CROWNED: The Clack Manor

Posted on by Andrea Fowler
In this addition of “Crowned” I wanted to showcase a recent home I sold for a lovely couple who I adored. The name of this home is “The Clack Manor”. The Georges’ name everything and each name showcased their loved for their homes and other things that made a home a home for them. 
What I loved the most about working on the sale of this home is the relationship that I built with the clients. They invited us to spend Memorial Day weekend with their family and of course food is my yes to just about anything. It was a splendid weekend being with their family as we prepped for the sale of The Clack Manor. 
The best thing about real estate is the relationships that you form from the process. It can be stressful in so many ways but the relationship and factors that help ease it are the bonus for me. 
Congratulations to The Georges on the sale of The Clack Manor and I wish them bliss on their new home (I forgot the name of it but believe when I say it has a title as well). 

Buy vs Rent: What Really Creates Family Wealth?

Posted on by Andrea Fowler
Buy vs Rent: What Really Creates Family Wealth? | Keeping Current Matters
There has been recent press regarding whether or not it makes better financial sense to rent rather than buy in today’s housing market. As an example, the recently released June Summary of the BH&J Buy vs. Rent Index reported:
“…as of the end of the first quarter of 2015, the housing market in the U.S. and all cities in the index are trending either closer to renting being the superior option or strictly favoring renting over purchasing a home.”
The summary goes on to explain that:
“The index conducts a “horse race” comparison between an individual that is buying a home and an individual that rents a similar quality home andreinvests all monies otherwise invested in homeownership.”(emphasis added)
Though the math may be correct, we are not as sure of the conclusion. Even if you check the methodology offered by the BH&J report itself, you will find that they realize:
“…any extra savings from renting might be spent on non-wealth enhancing goods resulting in any benefits from renting versus owning disappearing in a cloud of consumption spending rather than savings.”

The Concept of ‘Forced Savings’ and Wealth Accumulation

Many believe the wealth accumulation of homeowners is tied into the concept of “forced savings”. The New York Times late last year published an editorial entitled,“Homeownership and Wealth Creation, which discussed this concept. The article explained:
“Homeownership requires potential buyers to save for a down payment, and forces them to continue to save by paying down a portion of the mortgage principal each month.”
“Even in instances where renters have excess cash, saving a substantial amount is difficult without a near-term goal, like a down payment. It is also difficult to systematically invest each month in stocks, bonds or other assets without being compelled to do so.”
Many of the points that were made in the article are on track with the research done by the Joint Center for Housing Studies at Harvard University which agrees that “forced savings” is a major advantage of homeownership. In a paper, The Dream Lives On: the Future of Homeownership in America, they concluded:
“Since many people have trouble saving and have to make a housing payment one way or the other, owning a home can overcome people’s tendency to defer savings to another day.”

The Truth is in the Historical Data

Edwards Deming once said: “Without data, you’re just another person with an opinion.”
Let’s look at the data on this subject. The Federal Reserve has conducted a study titled:Survey of Consumer Finances. The study found that the average net worth of a homeowner ($194,500) is 36 times greater than that of a renter ($5,400).

Bottom Line

The New York Times editorial articulated it best:
“Homeownership long has been central to Americans’ ability to amass wealth; even with the substantial decline in wealth after the housing bust, the net worth of homeowners over time has significantly outpaced that of renters, who tend as a group to accumulate little if any wealth…As a means to building wealth, there is no practical substitute for homeownership.”
If you are a renter who is considering making a purchase, sit with a local real estate professional who can explain the benefits of signing a contract to purchase over renewing your lease!

How Will Mortgage Rate Hikes Impact Home Sales?

Posted on by Andrea Fowler
How Will Mortgage Rate Hikes Impact Home Sales? | Keeping Current Matters
When mortgage interest rates begin to climb, experts immediately begin to discuss home affordability indexes. They calculate how an increase in rates will slow home purchases as more and more potential buyers are priced out of the market. Today, with home prices also increasing, many believe that home sales may slow down rather dramatically.
This may prove to be true in the long term. However, in the short term, increasing mortgage rates may have the opposite effect. Many buyers who have been sitting on the fence may realize that delaying their purchase no longer makes sense.
Last week, in a CNBC article, Matt Weaver of Florida-based PMAC Lending explained the impact an increase in rates will have:
“These increases really help the home-buying market. It really gets buyers to really understand that ‘wait a minute, rates are at an all-time low, let’s react now, let’s react before they go higher’.”
As an example, we can look to 2013 when interest rates spiked up by a full percentage point over a two month period. The result is that many buyers rushed to the market on the fear that rates would continue to climb. It didn’t necessarily increase the number of sales that year dramatically.
However, it did seem to move some sales up in the year as evidenced by the chart below:
Home Sales & Impact of Mortgage Rate Spike | Keeping Current Matters
We can see that the sales cycle did not follow a more normal cycle (2014) with more sales being pushed into July and August and slightly less sales in September and August.

Bottom Line

If you are waiting to put your house on the market, think twice. Now may be the perfect time to sell as buyer competition will continue to heat up as more purchasers jump into the market. You may also save a pretty penny on the monthly mortgage payment of your next home by selling now before rates shoot up.

Mortgage Rates Just Jumped Over 4%. Now What?

Posted on by Andrea Fowler
Mortgage Rates Just Jumped Over 4%. Now What? | Keeping Current Matters
Last week, mortgage interest rates jumped over the 4% mark for the first time this year according to Freddie Mac’s Mortgage Market Survey.
In an article in Housing Wire, a Bankrate analyst explained:
“Mortgage rates rocketed higher following a stronger than expected monthly employment report. The good news on the job front further solidifies the notion that the Federal Reserve will likely begin raising interest rates soon, perhaps in the third quarter of this year.”
This is the same type of commentary we heard back in the spring of 2013 when the talk of the Fed possibly raising rates caused mortgage interest rates to surge by a full percentage point from the end of April through the end of June of that year.

Will We See that Same Surge in 2015?

No one knows for sure. However, Fannie Mae, Freddie Mac, the Mortgage Bankers Association and the National Association of Realtors are each calling for rates to continue their upswing over the next six quarters.

Here is a chart comparing 2013 to this year:

Mortgage Rate Spike Comparison | Keeping Current Matters

Bottom Line

Though no one can definitely say where rates will be six months from now, most experts believe they will be higher. If you are thinking of buying your first home or are considering a move up to the house of your family’s dreams, now may be the best time to do it.

217,726 Reasons to Buy a Home Now!

Posted on by Andrea Fowler
217,726 Reasons to Buy a Home Now! | Keeping Current Matters
The inaugural Opportunity Cost Report was released recently by realtor.com. The report explained that “with interest rates and home prices expected to climb in the next year, the financial penalties of delaying or forgoing a home purchase in today’s market have become very steep”.
The report estimates that, based on today’s dollars, the average purchaser would accumulate $217,726 in increased wealth over a 30-year period.
(You can get the projected wealth increase for almost 100 metros here.)

What could this mean to someone sitting on the fence waiting to buy?

Experts believe that both home prices and mortgage interest rates will increase over the next twelve months. Obviously, if this does happen, the monthly cost of a home a year from now will be dramatically higher than it is today. The Opportunity Cost Report breaks down exactly how much a purchaser could lose over increments of one year and three years. Here are the results based on an average purchaser in the U.S. delaying their purchase:
The Cost of Waiting to Buy | Keeping Current Matters

Bottom Line

If you are ready, willing and able to buy a home, waiting doesn’t make sense.

Guess Where Residential Rents are Heading?

Posted on by Andrea Fowler
Guess Where Residential Rents are Heading? | Keeping Current Matters
Each month, many people are faced with the decision of renewing their rental lease for another year or purchasing their first home. One of the questions that must be answered before they make a decision is – “Where are rents headed?”
The Wall Street Journal recently wrote an article on this issue. Their conclusion:
“Apartment rental increases slowed in the first quarter from a year earlier, but the move is more likely a temporary blip than the beginning of a long-term respite for renters.”
The article goes on to quote Ryan Severino, a senior economist at Reis:
“I wish I had a better story to tell renters these days, but I think they’re in for some rent increases for the foreseeable future.”
Probably the most interesting part of the article came in the Comment Section where a proud landlord proclaimed:
“As a landlord I can tell you I don’t pay property tax. I don’t pay for repairs. The tenant pays. I get my money off the top.”
Here is a chart showing rent increases over the last 25+ years:
Median Asking Rent Since 1988 | Keeping Current Matters

June is National Homeownership Month!

Posted on by Andrea Fowler
Today Kicks Off National Homeownership Month! | Keeping Current Matters
National Homeownership Month actually started as a week-long celebration of homeownership during the Clinton administration in 1995. In 2002, President George W. Bush proclaimed June as the National Homeownership Month. Here is an excerpt from his proclamation:
“Homeownership is an important part of the American Dream…A home provides shelter and a safe place where families can prosper and children can thrive. For many Americans, their home is an important financial investment, and it can be a source of great personal pride and an important part of community stability.”
“Homeownership encourages personal responsibility and the values necessary for strong families. Where homeownership flourishes, neighborhoods are more stable, residents are more civic-minded, schools are better, and crime rates decline.”
“During National Homeownership Month, I encourage all Americans to learn more about financial management and to explore homeownership opportunities in their communities. By taking this important step, individuals and families help safeguard their financial futures and contribute to the strength of our Nation.”
If you are one of the many renters out there who would like to make the transition from renter to homeowner, contact me so that we can evaluate your ability to do so.

If You are Thinking of Selling, Now’s the Time

Posted on by Andrea Fowler
If You are Thinking of Selling, Now’s the Time | Keeping Current Matters
If you thought about selling your house this year, now may be the time to do it. The inventory of homes for sale is well below historic norms and buyer demand is skyrocketing. We were still in high school when we learned the concept of supply and demand: the best time to sell something is when supply of that item is low and demand for that item is high. That defines today’s real estate market.
Jonathan Smoke, the chief economist of realtor.com, in a recent article revealed:
“Our preliminary review of April activity on realtor.com shows that traffic, searches, and listing views are up more than 35% over last year. With 3 million jobs created and close to 1.5 million new households formed in the past 12 months, many more people want a new home of their own, and they want it bad. Their patience will be tested with tight supply—indeed, the No. 1 impediment of active shoppers in April was not being able to find a home that meets their needs.”
In this type of market, a seller may hold a major negotiating advantage when it comes to price and other aspects of the real estate transaction including the inspection, appraisal and financing contingencies.

Bottom Line

As a potential seller, you are in the driver’s seat right now. It might be time to hit the gas.

New Construction: Hear Those Hammers in the Background?

Posted on by Andrea Fowler
New Construction: Hear Those Hammers in the Background? | Keeping Current Matters
If you are planning on selling your home over the next two years, now may be the time to act. Demand is high, supply is low and many homeowners are benefiting from an almost auction atmosphere with several buyers fighting for their house in the current multi-bid environment. Higher prices and less stringent contingencies are making it easier for the seller and their family.
However, there may be more (and better) competition about to hit the market in the form of newly constructed homes. This may put an end to the buyers’ frenzy over the limited inventory of existing homes which has been below normal levels for over a year.
According to the latest report from the National Association of Realtors (NAR), the forecast for new housing starts and sales will increase significantly over the next two years:
  • NAR is forecasting 1.1 million new housing starts in 2015, jumping to 1.4 million in 2016.
  • New home sales are projected to increase from the 437,000 in 2014 to 570,000 this year and 720,000 in 2016.

Bottom Line

In major urban areas across the country, building cranes are again stretched across the city skyline. In many suburbs, you can again hear the thumping of a carpenter’s hammer in the background. Those are the sights and sounds that inform us that it may be time to sell.

You Want to Raise My Rent How Much?

Posted on by Andrea Fowler
You Want to Raise My Rent How Much? | Keeping Current Matters
We recently reported that investment purchases in 2014 fell 7.4% for the year, that combined with a diminished supply of distressed inventory allowing for big profits, has real estate investors looking for a new way to make more money in 2015.
So if they don’t have new properties to buy… how would they make more money? Easy… they are going to raise your rent!
A recent article from Bloomberg Business gave insight into exactly what the CEO’s of major investment firms are thinking.
“We are focusing aggressively on rent bumps,” American Residential Properties CEO Stephen Schmitz said during a panel discussion. “There’s a supply imbalance in some markets. The same thing that keeps occupancy high also drives rents.”

How Much Are They Going To Raise Your Rent?

Rental rates are predicted to increase 4% on renewals and as much as 5.7% for new tenants.
Haendel St. Juste, a Morgan Stanley analyst put it this way:
“The focus is now on optimizing revenue, compared to getting heads in beds,”

So What Can You Do?

If you are one of the millions of renters out there dreading the day that you have to renew your lease, or planning to move into a new rental property, now may be the time to sit with a real estate professional and evaluate your ability to lock in your housing cost, by buying now.