Sunday, June 22, 2014

Home Prices over 30 Years

I found this graphic interesting in keeping everything in perspective.

Saturday, June 21, 2014

Local Market Snapshot

This is a illustrative snapshot of the report posted earlier today.



Ada County May Real Estate Market Report

May Market Report-Why I’m Still Smiling

June 11, 2014 by  · Leave a Comment

Talk about what’s happening in our local market and some of the consumer data that NAR has assembled to help us better design our scope of services for targeted clients.

First the market…

Single family home sales in May 2014 were 783 in Ada County, a decrease of 6% compared to May 2013.   YTD total sales are down 2% compared to this time last year; 2,881 homes sold compared to 2,950.

In May 76% of our total sales were for homes priced above $160,000.  This graphically portrays the smaller role that first –time buyers has on our market. In 2010 more than 52% of buyers were “first-time”. Today the number of first-time buyers is closer to 30%.

In May sales of homes in the $120,00 – $160,000 were up 21% from April 2014 to 162. This category had the greatest sales increase month-over-month.

Days on Market for May were 47.  That’s down eight days from April. In May 2013, Days on Market was 46.

New homes sold in May totaled 133; down 18% from last year; but…up 29% over April.

Existing home sales were 650; down 3% from May 2013.

Historically, May sales set the tone for the Summer. May 2014 posted a 18% increase over April. That’s the second highest since 2006.

(Review Chart – Keeping pace with 2013…some months will be up and some down. )

Of the total sales in May, 6% were distressed; down 4% from last month.

Pending sales at the end of May were 1161; down 19% from May 2013. Pending sales have trailed behind previous year’s pending sales for ten consecutive months.

Pending sales in distress are 7%.

May median home price was $209,000; up 7% from May 2013. Our YTD median price is $205,000; up 9% over last year.

New Homes median price for May was $299,900; up 10% from May 2013. For Existing homes the increase is 9% to $195,375.

The number of houses available for sale at the end of May increased 5% from April 2014 to 2,680.  This is an increase we really need…maybe.  This is 41% more than last year at this time.

We anticipate continued inventory growth from now until the end of Summer.

The price point with the largest increase month-over-month is $160,000 – $200,000 at 12%. The next highest is $200,000 – $250,000 with 10%. Below $160,000 there is no increase in availability.

Of the total active listings, 7% are distressed, unchanged from April.

In Ada County we now have 3.7 months of inventory on hand, down 18% from the end of Apil.

The price category in shortest supply is <$120,000 where we have 1.4 months; actually up a little from last month.

From $120,000 to $160,000 we have 2.1 months available inventory.

From $160,000 to $300,000 we have 3.6 months; all down from last month..

Above $300,000 we have a 4 month’s supply. Above $500,000 the supply is closer to 9 months.

Of sales in May, the most popular price point was $160,000 to $200,000 (21%); and $120,000 to $160,000 (20%) followed by  $200,000 to $250,000 with 18%.

So…what’s next?

Sales in May, although behind last year, show a stronger month-over-month increase than any of the last three years.

Chances are that we will continue to lag behind some months and be barely ahead in others.

Median price seems to be holding tight to the $200K level. This will go up “a little” as we head into summer.

New studies reveal that student debt is a bigger retardant on new homebuyers. Three out of four college grads say they have to wait longer to retire more of that debt before they can afford to own their first home.

On Monday, President Obama took executive action that will allow millions more people to cap their student loan payments at 10 percent of their annual incomes – an option that most, but not all, student borrowers have had since 2010.

He also urged Congress to approve a bill that Sen. Elizabeth Warren (D) of Massachusetts has sponsored, and that the Senate plans to take up this week, which would allow some 25 million borrowers to refinance student loans at lower rates. And he announced a number of other measures around communication and education for student borrowers, to allow them to make more informed decisions and take advantage of the options open to them

The CFPB website also offer resources

There is demand and ability, we’ve just got to have the right product.

Bottom line…its going to be a cooler summer than last year.


Friday, June 20, 2014

Why SO MUCH Paperwork?

Getting a Mortgage: Why SO MUCH Paperwork? | The KCM Crew

We are often asked why there is so much paperwork mandated by the bank for a mortgage loan application when buying a home today. It seems that the bank needs to know everything about us and requires three separate sources to validate each and every entry on the application form. Many buyers are being told by friends and family that the process was a hundred times easier when they bought their home ten to twenty years ago.

There are two very good reasons that the loan process is much more onerous on today’s buyer than perhaps any time in history.

  1. The government has set new guidelines that now demand that the bank prove beyond any doubt that you are indeed capable of affording the mortgage. During the run-up in the housing market, many people ‘qualified’ for mortgages that they could never pay back. This led to millions of families losing their home. The government wants to make sure this can’t happen again

  2. The banks don’t want to be in the real estate business. Over the last seven years, banks were forced to take on the responsibility of liquidating millions of foreclosures and also negotiating another million plus short sales. Just like the government, they don’t want more foreclosures. For that reason, they need to double (maybe heaven triple) check everything on the application.

However, there is some good news in the situation. The housing crash that mandated that banks be extremely strict on paperwork requirements also allowed you to get a mortgage interest rate probably below 5%.

The friends and family who bought homes ten or twenty ago experienced a simpler mortgage application process but also paid a higher interest rate (the average 30 year fixed rate mortgage was 8.12% in the 1990’s and 6.29% in the 2000’s). If you went to the bank and offered to pay 7% instead of <5%, they would probably bend over backwards to make the process much easier.

Bottom Line

Instead of concentrating on the additional paperwork required, let’s be thankful that we are able to buy a home at historically low rates.


Thursday, June 19, 2014

The PTC Index

April 2014

Building Permits294
New Home Sales140
Existing Home Sales822
Average Sales Price195447.5
Financial-Bond Market(10-yr Treasury)2.71
Days on Market65
Distressed(Short Sales and REO)1028
Notices of Default96
PTC Index197

The spring season continued to make positive gains during the month of April; the PTC Index is showing positive movement in several areas as the busier summer buying season fast approaches. Notices of Default fell another 3.3 percent from the month prior bringing the total amount to 96 - the first time in the history of the Index that NOD counts fell below 100 in a single month. At its peak, the Index shows NODs reach as high as 949 filings during March 2010. Refinances in April only reflect half the volume from a year ago but made the single greatest gain in a full year, increasing by 21 percent over April 2013. New home sales fell slightly from the month prior and year ago by 8.5 percent and 28.6 percent, respectively so this will be an area to watch in the coming months. Conversely, building permits made gains of 14 percent over the month prior so we may be seeing increased starts (reflecting new home sales) in the next 30 to 60 days. Existing home sales increased by 21 percent since March 2014 while the average sales price across the valley grew slightly to a year-high of $191,207.

Wednesday, June 18, 2014

Should the Home Owner Accompany the Appraiser on the Inspection?

The doorbell rings.  On the front porch stands the appraiser you were expecting.  She explains that she will first measure the home from the exterior and then will need to walk through each room on the inside.  The questions in your mind are: What do you want me to do? Do you need help? Should I go with you?  These are all great questions, and the answer is: it depends.Viewing Property

Appraisers are used to doing things on their own.  A fair number of homes we inspect are vacant, so our tools are set up for solo use.  Everyone at our firm has a laser measuring device so there is not even a ‘dumb end’ of the tape to hold.  In other words, we appreciate the offer for help, but it is not usually needed.

On the other hand, it is nice to have someone with us who knows more about the house than we do.  Pointing out updates and features that are not readily seen can be helpful to the appraiser.

Every appraiser has a personal preference when it comes to home owner participation.  Some of us like to have them in tow and others would prefer to focus on the task at hand without interruption.  It is simply a matter of preference.  However, it is not really about our opinion when it comes to this matter.  It is more about you.

Having a stranger walk through your home can be an intimidating experience.  Some desire to accompany the appraiser and others would rather the appraiser just do it alone.  At Appraisal Precision and Consulting Group, we want you to do whatever feels best to you.  There are pros and cons to both.  In the end, it is your home.  You are in charge.

Courtesy of Appraisal Precision and Consulting Group

Tuesday, June 17, 2014

5 Reasons to Sell Now

5 Reasons to Sell Now | The KCM Crew

Many sellers are still hesitant about putting their house up for sale. Where are prices headed? Where are interest rates headed? Can buyers qualify for a mortgage?  These are all valid questions. However, there are several reasons to sell your home sooner rather than later. Here are five of those reasons.

1. Demand is Strong

There is currently a pent-up demand of purchasers as many home buyers pushed off their search this past winter & early spring because of extreme weather. According to the National Association of Realtors (NAR), the number of buyers in the market, which feel off dramatically in December, January and February, has begun to increase again over the last few months. These buyers are ready, willing and able to buy…and are in the market right now!

2. There Is Less Competition Now

Housing supply is still under the historical number of 6 months’ supply. This means that, in many markets, there are not enough homes for sale to satisfy the number of buyers in that market. This is good news for home prices. However, additional inventory is about to come to market.

There is a pent-up desire for many homeowners to move as they were unable to sell over the last few years because of a negative equity situation. Homeowners are now seeing a return to positive equity as prices increased over the last eighteen months. Many of these homes will be coming to the market in the near future. Also, new construction of single-family homes is again beginning to increase. A recent study by Harris Poll revealed that 41% of buyers would prefer to buy a new home while only 21% prefer an existing home (38% had no preference).

The choices buyers have will continue to increase over the next few months. Don’t wait until all this other inventory of homes comes to market before you sell.

3. The Process Will Be Quicker

One of the biggest challenges of the 2014 housing market has been the length of time it takes from contract to closing. Banks are requiring more and more paperwork before approving a mortgage. As the market heats up, banks will be inundated with loan inquiries causing closing timelines to lengthen.  Selling now will make the process quicker and simpler.

4. There Will Never Be a Better Time to Move-Up

If you are moving up to a larger, more expensive home, consider doing it now. Prices are projected to appreciate by over 19% from now to 2018. If you are moving to a higher priced home, it will wind-up costing you more in raw dollars (both in down payment and mortgage payment) if you wait. You can also lock-in your 30 year housing expense with an interest rate in the low 4’s right now. Rates are projected to be over 5% by this time next year.

5. It’s Time to Move On with Your Life

Look at the reason you decided to sell in the first place and determine whether it is worth waiting. Is money more important than being with family? Is money more important than your health? Is money more important than having the freedom to go on with your life the way you think you should?

Only you know the answers to the questions above. You have the power to take back control of the situation by putting your home on the market and pricing it so it sells. Perhaps, the time has come for you and your family to move on and start living the life you desire.

That is what is truly important.



Thursday, June 12, 2014

Cost Across the Decades

Here is an interesting comparison across the decades for interest rates and mortgage payments. I remember well the first house my wife and I purchased and the loan officer stating we would never see such low rates again. (It was an Idaho Housing backed loan and interest rates had risen since we locked it in.) It was around 4.5% as I recall, and for many years that was true, but not in the last couple of years.

Wednesday, June 11, 2014

4 Reasons to Buy YOUR HOME Now!


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

1. Prices Will Continue to Rise

The Home Price Expectation Survey polls a distinguished panel of over 100 economists, investment strategists, and housing market analysts. Their most recent report projects appreciation in home values over the next five years to be between 30.8% (most optimistic) and 9.4% (most pessimistic).

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 Increasing

Although Freddie Mac’s Primary Mortgage Market Survey shows that interest rates for a 30-year mortgage have softened recently, most experts predict that they will begin to rise later this year. The Mortgage Bankers Association, Fannie Mae, Freddie Mac, and the National Association of Realtors are in unison; projecting that rates will be up almost a full percentage point by the end of next year.

An increase in rates will impact YOUR monthly mortgage payment. Your housing expense will be more a year from now if a mortgage is necessary to purchase your next home.

3. Either Way, You are Paying a Mortgage

As a recent paper from the Joint Center for Housing Studies at Harvard University explains:
“Households must consume housing whether they own or rent. Not even accounting for more favorable tax treatment of owning, homeowners pay debt service to pay down their own principal while households that rent pay down the principal of a landlord plus a rate of return. That’s yet another reason owning often does—as Americans intuit—end up making more financial sense than renting.”

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 that both are on the rise.

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

Look at the actual reason you are buying and decide whether 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 renovations, maybe it is time to buy.

If the right thing for you and your family is to purchase a home this year, buying sooner rather than later could lead to substantial savings.


Tuesday, June 10, 2014

Should I Rent My House if I Can’t Sell It?


Posted: 10 Jun 2014 04:00 AM PDT

Should I Rent If I Can't Sell | The KCM Crew

There has been a lot written about how buying a home is less expensive than renting one in most parts of the country. Rents are skyrocketing and homes are still at great prices. These two situations are also causing some sellers to consider renting their home instead of selling it. After all, a homeowner can get great rental income now and perhaps wait until house values increase even further before selling.

This logic makes sense in some cases. There is a strong belief that residential real estate is a great investment right now. However, if you have no desire to actually become an educated investor in this sector, you may be headed for more trouble than you were looking for.

Before renting your home, you should answer the following questions to make sure this is the right course of action for you and your family.

10 Questions to ask BEFORE renting your home

  1. How will you respond if your tenant says they can’t afford to pay the rent this month because of more pressing obligations? (This happens most often during holiday season and back-to-school time when families with children have extra expenses).

  2. Because of the economy, many homeowners cannot make their mortgage payment. What percentage of tenants do you think cannot afford to pay their rent?

  3. Have you interviewed experienced eviction attorneys in case a challenge does arise?

  4. Have you talked to your insurance company about a possible increase in premiums as liability is greater in a non-owner occupied home?

  5. Will you allow pets? Cats? Dogs? How big a dog?

  6. How will you actually collect the rent? By mail? In person?

  7. Repairs are part of being a landlord. Who will take tenant calls when necessary repairs come up?

  8. Do you have a list of craftspeople readily available to handle these repairs?

  9. How often will you do a physical inspection of the property?

  10. Will you alert your current neighbors that you are renting the house?

Bottom Line

Again, renting out residential real estate is historically a great investment. However, it is not without its challenges. Make sure you have decided to rent the house because you want to be an investor, not because you are hoping to get a few extra dollars by postponing a sale.