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Rent Vs. Own

Some Highlights:
Owning your own home vs. renting may lead to some great options, such as locking in your monthly payments and having the freedom to customize your living space.
Whether you rent or own, you have to cover someone’s mortgage costs. You may as well be doing so to build your own wealth, rather than that of your landlord.
Renting and owning both have up-front fees when you sign your lease or close, respectively. Think about putting that money to work for you!

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The Surprising Profile of the Real Estate Investor

Over 10% of all residential homes are purchased by investors, and that number continues to rise. Who are these investors?

Many have speculated that the large institutional conglomerates such as Blackstone, American Homes 4 Rent, and Colony Starwood dominate investor purchases. However, a special report on investor home buying by CoreLogicDon’t Call it a Comeback: Housing Investors Have Been Here for Years, shows this is not the case.

Ralph McLaughlin, CoreLogic’s Deputy Chief Economist and author of the report, explained his findings at the recent National Association of Real Estate Editors conference in Austin:

“Investor buying activity in the U.S. is at record highs. And our records go back confidently, about 20 years…

What’s going on and why? Well, it turns out, it’s not the big institutional guys that are leading the increase in home buying. It’s actually the smaller guys. It’s those that have bought between one and ten properties over this 20-year period, they’re the ones that are really leading the increase in investor home buying.”

The Surprising Profile of the Real Estate Investor | MyKCM

Here is the breakdown of the percentage of purchasers by type of investor over the last six years according to the report:As the graph shows, the percentage of “Mom & Pop” investors is currently dominating the number of homes purchased by investors, as the percentage of homes purchased by both professional and institutional investors is falling.

Bottom Line

Most houses purchased by an investor are bought by small investors looking to diversify their financial portfolio by adding a real estate component. If you are investing in real estate as either a landlord or someone who fixes-up and flips the house, let’s chat about the ways you can build or liquidate your current portfolio of properties.

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What a Difference a Year Makes for Sellers

Over the last few years, many sellers have been hesitant to put their houses on the market because they feared not being able to find another home to buy.

We’ve reported on inventory shortages in the past, and it’s been a constant concern for potential buyers throughout recent years. New research shows the inventory concern is starting to decrease among potential buyers.

According to First American, the two leading obstacles to homeownership that buyers feel today are Affordability and Limited Inventory. This means the feeling that homes are less affordable has risen, while the fear of limited inventory has decreased, delivering a wealth of good news for sellers.

What a Difference a Year Makes for Sellers | MyKCM

At the same time, over the past 12 months, we’ve seen a steady month-over-month increase in the number of homes coming to market for purchase. In the past, the lack of listings and available inventory slowed down the real estate market. This recent increase in current inventory has many buyers and sellers now thinking it is time to make their move – and rightfully so! For the last two months, we’ve seen over 4 months of inventory become available for sale, a promising number that’s been slowly increasing this year and creating more buying opportunities.

What a Difference a Year Makes for Sellers | MyKCM

To further support the idea of an improving real estate market, Sam Khater, the Chief Economist at Freddie Mac says,

“…In the near-term, we expect the housing market to continue to improve from both a sales and price perspective.”

Many experts, like Sam, believe the second half of 2019 will drive a stronger market than we saw at the beginning of the year. This is great news for homeowners who have put off getting their houses on the market and are now ready to make a move.

Bottom Line

What a difference we’ve seen over the course of this year! If you’re thinking of selling, now is the time as inventory is on the rise.

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4 Tips to Sell Your Home Faster

Since June of last year, we have seen an increase in the inventory of homes for sale month per month. Every spring and summer, the inventory increases because people want to sell their home. For those with children, they may want to be in their new home for the beginning of the school year.

If you are one of those sellers, you may find these 4 tips helpful in getting your home sold more quickly.

1. Make buyers feel at home

Declutter your home! Pack away all personal items like pictures, awards, and sentimental belongings. Make them feel like they belong in this house! According to the Profile of Home Staging by the National Association of Realtors,

“83% of buyers’ agents said staging a home made it easier for a buyer to visualize the property as a future home.”

Not only will your house spend less time on the market, but the same report mentioned that,

“One-quarter of buyers’ agents said that staging a home increased the dollar value offered between 1 – 5%, compared to other similar homes on the market that were not staged.”

2. Keep it organized

Since you took the time to declutter, keep it organized! Before the buyers show up, pick up toys, make the bed, and put away clean dishes. It is also a good idea to put out some cookies fresh from the oven or a scented candle. Buyers will remember the smell of your home! According to the same report, the kitchen is one of the most important rooms to stage in order to attract more buyers.

3. Give buyers full access

One of the top four elements when selling your home is access! If your home is available anytime, that opens up more opportunity to find a buyer right away. Some buyers, especially those relocating, don’t have much time available. If they cannot get into the house, they will move on to the next one.

4. Price it right

As we mentioned at the beginning, more inventory coming into the market guarantees there will be some competition. You want to make sure your home is noticed. The key to selling your house in 2019 is ensuring it is Priced to Sell Immediately (PTSI). That way, your home will be seen by the greatest amount of buyers and will sell at a great price before more competition comes to market!

Bottom Line

If you want to sell your house in the least amount of time at the best price with as little hassle as possible, a local real estate professional is a useful guide. Call them today to find out what you need to do to sell your home more quickly.

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Stop Wondering What Your Budget Is & Get Pre-Approved!

In many markets across the country, the number of buyers searching for their dream homes outnumbers the number of homes for sale. This has led to a competitive marketplace where buyers often need to stand out. One way to show that you are serious about buying your dream home is to get pre-qualified or pre-approved for a mortgage before starting your search.

Even if you are not in an incredibly competitive market, understanding your budget will give you the confidence of knowing whether or not your dream home is within your reach.

Freddie Mac lays out the advantages of pre-approval in the ‘My Home’ section of their website:

“It’s highly recommended that you work with your lender to get pre-approved before you begin house hunting. Pre-approval will tell you how much home you can afford and can help you move faster, and with greater confidence, in competitive markets.”

One of the many advantages of working with a local real estate professional is that many have relationships with lenders who will be able to help you through this process. Once you have selected a lender, you will need to fill out their loan application and provide them with important information regarding “your credit, debt, work history, down payment and residential history.”

Freddie Mac describes the ‘4 Cs’ that help determine the amount you will be qualified to borrow:

  1. Capacity: Your current and future ability to make your payments
  2. Capital or cash reserves: The money, savings, and investments you have that can be sold quickly for cash
  3. Collateral: The home, or type of home, that you would like to purchase
  4. Credit: Your history of paying bills and other debts on time

Getting pre-approved is one of many steps that will show home sellers that you are serious about buying, and it often helps speed up the process once your offer has been accepted.

Bottom Line

Many potential homebuyers overestimate the down payment and credit scores necessary to qualify for a mortgage. If you are ready and willing to buy, you may be pleasantly surprised at your ability to do so today.

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What You Need to Know About Private Mortgage Insurance (PMI)

Whether it is your first time or your fifth, it is always important to know all the facts when it comes to buying a home. With the large number of mortgage programs available that allow buyers to purchase homes with down payments below 20%, you can never have too much information about Private Mortgage Insurance (PMI).

What is PMI?

Freddie Mac defines PMI as:

“An insurance policy that protects the lender if you are unable to pay your mortgage. It’s a monthly fee, rolled into your mortgage payment, that is required for all conforming, conventional loans that have down payments less than 20%.

Once you’ve built equity of 20% in your home, you can cancel your PMI and remove that expense from your mortgage payment.”

As the borrower, you pay the monthly premiums for the insurance policy, and the lender is the beneficiary. Freddie Mac goes on to explain that:

“The cost of PMI varies based on your loan-to-value ratio – the amount you owe on your mortgage compared to its value – and credit score, but you can expect to pay between $30 and $70 per month for every $100,000 borrowed.” 

According to the National Association of Realtors, the average down payment for all buyers last year was 13%. For first-time buyers, that number dropped to 7%, while repeat buyers put down 16% (no doubt aided by the sale of their homes). This just goes to show that for a large number of buyers last year, PMI did not stop them from buying their dream homes.

What You Need to Know About Private Mortgage Insurance (PMI) | MyKCM

Here’s an example of the cost of a mortgage on a $200,000 home with a 5% down payment & PMI, compared to a 20% down payment without PMI:The larger the down payment you can make, the lower your monthly housing cost will be, but Freddie Mac urges you to remember:

“It’s no doubt an added cost, but it’s enabling you to buy now and begin building equity versus waiting 5 to 10 years to build enough savings for a 20% down payment.”

Bottom Line

If you have questions about whether you should buy now or wait until you’ve saved a larger down payment, let’s get together to discuss our market’s conditions and help you make the best decision for you and your family.

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Young First-Time Buyers Are Saving for Their Dream Homes

Young buyers (Millennials & Gen Z) have waited longer than previous generations to enter the housing market for their first home. However, this hasn’t stopped them from dreaming about the home they will eventually buy. Many spend hours searching listings and building Pinterest boards of their favorite home features.

According to a survey from Open Listings, 70% of single renters are more likely to spend their Sunday nights swiping through house listings than dating profiles.

All that time window shopping has led 45% of millennials to expect the first home they buy to be their “dream home”! They are willing to wait longer, save more for a larger down payment, and are pickier about the listings they want to tour and the features that they want to see in their first home.

Waiting a little longer to buy a home than their parents or grandparents did has also helped young buyers become more established in their careers prior to making such a large purchase. Lawrence Yun, NAR’s Chief Economist, recently commented,

“Older millennials are now entering the prime earning stages of their careers, and the size and costs of homes they purchase reflect this. Their choices are falling more in line with their Gen X and boomer counterparts.”

In some areas of the country, high competition in the starter home market forces young buyers to wait longer. The extra money they save during that time opens their search to bigger, more expensive homes.

If this trend continues, older millennials will skip the starter home altogether, going straight to a trade-up or premium home instead.

Bottom Line

If you are one of the many young renters planning on buying your first home soon, let’s get together to help determine what type of home will best suit your present and future needs.

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4 Reasons to Sell This Summer

Some Highlights:

  • Buyer demand continues to outpace the supply of homes for sale. This means that buyers are often competing with one another for the few listings that are available.
  • Housing inventory is still under the 6-month supply needed to sustain a normal housing market.
  • Now may be the time for you and your family to move on and start living the life you desire!
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Having a Professional on Your Side Makes All the Difference!

In today’s fast-paced world where answers are a Google search away, there are some who may wonder what the benefits of hiring a real estate professional to help them in their home search are. The truth is, the addition of more information causes more confusion.

Shows like Property BrothersFixer Upper, and dozens more on HGTV have given many a false sense of what it’s like to buy and sell a home.

Now more than ever, you need an expert on your side who is going to guide you toward your dreams and not let anything get in the way of achieving them. Buying and/or selling a home is definitely not something you want to DIY (Do It Yourself)!

Here are just some of the reasons you need a real estate professional in your corner:

There’s more to real estate than finding a house you like online!

There are over 230 possible steps that need to take place during every successful real estate transaction. Don’t you want someone who has been there before, someone who knows what these actions are, to ensure you achieve your dream?

You Need a Skilled Negotiator

In today’s market, hiring a talented negotiator could save you thousands, perhaps tens of thousands of dollars. Each step of the way – from the original offer, to the possible renegotiation of that offer after a home inspection, to the possible cancellation of the deal based on a troubled appraisal – you need someone who can keep the deal together until it closes.

What is the home you’re buying or selling worth in today’s market?

There is so much information on the news and on the Internet about home sales, prices, and mortgage rates; how do you know what’s going on specifically in your area? Who do you turn to in order to competitively and correctly price your home at the beginning of the selling process? How do you know what to offer on your dream home without paying too much, or offending the seller with a lowball offer?

Dave Ramsey, the financial guru, advises:

“When getting help with money, whether it’s insurance, real estate or investments, you should always look for someone with the heart of a teacher, not the heart of a salesman.”

Hiring an agent like Brandon Smith who has his finger on the pulse of the market will make your buying or selling experience an educated one. You need someone who is going to tell you the truth, not just what they think you want to hear.

Bottom Line

Today’s real estate market is highly competitive. Having a professional who’s been there before to guide you through the process is a simple step that will give you a huge advantage!

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What is the Cost of Waiting Until Next Year to Buy?

Some Highlights:

  • The “cost of waiting to buy” is defined as the additional funds necessary to buy a home if prices & interest rates were to increase over a period of time.
  • Freddie Mac forecasts interest rates to rise to 4.5% by the Q4 2020.
  • CoreLogic predicts home prices to appreciate by 4.8% over the next 12 months.
  • If you are ready and willing to buy your dream home, find out if you are able to!