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This Just In: Data Says May is the Best Month to Sell Your Home

This Just In: Data Says May is the Best Month to Sell Your Home | MyKCM

According to a newly released study by ATTOM Data Solutions, selling your home in the month of May will net you an average of 5.9% above estimated market value for your home.

For the study, ATTOM performed an “analysis of 14.7 million home sales from 2011 to 2017” and found the average seller premium achieved for each month of the year. Below is a breakdown by month:

This Just In: Data Says May is the Best Month to Sell Your Home | MyKCM

ATTOM even went a step further and broke their results down by day.

Top 5 Days to Sell:

  • June 28th – 9.1% above market
  • February 15th – 9.0% above market
  • May 31st – 8.3% above market
  • May 29th – 8.2% above market
  • June 21st – 8.1% above market

It should come as no surprise that May and June dominate as the top months to sell and that 4 of the top 5 days to sell fall in those two months. The second quarter of the year (April, May, June) is referred to as the Spring Buyers Season, when competition is fierce to find a dream home, which often leads to bidding wars.

One caveat to mention though, is that when broken down by metroATTOM noticed that while warmer climates share in the overall trend, it turns out that they have different top months for sales. The best month to get the highest price in Miami, FL, for instance, was January, and Phoenix, AZ came in with November leading the charge.

If you’re thinking of selling your home this year, the time to list is NOW! According to the National Association of Realtors, homes sold in an average of just 30 days last month! If you list now, you’ll have a really good chance to sell in May or June, setting yourself up for getting the best price!

Bottom Line

Let’s get together to discuss the market conditions in our area and get you the most exposure to the buyers who are ready and willing to buy!

Why Home Prices Are Increasing

by Sonja Coffee

Why Home Prices Are Increasing

Why Home Prices Are Increasing | MyKCM

There are many unsubstantiated theories as to why home values are continuing to increase. From those who are worried that lending standards are again becoming too lenient (data shows this is untrue), to those who are concerned that prices are again approaching boom peaks because of “irrational exuberance” (this is also untrue as prices are not at peak levels when they are adjusted for inflation), there seems to be no shortage of opinion.

However, the increase in prices is easily explained by the theory of supply & demand. Whenever there is a limited supply of an item that is in high demand, prices increase.

It is that simple. In real estate, it takes a six-month supply of existing salable inventory to maintain pricing stability. In most housing markets, anything less than six months will cause home values to appreciate and anything more than seven months will cause prices to depreciate (see chart below).

Why Home Prices Are Increasing | MyKCM

According to the Existing Home Sales Report from the National Association of Realtors (NAR), the monthly inventory of homes for sale has been below six months for the last five years (see chart below).

Why Home Prices Are Increasing | MyKCM

Bottom Line

If buyer demand continues to outpace the current supply of existing homes for sale, prices will continue to appreciate. Nothing nefarious is taking place. It is simply the theory of supply & demand working as it should.

How Much Do You Need to Make to Buy a Home in Your State?

by Sonja Coffee

How Much Do You Need to Make to Buy a Home in Your State?

How Much Do You Need to Make to Buy a Home in Your State? | MyKCM

It’s no mystery that cost of living varies drastically depending on where you live, so a new study by GOBankingRates set out to find out what minimum salary you would need to make in order to buy a median-priced home in each of the 50 states, and Washington, D.C.

States in the Midwest came out on top as most affordable, requiring the smallest salaries in order to buy a median-priced home. States with large metropolitan areas saw a bump in the average salary needed to buy with California, Washington, D.C., and Hawaii edging out all others with the highest salaries required.

Below is a map with the full results of the study:

How Much Do You Need to Make to Buy a Home in Your State? | MyKCM

GoBankingRates gave this advice to anyone considering a home purchase,

“Before you buy a home, it’s important to find out if you can afford the monthly mortgage payment. To do this, some financial experts recommend your housing costs — primarily your mortgage payments — shouldn’t consume more than 30 percent of your monthly income.”

As we recently reported, research from Zillow shows that historically, Americans had spent 21% of their income on owning a median-priced home. The latest data from the fourth quarter of 2017 shows that the percentage of income needed today is only 15.7%!

Bottom Line

If you are considering buying a home, whether it’s your first time or your fifth time, let’s get together to evaluate your ability to do so in today’s market!

Are You Aware Of How Much Equity You Have In Your Home? You May Be Surprised!

Are You Aware of How Much Equity You Have in Your Home? You May Be Surprised!

CoreLogic’s latest Equity Report revealed that 675,000 US homeowners regained positive equity in their homes in 2017. This is great news for the country, as 95.1% of all mortgaged properties are now in a positive equity situation.

U.S homeowners with mortgages (roughly 63% of all the properties) have seen their equity increase by a total of $908.4 billion since the fourth quarter 2016, an increase of 12.2%, year over year.”

Price Appreciation = Good News for Homeowners

Frank Nothaft, CoreLogic’s Chief Economist, explains:

Home-price growth has been the primary driver of home-equity wealth creation. The CoreLogic Home Price Index grew 6.2 percent during 2017. The largest calendar-year increase since 2013. Likewise, the average growth in home equity was more than $15,000 during 2017, the most in four years.”

He also believes this is a great sign for the market in 2018, saying:

“Because wealth gains spur additional consumer purchases, the rise in home-equity wealth during 2017 should add more than $50 billion to U.S. consumption spending over the next two to three years.”  

This is great news for homeowners! But, do they realize that their equity position has changed?

A study by Fannie Mae suggests that many homeowners are not aware that they have regained equity in their homes as their investment has increased in value. For example, their study showed that 23% of Americans still believe their home is in a negative equity position when, in actuality, CoreLogic’s report shows that only 4.9% of homes are in that position (down from 6.3% in Q4 2016).

The study also revealed that only 37% of Americans believe that they have “significant equity” (greater than 20%) when in actuality, 83% do!

Are You Aware of How Much Equity You Have in Your Home? You May Be Surprised! | Keeping Current Matters

This means that 46% of Americans with a mortgage fail to realize the opportune situation they are in. With a sizeable equity position, many homeowners could easily move into a house (either larger or smaller) that better meets their current needs.

Fannie Mae spoke out on this issue in their report:

“Homeowners who underestimate their homes’ values not only underestimate their home equity, they also likely underestimate 1) how large a down payment they could make with their home equity, 2) their chances of qualifying for mortgages, and, therefore, 3) their opportunities for selling their current homes and for buying different homes.”

Bottom Line

If you are one of the many Americans who is unsure of how much equity you have built in your home, don’t let that be the reason you fail to move on to your dream home in 2018! Meet with a local real estate professional today who can help you evaluate your situation and assist you along the way!

 

20 TIPS FOR PREPARING YOUR HOUSE FOR SALE THIS SPRING

by Sonja Coffee

20 Tips For Preparing Your House For Sale This Spring 

Tips for Preparing Your House for Sale This Spring [INFOGRAPHIC] | Keeping Current Matters

Highlights:

  • When listing your house for sale your top goal will be to get the home sold for the best price possible!
  • There are many small projects that you can do to ensure this happens!
  • Your real estate agent will have a list of specific suggestions for getting your house ready for market and is a great resource for finding local contractors who can help!

7 Factors to Consider When Choosing A Home to Retire In

by Sonja Coffee

7 Factors to Consider When Choosing A Home to Retire In

7 Factors to Consider When Choosing A Home to Retire In | MyKCM

As more and more baby boomers enter retirement age, the question of whether or not to sell their homes and move will become a hot topic. In today’s housing market climate, with low available inventory in the starter and trade-up home categories, it makes sense to evaluate your home’s ability to adapt to your needs in retirement.

According to the National Association of Exclusive Buyers Agents (NAEBA), there are 7 factors that you should consider when choosing your retirement home.

1. Affordability

“It may be easy enough to purchase your home today but think long-term about your monthly costs. Account for property taxes, insurance, HOA fees, utilities – all the things that will be due whether or not you have a mortgage on the property.

Would moving to a complex with homeowner association fees actually be cheaper than having to hire all the contractors you would need to maintain your home, lawn, etc.? Would your taxes go down significantly if you relocated? What is your monthly income going to be like in retirement?

2. Equity

“If you have equity in your current home, you may be able to apply it to the purchase of your next home. Maintaining a healthy amount of home equity gives you a source of emergency funds to tap, via a home equity loan or reverse mortgage.”

The equity you have in your current home may be enough to purchase your retirement home with little to no mortgage. Homeowners in the US gained an average of over $14,000 in equity last year.

3. Maintenance

“As we age, our tolerance for cleaning gutters, raking leaves and shoveling snow can go right out the window. A condominium with low-maintenance needs can be a literal lifesaver, if your health or physical abilities decline.”

As we mentioned earlier, would a condo with an HOA fee be worth the added peace of mind of not having to do the maintenance work yourself?

4. Security

“Elderly homeowners can be targets for scams or break-ins. Living in a home with security features, such as a manned gate house, resident-only access and a security system can bring peace of mind.”

As scary as that thought may be, any additional security and an extra set of eyes looking out for you always adds to peace of mind.

5. Pets

“Renting won’t do if the dog can’t come too! The companionship of pets can provide emotional and physical benefits.”

Evaluate all of your options when it comes to bringing your ‘furever’ friend with you to a new home. Will there be necessary additional deposits if you are renting or in a condo? Is the backyard fenced in? How far are you from your favorite veterinarian?

6. Mobility

“No one wants to picture themselves in a wheelchair or a walker, but the home layout must be able to accommodate limited mobility.”

Sixty is the new 40, right? People are living longer and are more active in retirement, but that doesn’t mean that down the road you won’t need your home to be more accessible. Installing handrails and making sure your hallways and doorways are wide enough may be a good reason to look for a home that was built to accommodate these needs.

7. Convenience

“Is the new home close to the golf course, or to shopping and dining? Do you have amenities within easy walking distance? This can add to home value!”

How close are you to your children and grandchildren? Would relocating to a new area make visits with family easier or more frequent? Beyond being close to your favorite stores and restaurants, there are a lot of factors to consider.

Bottom Line

When it comes to your forever home, evaluating your current house for its ability to adapt with you as you age can be the first step to guaranteeing your comfort in retirement. If after considering all these factors you find yourself curious about your options, let’s get together to evaluate your ability to sell your house in today’s market and get you into your dream retirement home!

Competition is Coming, Are You Thinking of Selling Your Home?

by Sonja Coffee

Competition is Coming, Are You Thinking of Selling Your Home?

Competition is Coming, Are You Thinking of Selling Your Home? | MyKCM

The number of building permits issued for single-family homes is the best indicator of how many newly built homes will rise over the next few months. According to the latest U.S. Census Bureau and U.S. Department of Housing & Urban Development Residential Sales Report, the number of these permits were up 7.4% over last year.

How will this impact buyers?

More inventory means more options. Lawrence Yun, NAR’s Chief Economistexplained this is good news for the housing market – especially for those looking to buy:

“This rise in single-family housing construction will help tame home price growth, and the increase in multifamily units should continue to help slow rent growth.”

How will this impact sellers?More inventory means more competition. Today, because of the tremendous lack of inventory, a seller can expect:

  1. A great price on their home as buyers outbid each other for it
  2. A quick sale as buyers have so little to choose from
  3. Fewer hassles as buyers don’t want to “rock the boat” on the deal

With an increase in competition, the seller may not enjoy these same benefits. As Chief Economist Nela Richardson, added:

“Because existing home inventory has been so low for so long, new construction is taking a larger share of the market…Builders meet the buyers and see the demand firsthand.”

Bottom Line

If you are considering selling your house, you’ll want to beat this new competition to market to ensure you get the most attention for your listing and the best price.

THE NEW TAX CODE and its impact on residential real estate

by Sonja Coffee

Disclaimer #1: This page is not meant to be a resource for tax advice but instead a resource for basic information concerning the aspects of the new tax code and how it may impact the real estate market. Our views herein provide broad guidance to the industry. The specific impact on each individual and property will vary. Therefore, your clients and customers should get tax advice from their accountants or financial advisors who will explain how the entire tax code will affect their personal returns.

Disclaimer #2: Some of the commentary on this page may be revised as the analysis of the bill and future law evolves. As further clarification of the new code and deeper analysis becomes available, we will update this page.

What about the three major concerns of real estate practitioners?


1.  Mortgage Interest Deduction

There was concern that the mortgage interest deduction (MID) would be eliminated. That didn’t happen.

However, the bill has made the following changes:

  • Reduces limit on deductible mortgage debt to $750,000 for new loans taken out after 12/14/17 (from the existing $1,000,000). Current loans up to $1 million are grandfathered.
  • Homeowners may refinance mortgage debts existing on 12/14/17 up to $1 million and still deduct the interest, so long as the new loan does not exceed the amount refinanced.
  • Repeals deduction for interest paid on home equity debt through 12/31/25.
  • Interest is still deductible on home equity loans if proceeds are used to substantially improve the residence.
  • Interest remains deductible on second homes, but subject to the limits.
2.  State and Local Taxes (SALT)

There was concern that the state and local tax deduction (which includes property taxes) would be eliminated. That didn’t happen.

The final bill allows an itemized deduction of up to $10,000 for the total of state and local property taxes and income or sales taxes. 

3.  Exclusion of gain on sale of a principal residence

There was concern that owners would now need to live in their house for at least 5 out of the last 8 years to claim this exemption. Under the former tax framework, a typical owner, who has lived in their house for at least 2 years out of the last 5 years, would pay nothing in capital gain taxes if they sell the house.

No change. The new code will remain the same as the old.

What will be the impact on the real estate market?


Please read disclaimers at the top of this page.  

The most thorough analysis of how tax reform will affect the housing market has come from Capital Economics. Here are some highlights:

  • The tax bill could raise the net costs of buying. But, given most households will see an overall tax cut, and potential buyers are likely to put that saving towards their home, we doubt it will have a significant detrimental impact on the housing market.
  • Most households stretch themselves when buying a home, and to the extent that the new code will cut taxes for most households, the overall change could be positive for the housing market.
  • The impact on expensive homes could be more detrimental, with a limit on the mortgage interest deduction raising taxes for that itemize.

Here is their full analysis (7 pages): US HOUSING MARKET FOCUS: Buying still better than renting in the long run

Calculated Risk’s Bill McBride weighed in on the subject. Here are some highlights:

  • The impact of reducing the MID from a maximum of $1 million in mortgage debt to $750 thousand in mortgage debt will have very little impact on the housing market.
  • State and local taxes (SALT) will have an impact on housing in some areas. Some people might choose to live in one state over another (if they have a choice), based on taxation. This could impact demand in certain states – especially for the middle and upper-middle class homeowners.
  • The corporate tax cuts (and other tax cuts) will mostly benefit the wealthy, and this will be a positive for high end real estate.
  • There will be some negative impact based on SALT, but overall the impact of these policy changes on housing will be minimal.

Here is his full analysis: A few comments: Housing and Policy

Mark Zandi of Moody’s Analytics had a more negative opinion. Here are the highlights:

  • House prices suffer under the tax plan. The tax law changes significantly reduce the value of the mortgage interest deduction, or MID, and property tax deductions, which are capitalized in current house prices.
  • Higher mortgage rates that result from the higher budget deficits and debt under the plans will weaken housing demand.
  • The hit to national house prices is estimated to be near 4% at the peak of their impact in summer 2019. That is, national house prices will be approximately 4% lower than they would have been if there were no tax legislation.
  • The impact on house prices is much greater for higher-priced homes, especially in parts of the country where incomes are higher and there are thus a disproportionate number of itemizers, and where homeowners have big mortgages and property tax bills.
  • The impact on the broader national economy of the higher stock prices and lower house prices is largely a wash.

Here is his full analysis: U.S. Macro Outlook: A Plan That Doesn’t Get It Done

Other links that might help:

Will Tax Reform Harm the Housing Market?
HousingWire on the impact of tax reform on the housing market.

Tax Reform Impact and Home Price Outlook
NAR estimated how home prices will change in the upcoming year for each state, taking into consideration the impact of the new tax law and the momentum of jobs and housing inventory.

Tax Bill Raises Concerns About Homeownership
Early consumer reaction to the new Tax Reform legislation and how it may affect their buying and selling decisions.

Metro Areas Most Affected by the New Tax Law
NAR’s analysis identifying which metro areas will be most affected by the new tax code.

Will the New Tax Law Impact Home Sales, Inventory, and Price Growth in Certain States?
Calculated Risk’s most recent take on the impact of the tax reform.

Examples of How The New Law Will Affect the Tax Incentives of Owning a Home
Early consumer reaction to the new Tax Reform legislation and how it may affect their buying and selling decisions.

Which Local Housing Markets Would Be Most Impacted by the GOP Tax Plan?
The new tax code includes two changes to the income tax structure that could potentially have significant impacts on homeowners, and by extension the housing market.

On this site, ATTOM Data Solutions created two heat maps to illustrate which local housing markets could have the most homeowners impacted by these changes.

Tax plan to impact at least 11 percent of Southern California home buyers
This article takes a deeper dive into the impact on Southern California the above data from the ATTOM site.

How New Yorkers Would Lose Under the Republican Tax Bill
This article takes a deeper dive into the impact on NYC and the surrounding region.

Could tax reform actually be good news for housing?
This article explains that one expert believes tax reform could increase the supply of homes by reducing federal tax subsidies.

How the Tax-Cut Bills Could Affect Homeownership
This article from Consumer Report talks about the possible impact on both buyers & sellers.

Deduction Rollback Hurts High-Tax States, But Exodus Isn’t Assured
(WSJ subscription required) A great analysis of how taxes affect where people decide to live.


More Helpful Information


Please read disclaimers at the top of this page.  

How Tax Reform Impacts Homeowners in Each State
This site, run by NAR, hopefully will be updated now that the tax reform bill has become law. It gives you state-by-state data on tax deductions, capital gains exemptions, and the potential impact on housing prices from the 2017 tax reform framework. You can download information for your state by clicking their map.

Which Places Pay the Most in Property Taxes?
This site gives you an interactive map where you can find the median property taxes by county.

Reforming the mortgage interest deduction: A chance for fairness for American taxpayers?
This article gives the argument for why the changes made sense. We are not saying we agree so please don’t attack us for the content. We just want you to better understand the other side, so you are prepared for those conversations.

And remember…

Some people will overreact to any change. In the current political environment, reactions from both sides may be even more passionate.

In the end, Jason Furman, a Harvard Kennedy School economist, may be proven correct:

“Nothing in my experience suggests that the views people have about the tax cuts – whether justified or not – will change after they start actually being affected by them.”

It is our job to remain objective and report the facts. As we say at KCM:

“It’s not good news. It’s not bad news. I’m just reporting THE news.”

 

 

Should I Wait Until Next Year to Buy? Or Buy Now?

by Sonja Coffee

Should I Wait Until Next Year to Buy? Or Buy Now? 

 

Should I Wait until next Year to Buy? Or Buy Now? [INFOGRAPHIC] | MyKCM

Some Highlights:

  • The Cost of Waiting to Buy is defined as the additional funds it would take to buy a home if prices & interest rates were to increase over a period of time.
  • Freddie Mac predicts interest rates to rise to 5.1% by 2019.
  • CoreLogic predicts home prices to appreciate by 4.3% over the next 12 months.
  • If you are ready and willing to buy your dream home, find out if you are able to!

Displaying blog entries 1-10 of 25

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