived in for many years instead of moving to a totally new or unfamiliar environment. There is, however, new information that suggests this might not be the best option for everyone. The familiarity of your current home is the pro of aging in place, but the potential financial drawbacks to remodeling or renovating might actually be more costly than the long-term benefits.

A recent report from the Joint Center for Housing Studies of Harvard University (JCHS) titled Housing America’s Older Adults explained,

“Given their high homeownership rates, most older adults live in single-family homes. Of the 24 million homeowners age 65 and over, fully 80 percent lived in detached single-family units...The majority of these homes are now at least 40 years old and therefore may present maintenance challenges for their owners.”

If you’re in this spot, 40 years ago you may have had a growing family. For that reason, you probably purchased a 4-bedroom Colonial on a large piece of property in a child-friendly neighborhood. It was a great choice for your family, and you still love that home.

Today, your kids are likely grown and moved out, so you don’t need all of those bedrooms. Yard upkeep is probably very time consuming, too. You might be thinking about taking some equity out of your house and converting one of your bedrooms into a massive master bathroom, and maybe another room into an open-space reading nook. You might also be thinking about cutting back on lawn maintenance by installing a pool surrounded by beautiful paving stones.

It all sounds wonderful, doesn’t it? For the short term, you may really enjoy the new upgrades, but you’ll still have to climb those stairs, pay to heat and cool a home that’s larger than what you need, and continue fixing all the things that start to go wrong with a 40-year-old home.

Last month, in their Retirement ReportKiplinger addressed the point,

“Renovations are just a part of what you need to make aging in place work for you. While it’s typically less expensive to remain in your home than to pay for assisted living, that doesn’t mean it’s a slam dunk to stay put. You’ll still have a long to-do list. Just one example: You need to plan ahead for how you will manage maintenance and care—for your home, and for yourself.”

So, at some point, the time may come when you decide to sell this house anyway. That can pose a big challenge if you’ve already taken cash value out of your home and used it to do the type of remodeling we mentioned above. Realistically, you may have inadvertently lowered the value of your home by doing things like reducing the number of bedrooms. The family moving into your neighborhood is probably similar to what your family was 40 years ago. They probably have young children, need the extra bedrooms, and may be nervous about the pool.

Bottom Line

Before you spend the money to remodel or renovate your current house so you can age in place, let’s get together to determine if it is truly your best option. Making a move to a smaller home in the neighborhood might make the most sense.

Posted in Real Estate
Feb. 11, 2020

Stop paying rent!

Great News for Renters Who Want to Buy a Home

Great News for Renters Who Want to Buy a Home | MyKCM

Rents in the United States have been skyrocketing since 2012. This has caused many renters to face a tremendous burden when juggling their housing expenses and the desire to save for a down payment at the same time. The recent stabilization of rental prices provides a great opportunity for renters to save more of their current income to put toward the purchase of a home.

Just last week the Joint Center of Housing Studies of Harvard University released the America's Rental Housing 2020 Report. The results explain the financial challenges renters are experiencing today,

“Despite slowing demand and the continued strength of new construction, rental markets in the U.S. remain extremely tight. Vacancy rates are at decades-long lows, pushing up rents far faster than incomes. Both the number and share of cost-burdened renters are again on the rise, especially among middle-income households.”

According to the most recent Zillow Rent Index, which measures the estimated market-rate rent for all homes and apartments, the typical U.S. rent now stands at $1,600 per month. Here is a graph of how the index’s median rent values have climbed over the last eight years:Great News for Renters Who Want to Buy a Home | MyKCM

Is Good News Coming?

There seems, however, to be some good news on the horizon. Four of the major rent indices are all reporting that rents are finally beginning to stabilize in all rental categories:

1. The Zillow Rent Index, linked above, only rose 2.6% over the last year.

2. RENTCafé’s research team also analyzes rent data across the 260 largest cities in the United States. The data on average rents comes directly from competitively rented, large-scale, multi-family properties (50+ units in size). Their 2019 Year-End Rent Report shows only a 3% increase in rents from last year, the slowest annual rise over the past 17 months.

3. The CoreLogic Single Family Rent Index reports on single-family only rental listing data in the Multiple Listing Service. Their latest index shows how overall year-over-year rent price increases have slowed since February 2016, when they peaked at 4.2%. They have stabilized around 3% since early 2019.

4. The Apartment List National Rent Report uses median rent statistics for recent movers taken from the Census Bureau American Community Survey. The 2020 report reveals that the year-over-year growth rate of 1.6% matches the rate at this time last year; it is just ahead of the 1.5% rate from January 2016. They also explain how “the past five years also saw stretches of notably faster rent growth. Year-over-year rent growth stood at 2.6% in January 2018, and in January 2016 it was 3.3%, more than double the current rate.”

It seems tenants are getting a breather from the rapid rent increases that have plagued them for almost a decade.

Bottom Line

Rental expenses are beginning to moderate, and at the same time, average wages are increasing. That power combination may allow renters who dream of buying a home of their own an opportunity to save more money to put toward a down payment. That’s sensational news!

Posted in Real Estate
Feb. 10, 2020

Price your home right!

How Pricing Your Home Right Makes a Big Difference

How Pricing Your Home Right Makes a Big Difference | MyKCM

Even though there’s a big buyer demand for homes in today’s low inventory market, it doesn’t mean you should price your home as high as the sky when you’re ready to sell. Here’s why making sure you price it right is key to driving the best price for the sale.

If you’ve ever watched the show “The Price Is Right,” you know the only way to win the game is to be the one to correctly guess the price of the item up for bid without going over. That means your guess must be just slightly under the retail price.

When it comes to pricing your home, setting it at or slightly below market value will increase the visibility of your listing and drive more buyers your way. This strategy actually increases the number of buyers who will see your home in their search process. Why? When potential buyers look at your listing and see a great price for a fantastic home, they’re probably going to want to take a closer look. This means more buyers are going to be excited about your house and more apt to make an offer.

When this happens, you’re more likely to set up a scenario with multiple offers, potential bidding wars, and the ability to drive a higher final sale price. At the end of the day, even when inventory is tight, pricing it right – or pricing it to sell immediately – makes a big difference.

Here’s the other thing: homeowners who make the mistake of overpricing their homes will eventually have to lower the prices anyway after they sit on the market for an extended period of time. This leaves buyers wondering if the price drops were caused by something wrong with these homes when in reality, nothing was wrong, the initial prices were just too high.

Bottom Line

If you’re thinking about selling your home this year, let’s get together so you have a professional on your side to help you properly price your home and maximize demand from the start.

Posted in Real Estate
Feb. 4, 2020

Three Reasons Why Pre-Approval Is the First Step in the 2020 Homebuying Journey

Three Reasons Why Pre-Approval Is the First Step in the 2020 Homebuying Journey

Three Reasons Why Pre-Approval Is the First Step in the 2020 Homebuying Journey | MyKCM

When the number of buyers in the housing market outnumbers the number of homes for sale, it’s called a “seller’s market.” The advantage tips toward the seller as low inventory heats up the competition among those searching for a place to call their own. This can create multiple offer scenarios and bidding wars, making it tough for buyers to land their dream homes – unless they stand out from the crowd. Here are three reasons why pre-approval should be your first step in the homebuying process.

1. Gain a Competitive Advantage

Low inventory, like we have today, means homebuyers need every advantage they can get to make a strong impression and close the deal. One of the best ways to get one step ahead of other buyers is to get pre-approved for a mortgage before you make an offer. For one, it shows the sellers you’re serious about buying a home, which is always a plus in your corner.

2. Accelerate the Homebuying Process

Pre-approval can also speed up the homebuying process, so you can move faster when you’re ready to make an offer. In a competitive arena like we have today, being ready to put your best foot forward when the time comes may be the leg-up you need to cross the finish line first and land the home of your dreams.

3. Know What You Can Borrow and Afford

Here’s the other thing: if you’re pre-approved, you also have a better sense of your budget, what you can afford, and ultimately how much you’re eligible to borrow for your mortgage. This way, you’re less apt to fall in love with a home that may be out of your reach.

Freddie Mac sets out the advantages of pre-approval in the My Home section of their website:

“It’s highly recommended that you work with your lender to get pre-approved before you begin house hunting. Pre-approval will tell you how much home you can afford and can help you move faster, and with greater confidence, in competitive markets.”

Local real estate professionals also have relationships with lenders who can help you through this process, so partnering with a trusted advisor will be key for that introduction. Once you select a lender, you’ll need to fill out their loan application and provide them with important information regarding “your credit, debt, work history, down payment and residential history.”

Freddie Mac also describes the ‘4 Cs’ that help determine the amount you’ll be qualified to borrow:

  1. Capacity: Your current and future ability to make your payments
  2. Capital or Cash Reserves: The money, savings, and investments you have that can be sold quickly for cash
  3. Collateral: The home, or type of home, that you would like to purchase
  4. Credit: Your history of paying bills and other debts on time

While there are still many additional steps you’ll need to take in the homebuying process, it’s clear why pre-approval is always the best place to begin. It’s your chance to gain the competitive edge you may need if you’re serious about owning a home.

Bottom Line

Getting started with pre-approval is a great way to begin the homebuying journey. Let’s get together today to make sure you’re on the fastest path to homeownership.

Posted in Real Estate