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Tara Paras ![Buyers Are Looking for Your Home, Now [INFOGRAPHIC] | Simplifying The Market](https://files.simplifyingthemarket.com/wp-content/uploads/2018/12/20145101/20181221-Share-STM.jpg)
![Buyers Are Looking for Your Home, Now [INFOGRAPHIC] | Simplifying The Market](https://files.simplifyingthemarket.com/wp-content/uploads/2018/12/20145053/20181221-STM-ENG.jpg)
There is a lot of uncertainty regarding the real estate market heading into 2019. That uncertainty has raised concerns that we may be headed toward another housing crash like the one we experienced a decade ago.
Here are four reasons why today’s market is much different:
A major challenge in 2006 was the number of foreclosures. There will always be foreclosures, but they spiked by over 100% prior to the crash. Foreclosures sold at a discount and, in many cases, lowered the values of adjacent homes. We are ending 2018 with foreclosures at historic pre-crash numbers – much fewer foreclosures than we ended 2006 with.
Ten years ago, many homeowners irrationally converted much, if not all, of their equity into cash with a cash-out refinance. When foreclosures rose and prices fell, they found themselves in a negative equity situation where their homes were worth less than their mortgage amounts. Many just walked away from their houses which led to even more foreclosures entering the market. Today is different. Over forty-eight percent of homeowners have at least 50% equity in their homes and they are not extracting their equity at the same rates they did in 2006.
One of the causes of the crash ten years ago was that lending standards were almost non-existent. NINJA loans (no income, no job, and no assets) no longer exist. ARMs (adjustable rate mortgages) still exist but only as a fraction of the number from a decade ago. Though mortgage standards have loosened somewhat during the last few years, we are nowhere near the standards that helped create the housing crisis ten years ago.
Though it is difficult to afford a home for many Americans, data shows that it is more affordable to purchase a home now than it was from 1985 to 2000. And, it requires much less of a percentage of your income today than it did in 2006.
The housing industry is facing some rough waters heading into 2019. However, the graphs above show that the market is much healthier than it was prior to the crash ten years ago.
As we head into 2019, many news outlets and housing experts warn that the housing market may slow down. Over the last six years, the inventory of homes for sale has been near historic lows, which has been the force behind increasing home prices.
This has been great news for sellers as many of them have been able to capitalize on the demand in the market and sell their homes quickly and at a great profit.
One of the big reasons why inventory has remained so low for so long is that an entire generation of home buyers is finally buying! The millennial generation (ages 19-35) has been the driving force behind bidding wars in many areas of the country as they ditch their renter lifestyles and put down roots in new communities.
First American recently released a study entitled “How ‘Renter’ Millennials Will Transform the Housing Market.” In their study, they explained that:
“…As more millennials age into their early-to-mid thirties, and begin to get married, have children and form households, they will continue to be the primary drivers of homeownership demand.”
Because of this, it is safe to say that one aspect of 2019’s housing market that WILL NOT slow down is the demand for housing from young renters who are no longer satisfied living in someone else’s homes.
According to the latest Housing Vacancies and Homeownership Report from the Census Bureau, home buyers under 35 are already out-buying older Americans. The chart below shows the year-over-year change in homeownership rate by those under and over the age of 35.
The national homeownership rate spiked to its highest level in 2004 and then steadily declined until the second quarter of 2016 when it reversed course. Homebuyers under the age of 35 are the reason for that shift.
More than half of the purchase mortgages originated by Fannie Mae and Freddie Mac in 2018 were to first-time homebuyers. In fact,
“according to Census Bureau and First American calculations, over the next 10 years, aging millennials are expected to purchase at least 10 million new homes. By 2060, it is estimated millennials will have produced more than 20 million first-time home buyers.”
If you are a homeowner who is nervous that the demand for your home will slow, don’t worry! If your home is priced competitively, there will be demand for years to come as this generation of renters is finally able to buy!
As we approach the end of the year, many homeowners find themselves asking the question, “If we’re currently in a strong real estate market, why won’t my house sell?”
Sometimes when the market is hot, homeowners attempt to set their listing price higher. Their hope is that a motivated buyer will be willing to pay any price for a house in their desired neighborhood! Sellers must remember, though, that in today’s market a house must be sold twice; first to the buyer and then to their bank.
A buyer can agree to pay the homeowner’s asking price, but after the bank conducts their appraisal, the price might need to be adjusted. The bank will only give the buyer a mortgage for the value of determined in the appraisal.
Sellers must also keep in mind that today’s homebuyers are well-educated. Before they look to buy a house, they have already seen many houses online. They’ve done their research on the neighborhoods they are interested in, including information on the school districts in the area.
They will know if your house seems overpriced and will not waste their time considering it. This is why it’s so important to make sure that your home is priced right from day one on the market!
In many areas, builders are taking advantage of the lack of inventory of homes for sale by building new houses. These newly constructed homes create competition for existing homes in the market. For this reason, many homeowners are making renovations and updates to their homes to compete with the new construction in their marketplace.
Most agents recommend that homeowners declutter their houses before putting them on the market. Buyers want to be able to imagine themselves living in the home instead of focusing on the current homeowner’s decor.
It’s important to take care of the small problems like dripping faucets and torn screens, while also remembering to remove any posters hanging in your teenager’s bedroom. Making sure your home is in perfect condition will make buyers fall in love with it and will ultimately help you get the right price for your house!
Why did the seller put their house on the market in the first place? Is the seller’s motivation still the same as it was when they first listed?
If homeowners are really motivated to sell, they will make sure their houses are both priced right and in good condition. The seller’s motivation will push them to consider all offers and help them make the right decision for their family’s future.
Having a marketing plan is important! According to NAR’s 2018 Profile of Home Buyers and Sellers, 95% of buyers searched online for a home last year. The days of looking for a newspaper ad or yard sign in your preferred neighborhood are over.
If you want to sell your home, you need a real estate professional who understands your local market and knows how to promote your home online. Something as simple as using pictures taken by a professional photographer can make a huge impact in advertising your home!
Keeping an open line of communication with your agent is crucial in getting your home sold with the least amount of hassles, in the right amount of time, and for the right price! From the beginning, establish a continuous line of communication with your agent, and make sure you review your agreement often to see if any changes need to be made. For example, adjusting the selling price!
There are houses selling every single day because they are listed at the right price, they have the right marketing plan, and they are staged for the sale. If for some reason your home didn’t sell and you’re still motivated to get it sold, let’s get together to figure out the reason your house isn’t selling!
Here are five reasons listing your home for sale this winter makes sense.
The latest Buyer Traffic Report from the National Association of Realtors (NAR) shows that buyer demand remains strong throughout the vast majority of the country. These buyers are ready, willing and able to purchase… and are in the market right now! More often than not, multiple buyers are competing with each other to buy a home.
Take advantage of the buyer activity currently in the market.
Housing inventory is still under the 6-month supply that is needed for a normal housing market. This means that, in the majority of the country, there are not enough homes for sale to satisfy the number of buyers in the market. This is good news for homeowners who have gained equity as their home values have increased. However, additional inventory could be coming to the market soon.
Historically, the average number of years a homeowner stayed in their home was six but has hovered between nine and ten years since 2011. 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. As home values continue to appreciate, more and more homeowners will be given the freedom to move.
The choices buyers have will continue to increase. Don’t wait until this other inventory comes to market before you decide to sell.
Today’s competitive environment has forced buyers to do all they can to stand out from the crowd, including getting pre-approved for their mortgage financing. This makes the entire selling process much faster and much simpler as buyers know exactly what they can afford before home shopping. According to Ellie Mae’s latest Origination Insights Report, the time to close a loan has dropped to 46 days.
If your next move will be into a premium or luxury home, now is the time to move up! The inventory of homes for sale at these higher price ranges has forced these markets into a buyer’s market. This means that if you are planning on selling a starter or trade-up home, your home will sell quickly, AND you’ll be able to find a premium home to call your own!
Prices are projected to appreciate by 4.8% over the next year according to CoreLogic. 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.
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 control of the situation by putting your home on the market. Perhaps the time has come for you and your family to move on and start living the life you desire.
We love Oprah. We think her name is perfect for an airport. But who has time to look through a hundred Favorite Things? So, as a team, we decided to make our own list. Then clients, friends, and family shared their favorites, too, and the list was way more manageable at 20 things—and too good not to share!
1. Rebecca Minkoff Always On M.A.B. Backpack
Tara Paras, Principal Broker & CEO
“I love my purse/backpack combo that saves me from having to carry both a purse and laptop bag. It's superlight, easy to carry, and stylish, too! It fits everything I need for meetings, and it doesn’t pull on my back, since it's a backpack! Super find when I was at a conference in Vegas. Love it!”
Audrey Reynolds, Realtor
“Packing cubes have saved me so many times while traveling.
I know exactly where everything is in my luggage at all times, and they make packing/unpacking a breeze. I love them!”
3. Shun Classic 10-inch Chef’s Knife
Aaron Sauvage
“I'm all about that Shun 10-inch chef’s knife! Shun’s are a great all-around kitchen knife. A Shun is very sharp, very well-made, and has a very nice edge! It also makes me feel fancy when I’m cooking in the kitchen.”
Cindi Opkycke, Realtor
“I love anything by catstudio! We’ve collected a few pieces from places we’ve lived and traveled, but my favorite is my Utah pillow! The mini pillows would look so cute on a Christmas tree, the dish towels would be lovely in a frame, and drinks always taste better in the pint glasses!”
5. PMD Personal Microdermabrasion
Justine Boone, Realtor
“There’s something about being able to sand my face that makes my day better! This is one thing that a salesperson insisted I buy that I actually love. I can give myself a quick facial without leaving home. It’s essential in a dry climate!”
Polly Popola
“To date, the best self-tanning product I have found. Very natural, good-looking color, and towels make it easy to apply. I’ve never had a streak!”
7. Organys Lash & Brow Booster Serum
Polly Popola
“Within a week of using this nightly on my brows and lashes, I for sure 100% saw growth. It really works! At least it did for me!”
8. Trader Joe’s Dark Chocolate Peanut Butter Cups
Sue Sorenson
“I don’t think I need to explain, LOL! But you may want supervision when getting these.”
9. Trader Joe’s Bruschetta Sauce
Sue Sorenson
“Delicious with everything, NO LIE! Low carb, low fat, low sodium. Add in heavy cream or ricotta for a quick pasta sauce. I have a tub in my fridge at all times.”
10. The Copper Can Moscow Mule
Rick Wroblewski
“These are awesome over ice with fresh-squeezed lime! They’re available all over the Salt Lake Valley and Park City.”
Whitney Stephens, Realtor
“Norwex products have been a gamechanger for me and my family. Chemical-free, fast, spotless (seriously, the cloths with just water clean better than commercial cleaning products), and letting the kids pitch in without worrying about damaging surfaces or chemical ingestion are just some of the reasons we love cleaning with Norwex at our house!”
12. Babyganics
Jessie Anderson, Realtor
“This is my favorite brand for baby stuff, especially wipes and sunscreen. The wipes don't smell like anything, which I like, and they’re really, really soft. Their spray sunscreen is the best! So easy to put on. It’s recommended by pediatricians because it’s mineral-based and doesn't smell like anything.”
13. Melissa & Doug on the Go Magicolor Coloring Pad
Jessie Anderson, Realtor
“These are awesome for little kids! It keeps them from marking up your stuff—the ink only shows on their paper! My daughter even left the caps off all night and they didn't dry up!”
Jessie Anderson, Realtor
“Cutest little first bike for baby! My baby would sit on this and push even before she could walk. It's lightweight and so easy to put together.”
15. CamelBak Chute Vacuum Insulated Stainless Water Bottle, 40 oz.
Kierstin Pierce, Marketing
“I don’t know about you, but I need to have water with me at all times and not just any water ... COLD water. This water bottle has been the best investment ever! It’s insulated, so it prevents ice from melting too fast, for super-refreshing, ice-cold water (or drink of choice) all day long. Living in a dry climate, you can never have too much hydration!”
16. TheraPAQ Large Reusable Gel Ice Wrap
Dawn Cardinale, Marketing
“After a knee injury, my PT used something like this at his office. I got this one, though I’m guessing there are better ones out there. I think it’s great, because you don’t have to lie still on a couch with ice packs, or use a bandage to wrap packs around your leg. This is easy: you can walk around with it on, and you don’t have to deal with wet, leaky ice packs. I ice every bump and bruise. It feels awesome.”
17. Saucony Kinvara Running Shoe
Walker Willey, Realtor
“I've had 5 or 6 pair of these. Superlight, low drop, natural feel, wide toe-box, fast, and super, comfortable underfoot. They’re good for both fast training runs and long runs. I am a fan."
Jessie Anderson, Realtor
“My favorite yoga mat! Very thick and sticky so your hands and feet stay in place. Even in the sweatiest of classes, you don't need a towel. Seems to last forever and hasn't worn out after 100s of classes.”
Dawn Cardinale, Marketing
“Shopping for a piano light, I only found very expensive classic-style lamps you see in libraries, all glass shades and brass bases. Finally found this gem for $40. It’s not very stable for a piano, since pianos vibrate, but I love it for its flexibility, tone and brightness levels, and other features. Plus it’s low-profile to fit anywhere.”
Bam Faboyede
“My Amazon Echo and Dot would be my favorites. Connects all the music in any room. I can control the sound and get my schedule in the morning, hear the news and weather while I’m in the shower, etc. I use them every day.”
![4 Reasons to Sell Your House This Winter [INFOGRAPHIC] | Simplifying The Market](https://files.simplifyingthemarket.com/wp-content/uploads/2018/12/12114920/20181214-STM-ENG.jpg)
Real estate is shifting to a more normal market; the days of national home appreciation topping 6% annually are over and inventories are increasing which is causing bidding wars to almost disappear. Some see these as signs that the market will soon come tumbling down as it did in 2008.
As it becomes easier for buyers to obtain mortgages, many are suggesting that this is definite proof that banks are repeating the same mistakes they made a decade ago. Today, we want to assure everyone that we are not heading to another housing “bubble & bust.”
Each month, the Mortgage Bankers’ Association (MBA) releases a measurement which indicates the availability of mortgage credit known as the Mortgage Credit Availability Index (MCAI). According to the MBA:
“The MCAI provides the only standardized quantitative index that is solely focused on mortgage credit. The MCAI is calculated using several factors related to borrower eligibility (credit score, loan type, loan-to-value ratio, etc.).” *
The higher the measurement, the easier it is to get a mortgage. During the buildup to the last housing bubble, the measurement sat at around 400. In 2005 and 2006, the measurement more than doubled to over 800 and was still at almost 600 in 2007. When the market crashed in 2008, the index fell to just over 100.
Over the last decade, as credit began to ease, the index increased to where it is today at 186.7 – still less than half of what it was prior to the buildup of last decade and less than one-quarter of where it was during the bubble.
Here is a graph depicting this information (remember, the higher the index, the easier it was to get a mortgage):
Though mortgage standards have loosened somewhat during the last few years, we are nowhere near the standards that helped create the housing crisis ten years ago.
*For more information on the MCAI, including methodology, FAQs, and other helpful resources, please click here.
Every year around this time, we take time to reflect and plan for next year. If you are renting your current home but have dreams of homeownership, your plan for the new year may include buying, and you wouldn’t be alone!
According to the 2018 Bank of America Homebuyer Insights Report, 74% of renters plan on buying in the next 5 years, with 38% planning to buy in the next 2 years!
When those same renters were asked why they disliked renting, 52% said that rising rental costs were their top reason, and 42% of renters believe that their rent will rise every year. The full results of the survey can be seen below:
It’s no wonder that rising rental costs came in as the top answer! The median asking rent price has risen steadily over the last 30 years, as you can see below!
There is a long-standing rule that a household should not spend more than 28% of its income on housing expenses. With nearly half of renters (48%) surveyed already spending more than that, and with their rents likely to rise again… why are they renting?
When asked why they haven’t purchased a home yet, not having enough saved for a down payment (44%) came in as the top response. The report went on to reveal that nearly half of all respondents believe that “a 20% down payment is required to buy a home.”
If the majority of those who believe they haven’t saved a large enough down payment believe that they need 20% down to buy, that means a large number of renters may be able to buy now!
If you are one of the many renters who is fed up with rising rents but may be confused about what is required to buy in today’s market, let’s get together to help you on your path to homeownership.
Everyone should realize that unless you are living somewhere rent-free, you are paying a mortgage – either yours or your landlord’s. Buying your own home provides you with a form of ‘forced savings’ that allows you to use your monthly housing costs to increase your family’s wealth.
Every month that you pay your mortgage, you are paying off a portion of the debt that you took on to purchase your home. Therefore, you own a little bit more of your home every month in the form of home equity. As your home’s value increases you also gain home equity.
Every quarter, Pulsenomics surveys a nationwide panel of over 100 economists, real estate experts, and investment and market strategists and asks them to project how residential home prices will appreciate over the next five years for their Home Price Expectation Survey (HPES).
The latest data from their Q4 2018 Survey revealed that home prices are expected to round out the year 5.8% higher than they were in January. For the next 5 years, home values will appreciate by an average of nearly 3% a year.
For example, let’s assume a young couple purchases and closes on a $250,000 home in January. Simply through their home appreciating in value, those homeowners can build their home equity by nearly $40,000 over the next five years.
In many cases, home equity is a large portion of a family’s overall net worth.
If your plan for 2019 includes entering the housing market to purchase a home, whether it’s your first or your fifth, let’s get together to make your plan a reality!
