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        <title>Real Estate Blog</title>
        <link>http://www.minneapolisurbanhomes.com/blog/2022-11/</link>
        <description></description>
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    <guid>https://www.minneapolisurbanhomes.com/blog/why-there-wont-be-a-flood-of-foreclosures-coming-to-the-housing-market.html</guid>
    <link>https://www.minneapolisurbanhomes.com/blog/why-there-wont-be-a-flood-of-foreclosures-coming-to-the-housing-market.html</link>
        <author>richard@drgmpls.com (Richard Newman)</author>
        <title>Why There Won’t Be a Flood of Foreclosures Coming to the Housing Market</title>
    <description> <![CDATA[ 



 




With the rapid shift that’s happened in the housing market this year, some people are raising concerns that we’re destined for a repeat of the crash we saw in 2008. But in truth, there are many key differences between what’s happening today and the bubble in the early 2000s.


One of the reasons this isn’t like the last time is the number of foreclosures in the market is much lower now. Here’s a look at why there won’t be a wave of foreclosures flooding the market.


Not as Many Homeowners Are in Trouble This Time


After the last housing crash, over nine million households lost their homes due to a foreclosure, short sale, or because they gave it back to the bank. This was, in large part, because of more relaxed lending standards where people could take out mortgages they ultimately couldn’t afford. Those lending practices led to a wave of distressed properties which made their way into the market and caused home values to plummet.


But today, revised lending standards have led to more qualified buyers. As a result, there are fewer homeowners who are behind on their mortgages. As Marina Walsh, Vice President of Industry Analysis at the Mortgage Bankers Association (MBA), says:




“For the second quarter in a row, the mortgage delinquency rate fell to its lowest level since MBA’s survey began in 1979 – declining to 3.45. Foreclosure starts and loans in the process of foreclosure also dropped in the third quarter to levels further below their historical averages.”




There Have Been Fewer Foreclosures over the Last Two Years


While you may have seen recent stories about the number of foreclosures rising today, context is important. During the pandemic, many homeowners were able to pause their mortgage payments using the forbearance program. The program gave homeowners facing difficulties extra time to get their finances in order and, in many cases, work out a plan with their lender.


With that program, many were concerned it would result in a wave of foreclosures coming to the market. That fear didn’t materialize. Data from the New York Fed shows there are still fewer foreclosures happening today than before the pandemic (see graph below):





That means, while there are more foreclosures now compared to last year (when foreclosures were paused), the number is still well below what the housing market has seen in a more typical year, like 2017-2019.


And most importantly, the number we’re seeing now is still far below the number we saw during the market crash (shown in the red bars in the graph). The big takeaway? Don’t let a headline in the news mislead you. While foreclosures are up year-over-year, historical context is essential to understanding the full picture.


Most Homeowners Have More Than Enough Equity To Sell Their Homes


Many homeowners today have enough equity to sell their homes instead of facing foreclosure. Due to rapidly rising home prices over the last two years, the average homeowner has gained record amounts of equity in their home. And if they’ve stayed in their homes even longer, they may have even more equity than they realize. As Ksenia Potapov, Economist at First American, says:




“Homeowners have very high levels of tappable home equity today, providing a cushion to withstand potential price declines, but also preventing housing distress from turning into a foreclosure. . . the result will likely be more of a foreclosure ‘trickle’ than a ‘tsunami.’”




A recent report from ATTOM Data explains it by going even deeper into the numbers:




“Only about 214,800 homeowners were facing possible foreclosure in the second quarter of 2022, or just four-tenths of one percent of the 58.2 million outstanding mortgages in the U.S. Of those facing foreclosure, about 195,400, or 91 percent, had at least some equity built up in their homes.”




Bottom Line


If you see headlines about the increasing number of foreclosures today, remember context is important. While it’s true the number of foreclosures is higher now than it was last year, foreclosures are still well below pre-pandemic years. If you have questions, let’s connect.


 ]]> </description>
    <pubDate>Wed, 30 Nov 2022 10:34:00 -0600</pubDate>
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    <guid>https://www.minneapolisurbanhomes.com/blog/more-people-are-finding-the-benefits-of-multigenerational-households-today.html</guid>
    <link>https://www.minneapolisurbanhomes.com/blog/more-people-are-finding-the-benefits-of-multigenerational-households-today.html</link>
        <author>richard@drgmpls.com (Richard Newman)</author>
        <title>More People Are Finding the Benefits of Multigenerational Households Today</title>
    <description> <![CDATA[ 



 




If you’re thinking of buying a home and living with siblings, parents, or grandparents, then multigenerational living may be for you. The Pew Research Center defines a multigenerational household as a home with two or more adult generations. And the number of individuals choosing multigenerational living has increased over the past 50 years.


As you consider this option for your own home search, know it could help you on your homeownership journey and provide you with other incredible benefits along the way.


Living with Loved Ones Could Help You Achieve Your Homeownership Goals


There are several reasons people choose to live in a multigenerational household, and for many, the arrangement is a personal one. But according to the Pew Research Center, the top reason people choose to live together today is financial.


A recent study from Freddie Mac also finds more people are choosing to buy a home together so they can save money in the homebuying process. As the study says:




“. . . an increasing percentage of young adult first-time homebuyers are relying on support from older generations, including their parents, to buy a home together.”




For these individuals, combining their resources can help them achieve their dream of buying and owning a home. By pooling their incomes together to make that purchase, they may be able to afford a home they couldn’t on their own.


Other Key Benefits of Multigenerational Living


Not to mention, living in a home with loved ones can have other benefits too, like giving you more quality time to spend together. Darla Mercado, Certified Financial Planner and Markets Editor for CNBC.com, explains how this living arrangement can help on a personal and financial level:




“Residing with relatives can offer advantages . . . you can pool multiple streams of income, for instance. And in households with young children, grandparents can pitch in with child care.”




If this sounds like a great option for you, it’s important to work with a trusted real estate professional to discuss your needs. They can help you navigate the process to find the right home for you and your loved ones.


Bottom Line


More people are discovering the benefits of multigenerational living. For the best information and help deciding what’s right for your personal situation, let’s connect and start the conversation today.


 ]]> </description>
    <pubDate>Thu, 17 Nov 2022 15:59:00 -0600</pubDate>
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<item>
    <guid>https://www.minneapolisurbanhomes.com/blog/home-equity-a-source-of-strength-for-homeowners-today.html</guid>
    <link>https://www.minneapolisurbanhomes.com/blog/home-equity-a-source-of-strength-for-homeowners-today.html</link>
        <author>richard@drgmpls.com (Richard Newman)</author>
        <title>Home Equity: A Source of Strength for Homeowners Today</title>
    <description> <![CDATA[ 



 




Experts agree there’s no chance of a large-scale foreclosure crisis like we saw back in 2008, and that’s good news for the housing market. As Mark Fleming, Chief Economist at First American, says:




“. . . don’t expect a housing bust like the mid-2000s, as lending standards in this housing cycle have been much tighter and homeowners have historically high levels of home equity, so there likely won’t be a surge in foreclosures.”




Data from the Mortgage Bankers Association (MBA) helps tell this story. It shows the overall percentage of homeowners at risk is decreasing significantly with time (see graph below):


But even though the volume of homeowners at risk is very low, there is still a small percentage of homeowners who may be coming face to face with foreclosure as a possibility today. If you’re facing difficulties yourself, it can help to understand your options. It starts with knowing what foreclosure is. Investopedia defines it like this:




“Typically, default is triggered when a borrower misses a specific number of monthly payments . . . Foreclosure is the legal process by which a lender attempts to recover the amount owed on a defaulted loan by taking ownership of and selling the mortgaged property.”




The good news is there are alternatives available to help you avoid going through the foreclosure process, including:




Reinstatement


Loan modification


Deed-in-lieu of foreclosure


Short sale




But before you go down any of those paths, it’s worth seeing if you have enough equity in your home to sell it and protect your investment.


You May Be Able To Use Your Equity To Sell Your House


Equity is the difference between what you owe on the home and its market value based on factors like price appreciation.


In today’s real estate market, many homeowners have far more equity in their homes than they realize due to the home price appreciation we’ve seen over the past few years. According to CoreLogic:




“The total average equity per borrower has now reached almost $300,000, the highest in the data series.”




So, what does that mean for you? If you’ve lived in your house for at least a few years or more, chances are your home’s value, and your equity, has risen dramatically. In addition, the mortgage payments you’ve made during that time chipped away at the balance of your loan. If your home’s current value is higher than what you still owe on your loan, you may be able to use that increase to your advantage.


Rick Sharga, Executive VP of Market Intelligence at ATTOM Data, explains how equity can help:




“Very few of the properties entering the foreclosure process have reverted to the lender at the end of the foreclosure. . . We believe that this may be an indication that borrowers are leveraging their equity and selling their homes rather than risking the loss of their equity in a foreclosure auction.”




Lean on Experts To Explore Your Options


To find out how much equity you have, work with a local real estate professional. They can give you an estimate of what your house could sell for based on recent sales of similar homes in your area. You may be able to sell your house to avoid foreclosure.


If you find out you have to pursue other options, your agent can help with that too. They’ll be able to connect you with other professionals in the industry, like housing counselors, who can look into your unique situation and offer advice on next steps if selling isn’t your best alternative.


Bottom Line


If you’re a homeowner facing hardship, let’s connect so you have an expert on your side to explore your options and see if you can sell your house to avoid foreclosure.


 ]]> </description>
    <pubDate>Mon, 14 Nov 2022 11:37:00 -0600</pubDate>
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<item>
    <guid>https://www.minneapolisurbanhomes.com/blog/do-you-believe-homeownership-is-out-of-reach-maybe-it-doesnt-have-to-be.html</guid>
    <link>https://www.minneapolisurbanhomes.com/blog/do-you-believe-homeownership-is-out-of-reach-maybe-it-doesnt-have-to-be.html</link>
        <author>richard@drgmpls.com (Richard Newman)</author>
        <title>Do You Believe Homeownership Is Out of Reach? Maybe It Doesn’t Have To Be.</title>
    <description> <![CDATA[ 



 




It turns out, millennials aren’t the renter generation after all. The 2022 Consumer Insights Report from Mynd says there’s a portion of millennial and Gen Z buyers who are pursuing homeownership as a way to build their wealth, but it may not be exactly the way previous generations have done it. The study explains how they’re breaking into the market:




“. . . younger generations of Americans are not buying into that dream in the same way that older generations have. A growing number of Americans are choosing to make their first real estate purchase as an investment property.”




Instead of buying a home and moving into it themselves, some young buyers are purchasing a home so they can use it as a rental. This tactic may be gaining popularity, at least in part, because of the affordability challenges brought about by today’s higher mortgage rates. The report above mentions how many people in this group are considering this approach. It says:




“Almost half of Millennials and Gen Z (43) are considering buying an investment property compared to only 9 of Baby Boomers and 27 of Gen X.”




Why Younger Buyers Are Buying a Home To Use as a Rental


This strategy allows buyers to continue living in their current location, like the bustle of a city apartment or a neighborhood that they know and love, where they couldn’t afford to buy. But instead of giving up on the idea of owning a home, they buy a home in a more affordable area with the intention of renting it out.


In a way, they’re getting the best of both worlds. They live where they want, and they still own a home where they can afford it.


Their goal is to generate passive income and diversify their assets. It works like this: in addition to having a rental stream of income, the equity they build in their house will also help grow their net worth over time.


Bottom Line


If you’re thinking about buying a home as an investment strategy to build your wealth, let’s connect to explore your options and nearby areas that may have homes that fit what you’re looking for.


 ]]> </description>
    <pubDate>Tue, 08 Nov 2022 14:50:00 -0600</pubDate>
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<item>
    <guid>https://www.minneapolisurbanhomes.com/blog/the-majority-of-americans-still-view-homeownership-as-the-american-dream.html</guid>
    <link>https://www.minneapolisurbanhomes.com/blog/the-majority-of-americans-still-view-homeownership-as-the-american-dream.html</link>
        <author>richard@drgmpls.com (Richard Newman)</author>
        <title>The Majority of Americans Still View Homeownership as the American Dream</title>
    <description> <![CDATA[ 



 




Buying a home is a powerful decision, and it remains a key part of the American Dream. In fact, the 2022 Consumer Insights Report from Mynd found the majority of people polled still view homeownership as a key life achievement. Let’s explore just a few of the reasons why so many Americans continue to value homeownership.


The Financial Benefits of Owning a Home


One possible reason homeownership is viewed so highly is because owning a home is a significant wealth-building tool, and it provides meaningful financial stability over renting by locking in your monthly housing payments for the length of your home loan. An article from Forbes explains:




“Understanding the potential benefits of homeownership helps individuals see the value of owning property instead of renting. . . . household wealth among homeowners is a whopping 1,469 higher on average compared to renters, excluding home equity, making the allure of homeownership even more enticing.”




Over time, owning a home not only helps boost your own net worth, but it also sets future generations up for success as you pass that wealth down. That may be why the Mynd report also says:




“Most Americans (78) still associate homeownership with the ‘American dream.’ And nearly two-thirds of Americans (65) see homeownership as a means of building intergenerational wealth.”




The Non-Financial Benefits of Homeownership


While the financial benefits of owning a home are important, becoming a homeowner impacts you on a social and emotional level, too. As Mark Fleming, Chief Economist for First American, says:




“. . . buying a home is not just a financial decision. It's also a lifestyle decision.”




Your home provides feelings of achievement, responsibility, and more. 3by30 highlights the top 10 benefits homeowners enjoy. A few non-financial advantages include:




Providing you with more freedom and control over your living space


Giving you a greater sense of pride


Helps with community engagement




What Does That Mean for You?


If your definition of the American Dream involves greater freedom and prosperity, then homeownership could play a major role in helping you achieve that dream. While it may feel challenging to buy a home today as mortgage rates and home prices rise, if the time is right for you, know that there are incredible benefits waiting for you at the end of your journey. You’ll have a place you can grow your wealth, call your own, and feel most comfortable.


Like the National Association of Realtors (NAR) says:




“. . . research has consistently shown that homeownership is also associated with multiple economic and social benefits to individual homeowners. Homeownership has always been an important way to build wealth.”




Bottom Line


Buying a home is a powerful decision and a key part of the long-term dream for many Americans. And if homeownership is part of your dreams this year, let’s connect to start the process today.


 ]]> </description>
    <pubDate>Tue, 08 Nov 2022 14:07:00 -0600</pubDate>
</item>
<item>
    <guid>https://www.minneapolisurbanhomes.com/blog/key-factors-affecting-home-affordability-today.html</guid>
    <link>https://www.minneapolisurbanhomes.com/blog/key-factors-affecting-home-affordability-today.html</link>
        <author>richard@drgmpls.com (Richard Newman)</author>
        <title>Key Factors Affecting Home Affordability Today</title>
    <description> <![CDATA[ 



 




Every time there’s a news segment about the housing market, we hear about the affordability challenges buyers are facing today. Those headlines are focused on how much mortgage rates have climbed this year. And while it’s true rates have risen dramatically, it’s important to remember they aren’t the only factor in the affordability equation.


Here are three measures used to establish home affordability: home prices, mortgage rates, and wages. Let’s look closely at each one.


1. Mortgage Rates


This is the factor most people are focused on when they talk about homebuying conditions today. So far, current rates are almost four full percentage points higher than they were at the beginning of the year. As Len Kiefer, Deputy Chief Economist at Freddie Mac, explains:




“U.S. 30-year fixed mortgage rates have increased 3.83 percentage points since the end of last year. That's the biggest year-to-date increase in rates in over 50 years.”




That increase in mortgage rates is impacting how much it costs to finance a home purchase, creating a challenge for many buyers that’s pricing some out of the market. While the current global uncertainty makes it difficult to project where mortgage rates will go in the future, experts do say that rates will likely remain high as long as inflation does.


2. Home Prices


The second factor at play is home prices. Home prices have made headlines over the past few years because they skyrocketed during the pandemic. Now, the most recent Home Price Index from S&amp;P Case-Shiller shows home values continued to decelerate for a fifth consecutive month (shown in green in the graph below):





This deceleration is happening because higher mortgage rates are moderating demand, and as a result, easing the buyer competition and bidding wars that previously drove prices up.


What’s worth noting though, is how much higher home prices still are than they were before the pandemic (shown in blue in the graph above). Even now, we have a long way to go to get to more normal levels of home price appreciation, which is historically closer to 4. When both mortgage rates and home prices are high, affordability and your purchasing power become a greater challenge.


But while prices are still elevated in many markets, some areas are seeing slight declines. It all depends on your local market. For insight into what’s happening in your area, reach out to a trusted real estate professional.


3. Wages


The one big, positive component in the affordability equation is the increase in American wages. The graph below uses data from the Bureau of Labor Statistics (BLS) to show how wages have grown over time. This year is no exception.





As the Bureau of Labor Statistics (BLS) reports:




“Median weekly earnings of the nation's 120.2 million full-time wage and salary workers were $1,070 in the third quarter of 2022 (not seasonally adjusted), the U.S. Bureau of Labor Statistics reported…This was 6.9 percent higher than a year earlier…”




So, when you think about affordability, remember the full picture includes more than just mortgage rates. Home prices and wages need to be factored in as well. Because wages have been rising, they’re a big reason why serious buyers are still purchasing homes this year.


If you have questions or want to learn more, reach out to a trusted advisor who can explain how all of these variables work together and what’s happening in your area. As Leslie Rouda Smith, President of the National Association of Realtors (NAR), says:




“Buying or selling a home involves a series of requirements and variables, and it's important to have someone in your corner from start to finish to make the process as smooth as possible… and objectivity to deliver trusted expertise to consumers in every U.S. ZIP code.”




Bottom Line


To learn more, let’s connect today and make sure you have a trusted lender so you’re able to make an informed decision if you’re planning to buy or sell a home right now.


 ]]> </description>
    <pubDate>Mon, 07 Nov 2022 11:15:00 -0600</pubDate>
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<item>
    <guid>https://www.minneapolisurbanhomes.com/blog/homeownership-wins-over-time.html</guid>
    <link>https://www.minneapolisurbanhomes.com/blog/homeownership-wins-over-time.html</link>
        <author>richard@drgmpls.com (Richard Newman)</author>
        <title>Homeownership Wins Over Time</title>
    <description> <![CDATA[ 



 




Some Highlights




If you’re questioning whether or not to buy a home this year due to today’s cooling market, consider the long-term financial benefits of homeownership.


As a homeowner, equity increases your wealth. On average, nationwide, home prices appreciated by 290.2 since 1991.


Homeownership wins in the long run. If you’re ready to buy a home, let’s connect today.




 ]]> </description>
    <pubDate>Fri, 04 Nov 2022 16:41:00 -0500</pubDate>
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