Thinking of buying a home?
I often get asked about what exactly happens between finding your dream home and actually getting the keys. What does a Realtor® do? What does it mean to be pre-approved? What is Escrow? What is Title?
Here is a useful video about the individuals and institutions involved in the process.
So, how does the Home Buying Process work?
I am passionate about making the home buying process as stress-free as possible. I look forward to chatting with you about your real estate needs. Enjoy the video!
CoreLogic released their most current Home Price Index. In the report, they revealed home appreciation in three categories: percentage appreciation over the last year, over the last month and projected over the next twelve months.
Here are state maps for each category:
The Past - home appreciation over the last 12 months
The Present - home appreciation over the last month
The Future - home appreciation projected over the next 12 months
Homes across the country are appreciating at different rates. If you plan on relocating to another state and are waiting for your home to appreciate more, you need to know that the home you will buy in another state may be appreciating even faster. Call me if you have any questions. I'd love to chat!
Also that current levels are on the verge of another housing bubble. It is easy to see how this thinking has taken form if we look at a graph of home prices for the last 16 years.
The graph definitely looks like a roller coaster ride. And, as prices begin to reach 2006 levels in most parts of the country again, it "seems logical" that the next part of the ride would be downhill. However, this graph includes the anomaly of the price bubble and the correction (the housing crash).
What if the bubble & bust didn't occur?
Let's assume that instead of the rise and fall in home prices that we saw last decade, we just had normal historic appreciation from 2000 to today. According to the 100+ experts that are surveyed for the Home Price Expectation Survey, normal annual appreciation for residential single family homes from 1987 to 1999 was 3.6%.
Starting with the median home price in 2000, we added 3.6% to it each year since then.
There is no reason for alarm as prices seem to be right in line with where they should be. Let's get together to discuss your real estate needs.
Eric Belsky is the Managing Director of the Joint Center of Housing Studies (JCHS) at Harvard University. He authored a paper on home ownership titled - The Dream Lives On: The Future of Homeownership in America. In his paper, Belsky reveals five financial reasons why people should consider buying a home.
Here are the five reasons, each followed by an excerpt from the study:
1) Housing is typically the one leveraged investment available.
"Few households are interested in borrowing money to buy stocks and bonds and few lenders are willing to lend them the money. As a result, home ownership allows households to amplify any appreciation on the value of their homes by a leverage factor. Even a hefty 20 percent down payment results in a leverage factor of five so that every percentage point rise in the value of the home is a 5 percent return on their equity. With many buyers putting 10 percent or less down, their leverage factor is 10 or more."
2) You're paying for housing whether you own or rent.
"Homeowners pay debt service to pay down their own principal while households that rent pay down the principal of a landlord."
3) Owning is usually a form of "forced savings."
"Since many people have trouble saving and have to make a housing payment one way or the other, owning a home can overcome people's tendency to defer savings to another day."
4) There are substantial tax benefits to owning.
"Homeowners are able to deduct mortgage interest and property taxes from income...On top of all this, capital gains up to $250,000 are excluded from income for single filers and up to $500,000 for married couples if they sell their homes for a gain."
5) Owning is a hedge against inflation.
"Housing costs and rents have tended over most time periods to go up at or higher than the rate of inflation, making owning an attractive proposition."
So home ownership makes sense for many Americans for an assortment of social and family reasons. It also makes sense financially. If you are considering a purchase a home in Irvine this year, Contact Me and let's get together to evaluate your ability to do so.
This is a pretty common question that a potential home buyer or seller may be asking themselves. Leading economists in real estate converged in New Orleans to present their answer to this question at the 50th Annual Real Estate Journalism Conference for the National Association of Real Estate Editors.
Here are the top takeaways from the week of presentations:
Many of the conversations at the conference came back to the impact that Millennials and first-time home buyers will have on the market in the future. Jonathan Smoke, Chief Economist for realtor.com had this to say:
"At any given time in our history, demographics would explain 60-80% of what's happening [in the market], and we are in a period of time where Millennials make up a largest demographic group according to the Census, at 84 million."
According to the National Association of Realtors (NAR), the median first-time home buyer age is 30 and many millennials are entering a prime age to drive the housing market into the future.
Lawrence Yun, Chief Economist for NAR shared that myths and affordability may be holding back potential buyers:
"84% of current renters have the desire to own. While 36% believe they cannot afford a home and 60% of renters believe it would be 'difficult' to qualify for a mortgage."
Ellie Mae's Vice President, Jonas Moe encouraged buyers to know their options before assuming that they do not qualify for a mortgage:
"Many potential home buyers are 'disqualifying' themselves. You don't need a 750 FICO Score and a 20% down payment to buy."
The National Multifamily Housing Council (NMHC) revealed that Millennials and Baby Boomers are often competing for the same housing inventory, causing a challenge as these two groups are the largest generations by population.
Both groups are looking for affordable, convenient homes close to city centers and 'what's happening'.
The experts agree that home ownership is still desirable across all demographic groups, with Millennials and Baby Boomers having a great impact on available supply. If your dreams include owning your own home, Contact Us and let's get together to evaluate your ability to buy now!
But how do you guarantee that you receive maximum value for your house? Here are two keys to ensuring you get the highest price possible.
1. Price it a LITTLE LOW
This may seem counter-intuitive. However, let's look at this concept for a moment. Many homeowners think that pricing their home a little OVER market value will leave them room for negotiation. In actuality, this just dramatically lessens the demand for your house (see chart below).
Instead of the seller trying to 'win' the negotiation with one buyer, they should price it so that demand for the home is maximized. In that way, the seller will not be fighting with a buyer over the price, but instead will have multiple buyers fighting with each other over the house.
Realtor. com, gives this advice:
"Aim to price your property at or just slightly below the going rate. Today's buyers are highly informed, so if they sense they're getting a deal, they're likely to bid up a property that's slightly under priced, especially in areas with low inventory."
2. Use a Real Estate Professional
This too may seem counter intuitive. The seller may think they would net more money if they didn't have to pay a real estate commission. With this being said, studies have shown that homes typically sell for more money when handled by a real estate professional.
So price your house at or slightly below the current market value and hire a local Irvine professional.That will guarantee you maximize the price you get for your house.
The price is right, and in such a competitive market you want to make sure you make a good offer so that you can guarantee your dream of making this house yours comes true!
Freddie Mac covered "4 Tips for Making an Offer" in their latest Executive Perspective.
Here are the 4 Tips they covered along with some additional information for your consideration:
1. Understand How Much You Can Afford
"While it's not nearly as fun as house hunting, fully understanding your finances is critical in making an offer."
This 'tip' or 'step' really should take place before you start your home search process.
Getting pre-approved is one of many steps that will show home sellers that you are serious about buying, and will allow you to make your offer with the confidence of knowing that you have already been approved for a mortgage for that amount. You will also need to know if you are prepared to make any repairs that may need to be made to the house (ex: new roof, new furnace).
2. Act Fast
"Even though there are fewer investors, the inventory of homes for sale is also low and competition for housing continues to heat up in many parts of the country."
According to the latest Existing Home Sales Report, the inventory of homes for sale is currently at a 4.7-month supply. This is well below the 6-month supply that is needed for a 'normal' market. Buyer demand has continued to outpace the supply of homes for sale, causing buyers to compete with each other for their dream home.
Make sure that as soon as you decide that you want to make an offer, you work with your agent to present it as soon as possible.
3. Make a Solid Offer
Freddie Mac offers this advice to help make your offer the strongest it can be:
"Your strongest offer will be comparable with other sales and listings in the neighborhood. A licensed real estate agent active in the neighborhoods you are considering will be instrumental in helping you put in a solid offer based on their experience and other key considerations such as recent sales of similar homes, the condition of the house and what you can afford."
Consider ways of making your offer stand out! Many buyers write a personal letter to the seller letting them know how much they would love to be the new homeowners. Your agent will be able to help you figure out if there are any other ways your offer could stand above the rest.
4. Be Prepared to Negotiate
"It's likely that you'll get at least one counteroffer from the sellers so be prepared. The two things most likely to be negotiated are the selling price and closing date. Given that, you'll be glad you did your homework first to understand how much you can afford.
Your agent will also be key in the negotiation process, giving you guidance on the counteroffer and making sure that the agreed-to contract terms are met."
If your offer is approved, Freddie Mac urges you to "always get an independent home inspection, so you know the true condition of the home. If the inspection uncovers undisclosed problems or issues, you can typically re-negotiate the terms or cancel the contract."
Buyers often tell me that they "don't want to get involved in a bidding war". Well, in today's market, it is extremely unlikely that only one offer will be received on a property, and you know what happens when there are multiple offers, right? Yes, a bidding war generally starts!
So whether buying your first home or your fifth, having a local Irvine real estate professional who is an expert in her market on your side is your best bet to make sure the process goes smoothly. Let's get together and see if we can make your dreams of home ownership a reality!
Many experts are projecting that home values could appreciate by another 5%+ over the next twelve months. One major challenge in such a market is the bank appraisal.
If prices are surging, it is difficult for appraisers to find adequate, comparable sales (similar houses in the neighborhood that closed recently) to defend the selling price when performing the appraisal for the bank.
Every month, Quicken Loans measures the disparity between what homeowner believe their houses are worth as compared to an appraiser's evaluation in their Home Price Perception Index (HPPI). Here is a chart showing that difference for each of the 12 months ended September 30 last year:
Every Irvine house on the market has to be sold twice; once to a prospective buyer and then to the bank (through the bank's appraisal). With escalating prices, the second sale might be even more difficult than the first. If you are planning on entering the housing market this year, let's get together to discuss this, and any other obstacles that may arise.
You can see how much your home is worth, and get an instant property value now, by clicking here.
In their current edition of the Home Price Expectation Survey released last year, Pulsenomics asked this question of the 100+ economists, real estate experts and investment & market strategists they surveyed:
“In your opinion, what is the primary driver of recent home value growth in the U.S.?”
Here are the top four reasons given by those surveyed:
The current lack of inventory in most housing markets has caused home appreciation to increase at greater percentages than historical averages. This means that this is a great time to sell your home as supply is low and demand is high. Right now there are less than 400 Irvine homes for sale, with list prices as ow as $319,900 all the way up to $13,995,000.
However, things may be about to change…
The fortuitous situation sellers see themselves in may soon change for three reasons:
According to Daren Blomquist, senior vice president of RealtyTrac:
“Lenders have been taking advantage of the strong seller’s market to dispose of lingering foreclosure inventory.”
My advice is don’t wait for this additional competition to hit the market. If you are considering selling your house, now may be the time.