Real Estate Blog

Keeping Current Matters, 9/16/15

The National Association of Realtors (NAR) recently released their July edition of the Housing Affordability Index. The index measures whether or not a typical family earns enough income to qualify for a mortgage loan on a typical home at the national level based on the most recent price and income data. NAR looks at the monthly mortgage payment (principal & interest) which is determined by the median sales price and mortgage interest rate at the time. With that information, NAR calculates the income necessary for a family to qualify for that mortgage amount (based on a 25% qualifying ratio for monthly housing expense to gross monthly income and a 20% down payment).

Here is a graph of the income needed to buy a

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Jim Buchta, Star Tribune, 091515

For Twin Cities home buyers, the waning days of summer are typically a time for browsing. Not this time around. With house listings in short supply, sellers are in the driver’s seat and buyers are on edge.

“It was much tougher than we expected,” said Mike Takalo, who, with his wife, last month closed on a house that was the seventh one they offered to buy since February. Among the six rejections was one in which they offered more than $30,000 over the listed price. “The emotional roller coaster was hard to handle,” he added.

The imbalance between buyers and sellers grew in the metro area last month, new data showed Monday.

Home sales increased 7.8 percent, but new listings were flat, causing the total number of

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Keeping Current Matters, 9/10/15

If you are debating purchasing a home right now, you are surely getting a lot of advice. Though your friends and family will have your best interest at heart, they may not be fully aware of your needs and what is currently happening in real estate. Let’s look at whether or not now is actually a good time for you to buy a home.

There are 3 questions you should ask before purchasing in today’s market:

1. Why am I buying a home in the first place?

This truly is the most important question to answer. Forget the finances for a minute. Why did you even begin to consider purchasing a home? For most, the reason has nothing to do with finances. A study by the Joint Center for Housing Studies at Harvard University

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Keeping Current Matters, 9/9/15

There is no doubt that home prices in the vast majority of housing markets across the country are continuing to increase on a month over month basis. The following map (based on data from the latest CoreLogic pricing report) reveals the appreciation level by state:

http://www.keepingcurrentmatters.com/wp-content/uploads/2015/09/1-month-price-change-KCM.jpg

These increases in value have caused some to be concerned about a new price bubble forming in residential real estate. Here are quotes from many of the most respected voices in the housing industry regarding the issue:

Nick Timiraos, reporter at the Wall Street Journal:

“Predictions of a new national home price bubble look unfounded for now, according to data.”

Michael Fratantoni, Chief Economist, the Mortgage Bankers Association:

“I don’t

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Keeping Current Matters, 8/31/15

The housing market has made a strong recovery, not only in sales and prices, but also in the confidence of consumers and experts as an investment. In a New York Times editorial entitled, “Homeownership and Wealth Creation” they explain:

“Homeownership long has been central to Americans’ ability to amass wealth; even with the substantial decline in wealth after the housing bust, the net worth of homeowners over time has significantly outpaced that of renters, who tend as a group to accumulate little if any wealth.”

Many of the points that were made in the article are on track with the research that the Federal Reserve has also conducted in their Survey of Consumer Finances. The study found that the average net

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Keeping Current Matters, 8/19/15

We are almost back to ‘pre-housing crash’ home values. The inventories of distressed properties (foreclosures & short sales) are shrinking dramatically. The economy is improving. The job numbers are headed in the right direction. The big question that still remains: Have Americans regained their confidence in real estate as a worthy investment? According to a survey conducted by Princeton Survey Research Associates, Americans have put real estate back into first place as the best of all investments.

Here are the results of the survey:

http://www.keepingcurrentmatters.com/wp-content/uploads/2015/08/Best-Investment-KCM.jpg

Bottom Line

Homeownership never lost its place as a key component of the American Dream for a host of financial and non-financial reasons. It is good to see that it has

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Keeping Current Matters, 8/18/15

Today, many real estate conversations center on housing prices and where they may be headed. That is why we like the Home Price Expectation Survey. Every quarter, Pulsenomics surveys a nationwide panel of over one hundred economists, real estate experts and investment & market strategists about where prices are headed over the next five years. They then average the projections of all 100+ experts into a single number.

The results of their latest survey

  • Home values will appreciate by 4.1% in 2015.
  • The cumulative appreciation will be 18.1% by 2019.
  • That means the average annual appreciation will be 3.4% over the next 5 years.
  • Even the experts making up the most bearish quartile of the survey still are
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Keeping Current Matters, 8/13/15

People often ask whether or not now is a good time to buy a home. No one ever asks when a good time to rent is. However, we want to make certain that everyone understands that today is NOT a good time to rent. The Census Bureau just released their second quarter median rent numbers. Here is a graph showing rent increases from 1988 until today:

http://www.keepingcurrentmatters.com/wp-content/uploads/2015/08/Increase-in-rents.jpg

At the same time, a report by Axiometrics revealed:

“The national apartment market’s annual effective rent growth rate of 5.1% in June 2015 represented a 47-month high, and continued a streak of 5.0%-plus rent growth that is now the longest in at least six years, according to apartment market research. The effective rent growth in June 2014 was 3.7%, putting June 2015’s

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Mortgage Lending is NOT Out of Control

Posted: 12 Aug 2015, Keeping Current Matters

This year, both Freddie Mac & Fannie Mae have introduced new programs that only require a 3% down payment on a mortgage in order to purchase a home. Earlier this month, the Mortgage Bankers’ Association reported that adjustable-rate mortgages (ARMs) may be making a slow comeback as the share of ARMs increased to 7.4 percent of total mortgage applications. Some see this loosening of lending standards as a point of concern. We know that the ridiculously low lending standards of the early 2000’s were part of the reason a housing bubble formed and burst last decade. Some are worried that we are headed down the same road that caused that housing crisis. However,

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Many believed that when the housing market crashed, so too would the desire of American’s to own a home again.  Many reports have shown that, especially among younger generations, the American Dream of homeownership is still very much alive.  Julián Castro, Secretary for HUD, recently summed up what it means to own a home in a speech at the National Press Club.

"Homeownership is still the cornerstone of the American Dream — a fact you can see in the lives of everyday folks. It’s a source of pride. It’s a source of wealth, providing both a nest and a nest egg. And it strengthens communities and fuels growth in the overall economy."

Castro appropriately named his speech, “2015: A Year of Housing Opportunity”, a theme that rang true throughout.

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