Home Prices Are Up...but there is a Challenge

Home values continue to climb and are projected to increase by about 5% over the next twelve months. That is great news for anyone who owns a home. However, it could present a challenge for a family trying to sell their house.

If prices are surging, it is difficult for appraisers to find adequate, comparable sales (similar houses in the neighborhood that closed recently) to defend the sales price when performing the appraisal for the bank.

The National Association of Realtors (NAR) recently released information revealing just how prominent the challenge is in today’s market.

And the challenge is deepening…

Every month, Quicken Loans measures the disparity between what a homeowner believes their house is worth as compared to an appraiser’s evaluation in their Home Price Perception Index (HPPI). Here is a chart showing that difference for each of the last 12 months

As we can see the difference has increased each of the last two months.

Bottom Line

Every house on the market has to be sold twice; once to a prospective buyer and then to the bank (through the bank’s appraisal). With escalating prices, the second sale might be even more difficult than the first. If you are planning on entering the housing market this year, let's meet up so I canguide you through this, and any other obstacle that may arise.

Buying a Home is 36% Less Expensive Than Renting Nationwide!

In the latest Rent vs. Buy Report from Trulia , they explained that homeownership remains cheaper than renting with a traditional 30-year fixed rate mortgage in the 100 largest metro areas in the United States.

The updated numbers actually show that the range is an average of 5% less expensive in Orange County (CA) all the way up to 46% in Houston (TX), and 36% Nationwide!

Other interesting findings in the report include:

• Interest rates have remained low and even though home prices have appreciated around the country, they haven’t greatly outpaced rental appreciation.

• Some markets may tip in favor of renting if home prices increase at a greater rate than rents and if – as most economists expect – mortgage rates rise, due to the strengthening economy.

• Nationally, rates would have to rise to 10.6% for renting to be cheaper than buying – and rates haven’t been that high since 1989.

Bottom Line

Buying a home makes sense socially and financially . If you are one of the many renters out there who would like to evaluate your ability to buy this year, meet with a local real estate professional who can help you find your dream home.

Vacation Home Sales Reach 2nd Highest Mark Since 2006

Some Highlights:

• 58% of vacation homes purchased were single family homes.
• 51% of vacation homes that were purchased were found online.
• The median price of a vacation home is up 28% from 2014.

Don't Wait! Move Up To Your Dream Home Now!

Now that the housing market has stabilized, more and more homeowners are considering moving up to the home they have always dreamed of. Prices are still below those of a few years ago and interest rates have stayed near historic lows.

Sellers should realize that waiting to make the move when mortgage rates are projected to increase probably doesn’t make sense. As rates increase, the price of the house you can afford will decrease if you plan to stay within a certain budget for your monthly housing costs.

Here is a chart detailing this point:

According to Freddie Mac, the current 30-year fixed rate is currently around 3.75%. With each quarter of a percent increase in interest rate, the value of the home you can afford decreases by 2.5% (in this example, by $10,000).

Freddie Mac predicts that mortgage rates will be closer to 4.7% by this time next year.

Act now to get the most house for your hard-earned money.

Don't Be Fooled... Homeownership Is A Great Investment!

Some Highlights:

• Harvard University's Joint Center of Housing Studies recently released the topfinancial &emotional reasons to own a home.
• Owning is a good way to build up wealth that can be passed along to your family as it is usually a form of " forced savings ."
• Whether you rent or own, you are paying a mortgage. Yours when you own, your landlord's when you rent.

The Top 5 Reasons You Should Not For Sale By Owner

In today's market, with homes selling quickly and prices rising, some homeowners might consider trying to sell their home on their own, known in the industry as a For Sale by Owner (FSBO). There are several reasons this might not be a good idea for the vast majority of sellers.

Here are five of those reasons:

1. There Are Too Many People to Negotiate With

Here is a list of some of the people with whom you must be prepared to negotiate if you decide to For Sale By Owner :

• The buyer who wants the best deal possible
• The buyer’s agent who solely represents the best interest of the buyer
• The buyer’s attorney (in some parts of the country)
• The home inspection companies, which work for the buyer and will almost always find some problems with the house
• The appraiser if there is a question of value

2. Exposure to Prospective Purchasers

Recent studies have shown that 89% of buyers search online for a home. That is in comparison to only 20% looking at print newspaper ads. Most real estate agents have an internet strategy to promote the sale of your home. Do you?

3. Results Come from the Internet

Where do buyers find the home they actually purchased?

• 44% on the internet
• 33% from a Real Estate Agent
• 9% from a yard sign
• 1% from newspaper

The days of selling your house by just putting up a sign and putting it in the paper are long gone. Having a strong internet strategy is crucial.

4. FSBOing has Become More and More Difficult

The paperwork involved in selling and buying a home has increased dramatically as industry disclosures and regulations have become mandatory. This is one of the reasons that the percentage of people FSBOing has dropped from 19% to 8% over the last 20+ years.

The 8% share represents the lowest recorded figure since NAR began collecting data in 1981.

5. You Net More Money when Using an Agent

Many homeowners believe that they will save the real estate commission by selling on their own. Realize that the main reason buyers look at FSBOs is because they also believe they can save the real estate agent’s commission. The seller and buyer can’t both save the commission.

Studies have shown that the typical house sold by the homeowner sells for $210,000 while the typical house sold by an agent sells for $249,000. This doesn’t mean that an agent can get $39,000 more for your home as studies have shown that people are more likely to FSBO in markets with lower price points. However, it does show that selling on your own might not make sense.

Bottom Line

Before you decide to take on the challenges of selling your house on your own, sit with a real estate professional in your marketplace and see what they have to offer.

Home Sales Up Year-Over-Year

Some Highlights

• This is the 48th consecutive month with year-over-year price gains.
• Lawrence Yun, NAR's Chief Economist saysthat, "The main issue continues to be a supply &affordability problem. Finding the right property at an affordable price is burdening many potential buyers."
• Inventory is still below historic norms at a 4.4 month supply.