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The Importance of Home Equity in Retirement Planning

We often discuss the difference in family wealth between homeowner households and renter households. Much of that difference is the result of the equity buildup that homeowners experience over the time that they own their home. In a report recently released by the nonpartisan Employee Benefit Research Institute (EBRI), they reveal how valuable equity can be in retirement planning.

Craig Copeland, Senior Research Associate at EBRI, recently authored a report, Importance of Individual Account Retirement Plans and Home Equity in Family Total Wealth, in which he reveals:

“Individual account retirement plan assets, plus home equity, represent almost all of what families have to use for retirement expenses outside of Social Security and traditional pensions. Those families without individual account assets typically have very low overall assets, so they have almost nothing to draw from for retirement expenses.”

The report echoed the findings of a working paper, Home Equity Patterns among Older American Households, authored by Barbara Butrica and Stipica Mudrazija of Urban Institute. Fannie Mae highlighted these findings for their blog The Home Storythis past winter, quoting Butrica and Mudrazija:

 “For most adults near traditional retirement age, a home is their most valuable asset — dwarfing retirement accounts, other financial assets, and other nonfinancial assets. Although relatively few retirees tap into their home equity, having it provides financial security… In fact, many retirement security experts argue that the conventional three-legged stool of retirement resources — Social Security, pensions, and savings — is incomplete because it ignores the home.”

USAToday interviewed two area experts to comment on the EBRI report. Randy Bruns, a private wealth adviser with HighPoint Planning Partners, agreed with the findings:

“Social Security and home equity are major pieces of the retirement puzzle.”

Wade Pfau, Professor of Retirement Income at The American College of Financial Services and author of Reverse Mortgages: How to use Reverse Mortgages to Secure Your Retirement, said having the equity without a plan to use it won’t help:

“Home equity is a very important asset for American retirees, and so it is important to think about how to make best use of home equity in retirement planning.”

Bottom Line

Whether you use the equity in your home through a reverse mortgage or by selling and downsizing to a less expensive home, it should be a crucial piece of your retirement planning.

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2018 Winter Olympics Competitions Start Today!

5 Reasons Homeowners Throw Better Olympic Viewing Parties

1.) There is more room to entertain a large crowd.

2.) The kitchen is big enough to make all the appetizers you need.

3.) There are multiple TV’s in different rooms to accommodate those wanting to watch different events.

4.) You can cheer as loudly as you want.

5.) Many fans will have a custom viewing room to watch the Olympics.

The beginning competitions start at 5:05pm Mountain Time today. Happy Viewing 🙂 GO USA!

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Whether You Rent or Buy, Either Way You’re Paying a Mortgage!

There are some people who have not purchased homes because they are uncomfortable taking on the obligation of a mortgage. Everyone should realize, however, that unless you are living with your parents rent-free, you are paying a mortgage – either yours or your landlord’s.

As Entrepreneur Magazine, a premier source for small business, explained in their article, “12 Practical Steps to Getting Rich”:

“While renting on a temporary basis isn’t terrible, you should most certainly own the roof over your head if you’re serious about your finances. It won’t make you rich overnight, but by renting, you’re paying someone else’s mortgage. In effect, you’re making someone else rich.”

Christina Boyle, Senior Vice President and head of the Single-Family Sales & Relationship Management organization at Freddie Mac, explains another benefit of securing a mortgage as opposed to paying rent:

“With a 30-year fixed rate mortgage, you’ll have the certainty & stability of knowing what your mortgage payment will be for the next 30 years – unlike rents which will continue to rise over the next three decades.”

As an owner, your mortgage payment is a form of ‘forced savings’ which allows you to build equity in your home that you can tap into later in life. As a renter, you guarantee the landlord is the person building that equity.

Interest rates are still at historic lows, making it one of the best times to secure a mortgage and make a move into your dream home. Freddie Mac’s latest report shows that rates across the country were at 4.22% last week.

Bottom Line

Whether you are looking for a primary residence for the first time or are considering a vacation home on the shore, now may be the time to buy.

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5 Reasons Millennials Choose to Buy

5 Reasons Millennials Choose to Buy [INFOGRAPHIC] | MyKCM

Some Highlights:

  • “The majority of millennials said they consider owning a home more sensible than renting for both financial and lifestyle reasons — including control of living space, flexibility in future decisions, privacy and security, and living in a nice home.”
  • The top reason millennials choose to buy is to have control over their living space, at 93%.
  • Many millennials who rent a home or apartment prior to buying their own homes dream of the day when they will be able to paint the walls whatever color they’d like, or renovate an outdated part of their living space.
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U.S. Housing Inventory Crunch Continues… List Your House Today!

Every winter, families across the country decide if this will be the year that they sell their current houses and move into their dream homes.

Mortgage rates hovered around 4% for all of 2017 which forced many buyers off the fence and into the market, resulting in incredibly strong demand RIGHT NOW!

At the same time, however, inventory levels of homes for sale have dropped dramatically as compared to this time last year.

Trulia reported that “in Q4 2017, U.S. home inventory decreased by 10.5%. That is the biggest drop we’ve seen since Q2 2013.”

Here is a chart showing the decrease in inventory levels by category:

U.S. Housing Inventory Crunch Continues… List Your House Today! | MyKCM

The largest drop in inventory was in the starter home category which saw a 19% dip in listings.

Bottom Line

Demand for your home is very strong right now while your competition (other homes for sale) is at a historically low level. If you are thinking of selling in 2018, now may be the perfect time.

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2018 Haute Chocolate Hop (Downtown Colorado Springs)

Calling lovers of chocolate and local events!

 

 

“On February’s First Friday Downtown, treat yourself to a progressive dessert tasting and art walk at a dozen Downtown venues. Present your Chocolate Passport at participating galleries and venues to receive gourmet treats, free art experiences and chances to win.

PURCHASE YOUR $10 ETICKET HERE, then redeem at any participating Haute Chocolate Hop location to receive your Chocolate Passport. Get your passport stamped between 5 and 8 p.m. and be entered for a chance to win a $100 Downtown Gift Card, good at more than 100 Downtown businesses. 8 stamps = 1 entry, ALL stamps = two entries!

Proceeds from the 2018 Haute Chocolate Hop benefit Art on the Streets and other cultural programs brought to you by Downtown Ventures, a 501(c)(3) nonprofit.

THE 2018 HAUTE CHOCOLATE HOP FEATURES:

RICO’S CAFE AND WINE BAR, offering a delicious square of Belgian Dolfin Chocolat in four decadent flavors and presenting work by local artists throughout the cafe. 322 N. Tejon St.

STORY COFFEE COMPANY, offering aromatic rosemary hot chocolate. 120 E. Bijou St.

COLORADO PHOTOGRAPHY SCHOOL, offering hot chocolate and chocolate treats from a local restaurant and presenting new work by local photographers. 14 E. Bijou St.

BOULDER STREET GALLERY, offering chocolate goodies and presenting new works in watercolor, oil, pastel and acrylic by the 27 Boulder Street Gallery artists. 206 N. Tejon St.

BINGO BURGER, offering a special Haute Chocolate rendition of their signature Boozy Shake. 132 N. Tejon St.

PAINTING WITH A TWIST, offering your choice of two chocolate beers (for visitors 21-plus) and a chocolate and art goody bag. 115 N. Tejon St.

CACAO CHEMISTRY, offering a ganache truffle (milk or dark) and presenting works by artist Carol Darling. 109 N. Tejon St.

THE PERK DOWNTOWN, offering your choice of chocolate coffee shot or brownie bite, and presenting an exhibit of work by local photographer Robin Schneider. 14 S. Tejon St.

PLAZA OF THE ROCKIES, offering an array of chocolate delicacies by Chef Stevie and presenting the work of a local artist yet to be announced. 111 S. Tejon St.

COTTONWOOD CENTER FOR THE ARTS, offering mini chocolate cupcakes from the Cupcake Girls and presenting Color Block: Works inspired by Blinky Palermo427 E. Colorado Ave.

KREUSER GALLERY, offering a 2-ounce bag of its signature Colorado Gold (white chocolate and caramel) coffee blend roasted on-site at this gallery-roastery venue, and presenting The Rough, the Wicked and the Wild: New works by Jess Preble218 W. Colorado Ave.

THE INDEPENDENCE CENTER, offering decadent treats from Mission Catering Company and presenting works by artists hailing from Cottonwood Center for the Arts729 S. Tejon St.

Questions? Email CLAIRE@DOWNTOWNCS.COM or call 886-0088.”

www.downtowncs.com/event/chocolate/

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Thinking of Selling? Now is the Perfect Time

It is common knowledge that a great number of homes sell during the spring-buying season. For that reason, many homeowners hold off on putting their homes on the market until then. The question is whether or not that will be a good strategy this year.

The other listings that do come out in the spring will represent increased competition to any seller. Do a greater number of homes actually come to the market in the spring as compared to the rest of the year? The National Association of Realtors (NAR) recently revealed the months in which most people listed their homes for sale in 2017. Here is a graphic showing the results:

Thinking of Selling? Now is the Perfect Time | MyKCM

The three months in the second quarter of the year (represented in red) are consistently the most popular months for sellers to list their homes on the market. Last year, the number of homes available for sale in January was 1,680,000.

That number spiked to 1,970,000 by May!

What does this mean to you?

With the national job situation improving, and mortgage interest rates projected to rise later in the year, buyers are not waiting until the spring; they are out looking for homes right now. If you are looking to sell this year, waiting until the spring to list your home means you will have the greatest competition amongst buyers.

Bottom Line

It may make sense to beat the rush of housing inventory that will enter the market in the spring and list your home today.

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The Impact of Tight Inventory on the Housing Market

The housing crisis is finally in the rearview mirror as the real estate market moves down the road to a complete recovery. Home values are up, home sales are up, and distressed sales (foreclosures and short sales) have fallen to their lowest points in years. It seems that the market will continue to strengthen in 2018.

However, there is one thing that may cause the industry to tap the brakes: a lack of housing inventory. While buyer demand looks like it will remain strong throughout the winter, supply is not keeping up.

Here are the thoughts of a few industry experts on the subject:

 

National Association of Realtors

“Total housing inventory at the end of November dropped 7.2 percent to 1.67 million existing homes available for sale, and is now 9.7 percent lower than a year ago (1.85 million) and has fallen year-over-year for 30 consecutive months. Unsold inventory is at a 3.4-month supply at the current sales pace, which is down from 4.0 months a year ago.”

Joseph Kirchner, Senior Economist for Realtor.com

“The increases in single-family permits and starts show that builders are planning and starting new construction projects, that’s a good thing because it will help to relieve the shortage of homes on the market.”

Sam Khater, Deputy Chief Economist at CoreLogic

Inventory is tighter than it appears. It’s much lower for entry-level buyers.”

Bottom Line 

If you are thinking of selling, now may be the time. Demand for your house will be strong at a time when there is very little competition. That could lead to a quick sale for a really good price.