Top 10 Reasons To Hire A Real Estate Agent Posted: 30 Aug 2013 04:00 AM PDT Click here to view a larger version. Courtesy of: Park City Real Estate – JensenandCompany.com |
NAR: Millennials in the Market Posted: 29 Aug 2013 04:00 AM PDT Today, we are honored to have Justin DeCesare, CEO of Middleton & Associates Real Estate in La Jolla, as our guest blogger. Justin has written a manual for new agents that is a must read for the new technology centered Real Estate market. It is available online in both print and Kindle editions. – The KCM Crew According to the National Association of Realtors’ 2013 Home Buyer and Seller Generational Trends study, the average Millennial home buyer (32 years old or younger) purchased a home within 8 miles of their previous home, whether leased or owned. To put icing on the cake for all of the incredible lead converters out there: 69% of Millennials contacted and worked with just one agent in the home buying process. This is a higher percentage than any other age group in the survey. Furthermore, 59% used the same agent to sell a home as when they purchased. Again, the highest of any generational group. Why is this important? It proves once and for all that there isn’t some mythical land where young home buyers will come from. We are right in front of you, working in the communities we live, and where we plan on staying for a while. No media article or pundit can take away from what quantified studies prove. Contrary to certain media opinions, Millennials are not fickle narcissists who only care about themselves: We as a generation want an agents’ experience in negotiations, not their beliefs about what THEY think we need. Millennials are an important part of the market, and like anyone else, we will use the agent that best suits our needs. Most likely, that agent will be someone who listens, understands why young home buyers are purchasing, and understands they are an advocate for their clients. You don’t need to reinvent the game. Do what you do best. Take young home buyers seriously, and be visible…on the internet AND in your community. Now, when a young home buyer approaches you at Starbucks with Beats™ by Dre headphones and Rayban Clubmasters® on, don’t dismiss them. They may have invented a website worth billions or just be hard working professionals. But, at some point, they realize it is time to buy their first home and start a family as has every other generation throughout history. |
Latinas and the Financial Power Shift Posted: 28 Aug 2013 04:00 AM PDT According to a recent report published by Nielsen, Latinas have rapidly positioned themselves as “prominent contributors to the educational, economic, and cultural wellbeing of American Society and consumer marketplace”. The report mentioned that Latinas are outpacing Latino males in their educational pursuits and career development and for first time exceeded non-Hispanic females in college enrollment. A record seven in ten (73 percent) Hispanic high school female graduates are enrolling in college. This is how the number compares to other groups:
With this advanced income and education, a Latina’s ability to invest in long term assets has increased. As we mentioned in previous blogs 3 in 4, Hispanics agree that buying a home is the best long-term investment. This also applies to the Latina segment of the population as they are more likely than the overall female population to buy a home for the first time. However, There is One ConcernThough the report revealed many positives surrounding the Latina market, one revelation from the study really caught my attention. Here is the quote directly from the report:“While twenty-first century Latinas are advancing their consumption of major assets, we cannot fail to note the Latina segment resists banked financial products and lives in a primary cash market.” When I read this, one of KCM’s mantras came to my head: “We need to educate them; not with a heart of a salesman, but with the heart of a teacher.” Many Latinas need our help in understanding the benefits of building a financial history if they want to be able to reach the American Dream of buying a home. Are you doing your part? |
The COST of a Home: Last Year, This Year & Next Year Posted: 26 Aug 2013 04:00 AM PDT The cost of a home is determined mainly by two components: price and mortgage rate. Today, we want to show how the monthly cost of purchasing a median priced home has changed over the last twelve months and how it might change over the next twelve months. For the first two examples, we will be using the National Association of Realtors’ (NAR) Existing Home Sales Report to establish median price and Freddie Mac’s Primary Mortgage Market Survey to establish mortgage rate. We also assumed a 20% down payment in all examples. LAST YEARThe median priced home in the country was selling for $187,800. The 30-year fixed mortgage rate was at 3.5%. Here is what it would cost to buy a home last year:TODAYThe median priced home in the country is selling for $213,500. The 30-year fixed mortgage rate is at 4.5%. Here is what it would cost a purchaser to buy a home today:The monthly cost increased by: $190.78! NEXT YEARProjecting into the future in real estate can be rather tricky. To establish future pricing, we depended on the over 100 housing experts surveyed for the Home Price Expectation Survey who called for an approximate appreciation rate of 5% over the next twelve months. For the interest rate, we took the average of the projections from the Mortgage Bankers’ Association, Freddie Mac and Fannie Mae. Here is what these experts project will be the approximate cost of a home a year from now:The monthly cost will increase by about: $97.32! |
Housing is Helping Rebuild the American Economy Posted: 20 Aug 2013 04:00 AM PDT Freddie Mac in their report, August 2013 U.S. Economic & Housing Market Outlook, explained the three reasons why housing is the key driving force to the overall economic recovery. The ChallengeThe report explains that the path to recovery has been historically slow:The Great Recession officially ended in June 2009 and, with the release of the second quarter GDP, we now have data on four full years of economic recovery. The data release confirmed what many have felt: four years of recovery have only brought lackluster growth. Compared to all prior postwar recoveries, this expansion has been the weakest. Real GDP has risen by only 9 percent since the recession officially ended, while it grew an average of 17.4 percent in the four years following the end of the previous ten recessions. The Answer – HousingFreddie Mac explains that housing drives the economy in three ways. Here are excerpts from the report on each:Demand for Housing Will Drive Employment Increased demand for housing will help stimulate new single-family and multifamily construction and boost home sales. We expect starts to hover just below one million (SAAR) over the second half of the year, the best six-month building pace since the first half of 2008. This increased building and sales will add approximately 3/8 of a percentage point directly to GDP growth through residential fixed investment and will employ many more workers in construction and at other housing related firms. Rising Prices = Increased Family Wealth = Increased Spending With housing being the biggest asset of most American households, rising house prices directly affect the balance sheet of homeowners. Home equity is the largest component of net wealth for many families. As wealth rises, households generally increase their consumption spending. They may even tap into their equity through a home-equity loan, using the proceeds for either consumption or investment spending. Some evidence that home equity lending has picked up was found in Freddie Mac’s Refinance Report for the second quarter, which saw $9.5 billion in home-equity cashed-out as part of a refinance, up from a year ago. Small Business Development is Funded through Home Equity Rising house prices will help the economic recovery by spurring small business formation, as a business owner’s home often serves as collateral for a start-up. Small business growth has been very weak during the recovery…Recent research by analysts at the U.S. Census Bureau and University of Maryland indicated that slow house price growth has been a key contributing factor to anemic small business growth. According to their analysis 42 percent of the decline in the performance of young firms (relative to mature firms) is due to declines in home prices. As Freddie Mac explains, the housing recovery is crucial to the recovery of the overall economy. To see the economic impact of a home sale in your state, click here. |
House Pricing is Still about Supply and Demand Posted: 19 Aug 2013 04:00 AM PDT Knowing how much inventory is for sale is crucial to determining where home values are headed. Pricing of any item is determined by supply and demand: how many items are available in relationship to how many want to buy that item. The reasons for the strong year-over-year home appreciation numbers we have been seeing is simple to explain: demand for housing is up and the supply of homes for sale has been at historic lows. But that is beginning to change. The months’ supply of available housing inventory, as reported by the National Association of Realtors, has increased from 4.3 months this past January to the current number of 5.2 months. And it seems inventory will continue to increase as we move forward. Last week, Realtor.com released their National Housing Trend Report which looked at the movement in inventory levels of homes for sale across the country. Here are two major findings of the report: 1.) Dramatic year-over-year inventory declines have evaporated.Nationally inventories in July are only 5.24 percent below the level of a year ago compared to being down 16.47 percent year-over-year in January.2.) Inventory declines decrease in local markets.The number of markets with decreases in year-over-year inventory declined from 125 in June to 118 in July. This suggests that fall inventories in some markets may return to levels of a year ago.In the report, Steve Berkowitz, CEO of Move, Inc. explains the impact of these findings on home values: The recovery is entering a new phase where inventory shortfalls are no longer the driving force behind changes in housing prices in many markets. Larger inventories, especially in the hotter markets that experienced rapid price increases in the spring, are expanding buyers’ choices and helping to moderate price increases. Don’t get carried away with recent news headlines when pricing your home. Let a real estate professional explain what the above information means to the current value of your house. |
Real Estate Prices over 30 Years [INFOGRAPHIC] Posted: 16 Aug 2013 04:00 AM PDT |
A Message to Millennials for Our Future Posted: 15 Aug 2013 04:00 AM PDT Today, we are honored to have Justin DeCesare, CEO of Middleton & Associates Real Estate in La Jolla, as our guest blogger. Justin has written a manual for new agents that is a must read for the new technology centered Real Estate market. It is available online in both print and Kindle editions. – The KCM Crew I spend a lot of time defending the work habits and dedication of my generation. Yet, I still wonder at times why we aren’t all as cynical and jaded as the media would like to portray us. Everything from the PRISM scandal to the everyday politically motivated Washington gridlock on items such as student loan rates have left many of us feeling weary of our place in the political and economic infrastructure. In Walter Hickey’s article on Business Insider, he quoted President Obama in his recent interview with Zillow CEO Spencer Rascoff as saying: “Jacob looked like a pretty young guy, renting is probably the best option.” While I don’t think this quote was meant to minimize the economic struggle of Millennials, it just seems to add to the stream of media attention that fails to see the impact we will have on the overall recovery. We are at a turning point in our society. Prices have bottomed, affordability indexes are low, and jobs are coming back on line. No matter your age, if you have the financial ability to buy a house, do so right now. Not a year from now…right now. By the time the media finally says Millennials are buying houses, they will be a year behind in their reporting. Take Action. Today.Whoever thinks they have a crystal ball is lying to you. No one knows exactly what will happen with the government’s bond buying programs or new housing starts and inventory. However, we do know this:
Lifelong wealth is created with a certain amount of risk; however, if you fail to take that risk you will always be stuck in your present situation. Years from now, there will be people who look back and think to themselves, “I should have bought when I could…That was the perfect time to buy.” Every type of Real Property is going to appreciate over a 10-20 year period, from commercial buildings, to multi-units, to single family homes. Our generation is set to play an important role in our economy as there is an ever-growing necessity for technologically advanced degrees and laborers. It is up to you as to whether or not you want this economic growth to shape the rest of your own personal life as well. Much like the greatest generation at the close of WWII, we have a duty to re-establish a vibrant economy. No one else will do it for us. I realize the economy has not yet fully recovered. But, if everything the media and the politicians say is true, none of us will own houses or have babies until our 50s. No matter what any pundit says, it is going to take young business people, humanitarians, laborers, and entrepreneurs to take the lead and recreate an America that the Greatest Generation would be proud of. Leave the cynicism to someone else. It fails in action as much as it does in belief. Now, it’s our turn. |
Real Estate without Freddie and Fannie Posted: 13 Aug 2013 04:00 AM PDT “The good news is right now there’s a bipartisan group of senators working to end Fannie and Freddie as we know them. And I support these kinds of reform efforts.” - President Obama, August 6th Ending Freddie Mac and Fannie Mae will mean two things to the housing industry: higher rates and probably shorter mortgages. This will result in larger monthly mortgage payments. Fannie Mae and Freddie Mac are government run agencies that have propped up a troubled real estate market over the last several years. The agencies always had a place within the mortgage sector but over the past several years have been involved in over 90% of new mortgage originations. As they wind down this involvement, the mortgage space may change dramatically. David Stevens, CEO of the Mortgage Bankers Association and a former Obama administration housing official, in a recent AP article explains what will be the result of winding down Fannie and Freddie: “You have to assume that almost in any future model being drafted, loans will be more expensive.” This will be felt in two ways. Higher Interest RatesIn the same AP article, Mark Zandi, chief economist at Moody’s Analytics, reveals:“It will mean higher mortgage rates. The question is how much higher.” According to Zandi, borrowers could pay about ½ point higher in interest rate ($75-$135 extra in interest payments per month to the average purchaser on a $200,000 loan). Why a projected increase in rates? The average 30 year mortgage rate over the last three decades is 8.69%. From 2003-2008, it was 6.06%. Part of the government’s stimulus program was spent on keeping mortgage rates low while the economy recovered. Many think that rates will return to the 6-6.5 range should Fannie and Freddie cease operations. Shorter Loan TermsOnce Freddie and Fannie no longer exist, the question becomes whether or not the private sector will any longer feel comfortable issuing a fixed rate loan for 30 years. In Canada, for example, they don’t even have 30 year fix rate mortgages available. The vast majority of Canadian home loans have a 25 year payout with the interest rate being renegotiated every five years. If rates go down, the borrower will wind up with a lower rate. If rates go up, the borrower ends up paying a higher rate. If you want a fixed rate mortgage for 25 years you pay a rate approximately two percentage points higher than the going rate at the time of your closing.Some believe that the private sector will no longer make the 30 year mortgage option available for at least a portion of borrowers. Bottom Line It will be interesting to see how the winding down of the two agencies impacts the housing market going forward. |
5 Demands to Make on Your Real Estate Agent Posted: 06 Aug 2013 04:00 AM PDT Are you thinking of selling your home? Are you dreading having to deal with strangers walking through the house? Are you concerned about getting the paperwork correct? Hiring a professional real estate agent can take away most of the challenges of selling. A great agent is always worth more than the commission they charge just like a great doctor or great accountant. You want to deal with one of the best agents in your marketplace. To do this, you must be able to distinguish the average agent from the great one. Let us help. If we were hiring an agent to sell my home today, we would require that they: 1. Tell us the truth about the priceToo many agents just take the listing at any price and then try to the ‘work the seller’ for a price correction later. Demand that the agent prove to you that they have a belief in the price they are suggesting. Make them show you their plan to sell the house at that price – TWICE! Every house in today’s market must be sold two times – first to a buyer and then to the bank.The second sale may be more difficult than he first. The residential appraisal process has gotten tougher. It has become more difficult to get the banks to agree on the contract price. A red flag should be raised if your agent is not discussing this with you at the time of the listing. 2. Understand the timetable with which my family is dealingYou will be moving your family to a new home. Whether the move revolves around the start of a new school year or the start of a new job, you will be trying to put the move to a plan. This can be very emotionally draining. Demand from your agent an appreciation for the timetables you are setting. I am not suggesting that your agent can pick the exact date for your move. You just want the agent to exert any influence they can.3. Remove as many of the challenges as possibleIt is imperative that your agent know how to handle the challenges that will arise. An agent’s ability to negotiate is critical in this market.Remember: If you have an agent who was weak negotiating with you on the parts of the listing contract that were most important to them (commission, length, etc.), don’t expect them to turn into Superman when they are negotiating for you with your buyer. 4. Help with the relocationIf you haven’t yet picked your new home, make sure the agent is capable and willing to help you. The coordination of the move is crucial. You don’t want to be without a roof over your head the night of the closing. Likewise, you don’t want to end up paying two housing expenses (whether it is rent or mortgage). You should, in most cases, be able to close on your current home and immediately move into your new residence.5. Get the house SOLD!There is a reason you are putting yourself and your family through the process of moving. You are moving on with your life in some way. The reason is important or you wouldn’t be dealing with the headaches and challenges that come along with selling. Do not allow your agent to forget these motivations. Constantly remind them that selling the house is why you hired them. Make sure that they don’t worry about your feelings more than they worry about your family. If they discover something needs to be done to attain your goal (i.e. price correction, repair, removing clutter), insist they have the courage to inform you.Good agents know how to deliver good news. Great agents know how to deliver tough news. In today’s market, YOU NEED A GREAT AGENT! |
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