Many sellers are still hesitant about putting their house up for sale. Where are prices headed? Where are interest rates headed? These are all valid questions. However, there are several reasons to sell your home sooner rather than later. Here are three of those reasons.
1. Demand is about to skyrocket
Most people realize that the housing market is hottest from April through June. The most serious buyers are well aware of this and, for that reason, come out in early spring in order to beat the heavy competition. We also have a pent-up demand as many buyers pushed off their home search this winter because of extreme weather. Sellers in markets where seasonal weather is never an issue must realize that buyers relocating to their region will increase dramatically this spring as these purchasers finally decide to escape the freezing temperatures of the winters in the north.
These buyers are ready, willing and able to buy…and are in the market right now!
2. There Is Less Competition - For Now
Housing supply always grows from the spring through the early summer. Also, there has been a growing desire for many homeowners to move as they were unable to sell over the last few years because of a negative equity situation. Homeowners have seen a return to positive equity as prices increased over the last eighteen months. Many of these homes will be coming to the market in the near future.
The choices buyers have will continue to increase over the next few months. Don’t wait until all the other potential sellers in your market put their homes up for sale.
3. There Will Never Be a Better Time to Move-Up
If you are moving up to a larger, more expensive home, consider doing it now. Prices are projected to appreciate by approximately 4% this year and 8% by the end of 2015. If you are moving to a higher priced home, it will wind-up costing you more in raw dollars (both in down payment and mortgage payment) if you wait. You can also lock-in your 30 year housing expense with an interest rate at about 4.5% right now. Freddie Mac projects rates to be 5.1% by this time next year and 5.7% by the fourth quarter of 2015.
Moving up to a new home will be less expensive this spring than later this year or next year.
And when you are ready to sell your property, make sure your home is marketed online correctly. Contact me today for a free market analysis and let me show you the difference.
From the KCM Crew for buyers blog on March 24, 20014:
We have often suggested that potential home buyers consider rising interest rates when thinking about the true cost of a home. Remember, cost is not determined by price alone but by price and mortgage rate. The longer a buyer waits, the higher the mortgage payment will be if rates continue to increase (as is projected by Fannie Mae, Freddie Mac, the National Association of Realtors and the Mortgage Bankers Association).
Money Magazine, in its latest issue, agreed with our analysis as they also warned their readership of the same ramification if they waited to buy a home.
Here is what they said:
"BE MINDFUL OF RATES. The average interest rate on a 30-year fixed loan is predicted to climb from the current 4.4% to 5.3% by the 2015 spring buying season, according to Freddie Mac. For a $250,000 loan, that means that a borrower who waits would pay $136 more per month and an additional $49,090 in interest over the life of the loan. Will you need a big loan? Better to act soon before rates tick up."
And the monthly increase Money mentioned did not take into consideration that prices are also projected to increase over the next year. Here is what the additional cost would be if prices rise by the 4.5% projected by the latest Home Price Expectation Survey and interest rates go to 5.3%.
Thanks again to KCM for the article above.
So far year to date (2014) the list price vs sale price in Apple Valley, MN for a 4 bedroom 2-3 bathroom home shows listing at $247,450 and selling at $237,000. So far this year we have only seen 79 listings, too few really to chart meaningfully, but taking a look at the bigger picture, it is rare to find a 4 bedroom home in Apple Valley for under $200,000 anymore.
Working with many first time home buyers looking at purchasing a property to grow into can be challenging. As interest rates increase and as property values increase this will become even more challenging.
If you are in the market for a home, you are not alone. There are many buyers actively searching for the right home for the right price. Your best bet when competing with other buyers is to be prepared. Get yourself pre-approved with a qualified lender or two. Reach out and talk with a REALTOR to learn about the home buying process. It is more than just looking and finding the right property. I look forward to helping my clients through the whole process and following up with them once they have moved into their new home. I'm happy to help each step of the way and after the sale too. Your best bet in this market is to talk to real estate professionals sooner rather than later.
Five Reasons to Buy a Home Now
Based on prices, mortgage rates and soaring rents, there may have never been a better time in real estate history to purchase a home than right now. Here are five major reasons purchasers should consider buying.
1. Competition is about to Increase
Every spring a surge of prospective purchasers enter the housing market. Like you, they will want the best home available in the best location at the best price. They will be competing with you for the ‘steals’ in the market. Don’t miss the opportunity to get that ‘once-in-a-lifetime’ buy available today that may no longer be available as the market heats up..
2. Price Increases Are on the Horizon
Nationally, home prices are projected to appreciate by 4.5% in 2014 and by over 19% from now until 2018. First home buyers will probably pay more both in price and interest rate if they wait until the spring. Even if you are a move-up buyer, it will wind-up costing you more in net dollars as the home you will buy will appreciate at approximately the same rate as the house you are in now.
3. Owning a Home Helps Create Family Wealth
Whether you rent or you own the home you are living in, you are paying a mortgage. Either you are paying your mortgage or your landlord’s. The Federal Reserve, in a recent study, revealed that the net worth of the average homeowner is 30 times greater than that of a renter.
4. Interest Rates Are Projected to Rise
The Mortgage Bankers Association, the National Association of Realtors, Freddie Mac and Fannie Mae have all projected that the 30-year mortgage interest rate will be over 5% by the spring of 2015. That is an increase of almost 3/4 of a point over current rates.
5. Buy Low, Sell High
Most would all agree that, when investing, we want to buy at the lowest price possible and hope to sell at the highest price. Housing can create family wealth as long as we follow this simple principle. Today, real estate is selling ‘low’ compared to where it will be next year. It’s time to buy.
Buying a Home Less Expensive than Renting – by 38%!
Trulia released their Rent vs. Buy Report (link to the report) last week. The report explained that homeownership remains cheaper than renting in all of the 100 largest metro areas by an average of 38%!
The other interesting findings in the report include:
From Realtor.org as seen on 3/11/2014
On March 6, 2014, in Did You Know, by Jessica Lautz, Survey Research Manager
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Discovered from the Minneapolis Star Tribune website 3/11/2014:
Such demolitions have been a controversial issue in the southwestern part of the city and in neighboring suburbs, particularly Edina.
Minneapolis City Council Member Linea Palmisano proposed the one-year moratorium Friday on single- and two-family home demolition and construction, and it took effect immediately on an interim basis. The move is intended to allow the city to more carefully examine its communication with residents and zoning for the areas in question.
The council voted unanimously to allow the moratorium, but could still vote it down after considering it in the committee process in the coming weeks. The plan will get an initial public hearing at City Hall on March 20.
Neighbors have complained of a lack of communication as builders rapidly tear down existing houses and replace them with much larger ones. Palmisano said they also have had problems with builders not complying with city rules during construction, which her office has been struggling to enforce.
“They have started tearing down houses and putting up new ones quickly, and they don’t at all look like the neighborhood,” said Jim Tincher, president of the Fulton Neighborhood Association. As part of its crusade, the neighborhood hands out the so-called “B.L.E.N.D.” awards to new projects that conform to the existing character of an area.
The redevelopments frequently fly under the radar, since many do not need variances and therefore don’t rise to the level of discussion in a public hearing. A demolition permit on a door is sometimes the only notice to neighbors that a building near their home is being demolished.
But data kept by the city show so-called “teardowns” are becoming exponentially more common in southwest Minneapolis, where the number of single-family homebuilding permits is three times that of other parts of the city. Palmisano said that in the first week she took office, there were 20 applications pending for her ward in different stages of demolition and rebuilding projects.
“The intent is to be able to give us some time to pause on just responding to fire after fire, while being able to study and get really good due process improvements,” Palmisano said. “Right now our ability to enforce even our existing laws [is] disjointed.”
The moratorium applies to Linden Hills, Fulton, Armatage, Kenny and Lynnhurst neighborhoods.
A ‘way to ruin … lives’
Gabriel Keller, a principal with Peterssen/Keller Architecture, said Friday that he has spent six months working with a downtown Minneapolis couple who recently purchased a house in Linden Hills. They had hoped to demolish it this spring and build their dream home on the lot.
“I don’t know what I’m going to say to them,” Keller said Friday of the moratorium. He said many architects are not building the kinds of “McMansions” that have drawn the fiercest criticism.
Keller added that changes in the area reflect investment occurring in new construction across the city.
“It means we’re doing something right,” he said, referring to the city. “But it also means we need to manage this carefully. Shutting things down for a year to me is not the way to do that. That’s the way to really ruin a lot of people’s lives.”
In a letter to neighbors, Palmisano said the city also wants builders to comply with regulations addressing noise, dumpsters, idling, shoveling and parking. “And we need to bring greater environmental sensitivity to these projects,” she wrote.
Heading off teardowns was a key issue in the campaign for Palmisano’s seat, as well as a priority for her council predecessor --Betsy Hodges, now Minneapolis’ mayor. Hodges spearheaded ordinance changes in her first term that limited the height and mass of new homes.
In Edina, fewer complaints
In Edina, the number of housing teardown permits set another record in 2013, but the addition of a redevelopment point person and some new policies seem to have blunted anger over noise and construction mess.
The number of issued teardown permits increased slightly last year, to a record 105 from 101 in 2012. But after years of taking flak from angry residents, city officials say they’re not getting as much heat over construction as they once did, probably because such comments now go to Cindy Larson, the city’s new redevelopment coordinator. A new requirement that builders hold a neighborhood meeting with people who live within 300 feet of a pending teardown has helped, too.
Last year, Edina tightened requirements for height and setbacks for new homes depending on lot size. But the new code did not take effect until Jan. 1. Some of the permit rush the city saw at year’s end — 125 new home permits were applied for, another record — was from developers who had designed homes that would not fit the new code. Construction on those homes could stretch out for many months to come, Edina officials say.
Staff writer Mary Jane Smetanka contributed to this report. Eric Roper • 612-673-1732
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
The latest survey was released last week. Here are the results:
This information was provided by Phil Georgiades. Phil is the Chief Loan Steward for VA Home Loan Centers, a veteran and active duty military services organization.
VA loans are one of the most misunderstood mortgage programs in America. Industry professionals and consumers often receive incorrect data when they inquire about them. In fact, misconceptions about the government guaranteed home loan program are so prevalent that a recent VA survey found that approximately half of all military veterans do not understand it.
With this in mind, here are the most common myths about VA Loans:
Myth 1: The VA loan benefit has a “one time” use.
Fact: Veterans and active duty military can use the VA loan many times. There is a limit to the borrower’s entitlement. The entitlement is the amount of loan the VA will guarantee. If the borrower exceeds their entitlement, they may have to make a down payment. Never the less, there are no limitations on how many times a Veteran or Active Duty Service Member can get a VA loan.
Myth 2: VA home loan benefits expire if they are not used.
Fact: For eligible participants, VA mortgage benefits never expire. This myth stems from confusion over the veteran benefit for education. Typically, the Montgomery GI Bill benefits expire 10 years after discharge.
Myth 3: A borrower can only have one VA loan at a time.
Fact: You can have two (or more) VA loans out at the same time as long as you have not exceeded your maximum entitlement and eligibility. In order to have more than one VA loan, the borrower must be able to afford both payments and sufficient entitlement is required. If the borrower exceeds their entitlement, they may be required to make a down payment.
Myth 4: If you have a VA loan, you cannot lease the home.
Fact: By law, homeowners with VA loans may rent out their home. If the home is located in a non-rental subdivision, the VA will not guarantee the loan. If the home is located in a subdivision (such as a co-op) where the other owners can deny or approve a tenant, the VA will not approve the financing. When an individual applies for a VA loan, they certify that they intend on making the home their primary residence. Borrowers cannot use their VA benefits to buy property for rental purposes except if they are using their benefits to buy a duplex, triplex or fourplex. Under these circumstances, the borrower must certify that they will occupy one of the units.
Myth 5: If a borrower has a short sale or foreclosure on a VA loan, they cannot have another VA loan.
Fact: If a borrower has a claim on their entitlement, they will still be able to get another VA loan, but the maximum amount they would otherwise qualify for may be less. For example, Mr. Smith had a home with a $100,000 VA loan that foreclosed in 2012. If Mr. Smith buys a home in a low cost area, he will have enough remaining eligibility for a $317,000 purchase with $0 money down. If he did not have the foreclosure, he would have been able to obtain another VA loan up to $417,000 with no money down payment.
Veterans and Active duty military deserve affordable home ownership. In recent years, the VA loan made up roughly 13% of all home purchase financing. This program remains underused largely because of misinformation. By separating facts from myth, more of America’s military would be able to realize their own American Dream.
FSBO Woes: Why It's So Hard to Sell Your Own Home
For most people, a for-sale-by-owner (FSBO) transaction simply isn't in the cards.
By Marcie Geffner
Granted, some people are able to sell their own homes without the services of a real estate agent. Some of these successful do-it-yourselfers are very experienced home sellers. Others are transferring ownership of their home to a child, a coworker or a tenant who's already living in the home. These circumstances are the exception, not the norm, however. For most people, a for-sale-by-owner (FSBO) transaction simply isn't in the cards. Here are five reasons why.
1. FSBOs can't list their home in the MLS. FSBOs aren't permitted to put their home in the multiple listing service (MLS) because these industry membership organizations are open only to licensed real estate brokers and agents. FSBOs are also locked out of many home search engines and Web sites, including the gigantic Realtor.com. Sure, a determined FSBO can put a for-sale sign in his or her front yard and run a tiny advertisement in the local newspaper, but the home won't receive nearly as much exposure as it would through the MLS.
2. Agents won't show FSBO homes. In a typical home sale, the buyer's agent receives a percentage of the commission that the seller pays the listing agent. Without a listing agreement, there's no guarantee that the buyer's agent will be compensated for his or her services, unless the buyer has signed a buyer's brokerage agreement that specifically provides for such compensation. Even if a FSBO offers to pay the buyer's side of the commission, most agents won't want to go through a transaction with an unsophisticated self-represented seller across the table. That means the pool of potential buyers for FSBO homes is limited primarily to unrepresented and probably unqualified prospects.
3. FSBOs usually overprice their home. Like most homeowners, most FSBOs honestly believe their own home is worth more than comparable homes in the same neighborhood. Usually, they're wrong. A real estate agent can provide an update on market conditions, an assessment of the likely selling price of the home and tips for improving the home's buyer appeal. Overpricing a for-sale home is a sure way to deter potential buyers.
4. Buyers will feel intimidated. Potential buyers will spend less time in a for-sale home if the owner is present during the showing, and they'll be shy about discussing its pluses and minuses with their own agent if the owner is within earshot. Buyers will also be less inclined to make an offer if they know they'll be negotiating directly with the seller. Having an agent on each side creates an effective emotional buffer between the seller and buyer.
5. FSBOs are likely to stumble into legal trouble. Real estate transactions are fraught with potential liability for unwary sellers, particularly in states that have extensive disclosure requirements (e.g., California). A FSBO who overlooks even one required form or legally mandated disclosure could face a protracted and expensive buyer lawsuit after the transaction closes.
Copyright © 2000 Marcie Geffner. All rights reserved.
From the National Association of REALTORS® 2/6/2014
Under QM regulations that took effect in January, one of the underwriting criteria for a loan to be originated as a Qualified Mortgage is that the borrower must meet a monthly debt to income ratio (DTI) of no more than 43 percent . The monthly debt payments include recurrent debt obligations such as student loans, auto loans, revolving debts, and any existing mortgages not paid off before getting a loan .
The chart below shows NAR Research’s calculations of the debt to personal income ratio for student debt, auto, and credit card debt with mortgage debt (red ) and without (blue) across age groups based on household debt and income data in 2012 . Using income data for persons with at least an Associate degree, all age groups will meet the 43% DTI except for the “21 to less than 30 year old” group. For this age group, the monthly student, auto and credit card debt payments are about 30 percent of income. Now, with mortgage payments for a starter price home of $149,425 in 2012 at 10% down payment and a 30-year fixed term , the debt to income ratio (red) increases to 61 percent.
The implication for millennials is that a home purchase may be pushed back and borrowing ability is adversely affected. Assuming that this group’s income grows at 5% per year, they will meet the 43% DTI in seven years. With an average student debt of $21,402, their current borrowing ability declines by the same amount .
Liz Lewis Sandwick grew up in Duluth, is married to her husband Robb, has three kids: Caroline (5) Cooper (3), and Max (1) and would love to help you find your next home!