Dec. 8, 2022

Key Advantages of Buying a Home Today

Key Advantages of Buying a Home Today | MyKCM

There’s no doubt buying a home today is different than it was over the past couple of years, and the shift in the market has led to advantages for buyers today. Right now, there are specific reasons that make this housing market attractive for those who’ve thought about buying but have sidelined their search due to rising mortgage rates.

Buying a home in any market is a personal decision, and the best way to make that decision is to educate yourself on the facts, not following sensationalized headlines in the news today.  The reality is, headlines do more to terrify people thinking about buying a home than they do to clarify what’s actually going on with real estate.

Here are three reasons potential homebuyers should consider buying a home today.

1. More Homes Are for Sale Right Now

According to data from the National Association of Realtors (NAR), this year, the supply of homes for sale has grown significantly compared to where we started the year (see graph below):

Key Advantages of Buying a Home Today | MyKCM

This growth has happened for two reasons: homeowners listing their homes for sale and homes staying on the market a bit longer as buyer demand has moderated in response to higher mortgage rates.

The good news for you is that more inventory means more homes to choose from. And when there are more homes on the market, you could also see less competition from other buyers because the peak frenzy of competing over the same home has eased too.

2. Home Prices Are Not Projected To Crash

Experts don’t believe home prices will crash like they did in 2008. Instead, home prices will moderate at various levels depending on the local market and the factors, like supply and demand, at play in that area. That’s why some experts are calling for slight appreciation and others are calling for slight depreciation (see graph below):

Key Advantages of Buying a Home Today | MyKCM

If you consider the big picture and average the expert forecasts for 2023 together, the expectation is for relatively flat or neutral price appreciation next year. So, if you’re worried about buying a home because you’re afraid home prices will crash like they did in 2008, rest assured that’s not what expert projections tell us.

3. Mortgage Rates Have Risen, but They Will Come Down

While mortgage rates have risen dramatically this year, the rapid increases we’ve seen have moderated in recent weeks as early signs hint that inflation may be easing slightly. Where they’ll go from here largely depends on what happens next with inflation. If inflation does truly begin to cool, mortgage rates may come down as a result.

When that happens, expect more buyers to jump back into the market. For you, that means you’ll once again face more competition. Buying your house now before more buyers reenter the market could help you get one step ahead. As Lawrence Yun, Chief Economist for NAR, says:

The upcoming months should see a return of buyers, as mortgage rates appear to have already peaked and have been coming down since mid-November.”

When mortgage rates come down, those waiting on the sidelines will jump back in. Your advantage is getting in before they do.

Bottom Line

If you’re thinking about buying a home, you should seriously consider the advantages today’s market offers. Let’s connect so you can make the dream of homeownership a reality. 

Dec. 1, 2022

Why There Won’t Be a Flood of Foreclosures Coming to the Housing Market

Why There Won’t Be a Flood of Foreclosures Coming to the Housing Market | MyKCM

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):

Why There Won’t Be a Flood of Foreclosures Coming to the Housing Market | MyKCM

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 Americansays:

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.

Posted in Selling a Home
Nov. 23, 2022

What Buyers Need To Know About the Inventory of Homes Available for Sale

What Buyers Need To Know About the Inventory of Homes Available for Sale | MyKCM

If you’re thinking about buying a home, you’re likely trying to juggle your needs, current mortgage rates, home prices, your schedule, and more to try to decide if you want to jump into the market.

If this sounds like you, here’s one key factor that could help you with your decision: there are more homes for sale today than there were at this time last year. According to Calculated Risk, for the week ending in November 18th, there were 47.7% more homes available for sale than there were at the same time in 2021. And having more options for your home search may be exactly what you need to feel confident about making a move.

Here’s a look at where the increased housing supply is coming from so you can get a better sense of what’s happening in the market today and what it means for you.

What Caused the Growth in Housing Inventory This Year?

The increase we’ve seen in housing supply this year isn’t from the source you think it is. Rather than an influx of recent homeowners listing their houses for sale (known as new listings), the primary reason the supply has grown is because homes are staying on the market a bit longer (known as active listings).

That’s happening because higher mortgage rates and home prices have helped moderate the peak frenzy of buyer demand, which has slowed down the pace of sales. And, as the pace of sales has eased, inventory has grown as a result.

The graph below uses data from realtor.com to show that it’s active listings, not new listings, that have driven the growth we’ve seen over the past few months:

What Buyers Need To Know About the Inventory of Homes Available for Sale | MyKCM

And while overall inventory gains may slow down this winter due to typical housing market seasonality, you still have a chance to capitalize on the current supply.

What This Means for Your Home Search

Regardless of the source, the increase in available housing supply is good for buyers. More homes available for sale means you have more options to choose from as you search for your next home, and you may even have more time to consider them.

So, if you tried to buy a home last year and lost out in a bidding war or just couldn’t find something you liked, this may be the news you’ve been waiting for. If you start your search today, those additional options should make it less difficult to find a home you love, especially as some other buyers pause their search this holiday season.

Just remember, housing supply is still low overall, so it won’t suddenly be easy – it’ll just be less challenging than it was at this time last year. As a recent article from realtor.com says:

“Despite this improvement in the number of homes actively for sale, active listings still lag their pre-pandemic levels.”

The increase in housing supply helps put you in a great position to kick off the new year in your dream home. And who better to help you find it than a trusted, local real estate professional?

Bottom Line

If you’re ready to jump into the housing market and see what’s available in our local area, let’s connect.

Nov. 10, 2022

VA Loans Can Help Veterans Achieve Their Dream of Homeownership

VA Loans Can Help Veterans Achieve Their Dream of Homeownership | MyKCM

For over 78 years, Veterans Affairs (VA) home loans have provided millions of veterans with the opportunity to purchase homes of their own. If you or a loved one have served, it’s important to understand this program and its benefits.

Here are some things you should know about VA loans before you start the homebuying process.

What Are VA Loans?

VA home loans provide a pathway to homeownership for those who have served our nation. The U.S. Department of Veterans Affairs describes the program like this:

“VA helps Servicemembers, Veterans, and eligible surviving spouses become homeowners. As part of our mission to serve you, we provide a home loan guaranty benefit and other housing-related programs to help you buy, build, repair, retain, or adapt a home for your own personal occupancy.”

Top Benefits of the VA Home Loan Program

In addition to helping eligible buyers achieve their homeownership dreams, VA loans have several other great benefits for buyers who qualify. According to the Department of Veteran Affairs:

  • Qualified borrowers can often purchase a home with no down payment.
  • Many other loans with down payments under 20% require Private Mortgage Insurance (PMI). VA Loans do not require PMI, which means veterans can save on their monthly housing costs.
  • VA-Backed Loans often offer competitive terms and mortgage interest rates.

A recent article from Veterans United sums up just how impactful this loan option can be:

“For the vast majority of military borrowers, VA loans represent the most powerful lending program on the market. These flexible, $0-down payment mortgages have helped more than 24 million service members become homeowners since 1944.”

John Bell, Acting Executive Director of the Department of Veterans Affairs Loan Guaranty Service, also explains why this program is so powerful:

“It provides early ownership for many people that would not have that opportunity to begin with. Since there’s no down payment, it allows people to hold their wealth and it gives them the ability to have long term financial security by being able to own a house and let that equity grow.”

Bottom Line

Homeownership is the American Dream. Our veterans sacrifice so much in service of our nation, and one way we can honor and thank them is to ensure they have the best information about the benefits of VA home loans. Thank you for your service.

Nov. 3, 2022

3 Trends That Are Good News for Today’s Homebuyers

3 Trends That Are Good News for Today’s Homebuyers | MyKCM

While higher mortgage rates are creating affordability challenges for homebuyers this year, there is some good news for those people still looking to buy a home.

As the market has cooled this year, some of the intensity buyers faced during the peak frenzy of the pandemic has cooled too. Here are just a few trends that may benefit you when you go to buy a home today.

1. More Homes To Choose from

During the pandemic, housing supply hit a record low at the same time buyer demand skyrocketed. This combination made it difficult to find a home because there just weren’t enough to meet buyer demand. According to Calculated Risk, the supply of homes for sale increased by 39.5% for the week ending October 28 compared to the same week last year.

Even though it’s still a sellers’ market and supply is still lower than more normal levels, you have more to choose from in your home search. That makes finding your dream home a bit less difficult.

2. Bidding Wars Have Eased

One of the top stories in real estate over the past two years was the intensity and frequency of bidding wars. But today, things are different. With more options, you’ll likely see less competition from other buyers looking for homes. According to the National Association of Realtors (NAR), the average number of offers on recently sold homes has declined. This September, the average was 2.5 offers per sale. In contrast, last September, the average was 3.7 offers per sale.

If you tried to buy a house over the past two years, you probably experienced the bidding war frenzy firsthand and may have been outbid on several homes along the way. Now you have a chance to jump back into the market and enjoy searching for a home with less competition.

3. More Negotiation Power

And when you have less competition, you also have more negotiating power as a buyer. Over the last two years, more buyers were willing to skip important steps in the homebuying process, like the appraisal or inspection, to try to win a bidding war. But the latest data from the National Association of Realtors (NAR) shows the percentage of buyers waiving those contingencies is going down.

As a buyer, this is good news. The appraisal and the inspection give you important information about the value and condition of the home you’re buying. And if something turns up in the inspection, you have more power today to renegotiate with the seller.

survey from realtor.com confirms more sellers are accepting offers that include contingencies today. According to that report, 95% of sellers said buyers requested a home inspection, and 67% negotiated with buyers on repairs as a result of the inspection findings.

Bottom Line

While buyers still face challenges today, they’re not necessarily the same ones you may have been up against just a year or so ago. If you were outbid or had trouble finding a home in the past, now may be the moment you’ve been waiting for. Let’s connect to start the homebuying process today.

Oct. 27, 2022

What Happens to Housing when There’s a Recession?

What Happens to Housing when There’s a Recession? | MyKCM

Since the 2008 housing bubble burst, the word recession strikes a stronger emotional chord than it ever did before. And while there’s some debate around whether we’re officially in a recession right now, the good news is experts say a recession today would likely be mild and the economy would rebound quickly. As the 2022 CEO Outlook from KPMG says:

“Global CEOs see a ‘mild and short’ recession, yet optimistic about global economy over 3-year horizon . . .

 More than 8 out of 10 anticipate a recession over the next 12 months, with more than half expecting it to be mild and short.”

To add to that sentiment, housing is typically one of the first sectors to rebound during a slowdown. As Ali Wolf, Chief Economist at Zondaexplains:

“Housing is traditionally one of the first sectors to slow as the economy shifts but is also one of the first to rebound.”

Part of that rebound is tied to what has historically happened to mortgage rates during recessions. Here’s a look back at rates during previous economic slowdowns to help put your mind at ease.

Mortgage Rates Typically Fall During Recessions

Historical data helps paint the picture of how a recession could impact the cost of financing a home. Looking at recessions in this country going all the way back to 1980, the graph below shows each time the economy slowed down mortgage rates decreased.

What Happens to Housing when There’s a Recession? | MyKCM
Fortune explains mortgage rates typically fall during an economic slowdown:

Over the past five recessions, mortgage rates have fallen an average of 1.8 percentage points from the peak seen during the recession to the trough. And in many cases, they continued to fall after the fact as it takes some time to turn things around even when the recession is technically over.”

While history doesn’t always repeat itself, we can learn from and find comfort in the trends of what’s happened in the past. If you’re thinking about buying or selling a home, you can make the best decision by working with a trusted real estate professional. That way you have expert advice on what a recession could mean for the housing market.

Bottom Line

History shows you don’t need to fear the word recession when it comes to the housing market. If you have questions about what’s happening today, let’s connect so you have expert advice and insights you can trust.

Oct. 19, 2022

Should You Still Buy a Home with the Latest News About Inflation?

Should You Still Buy a Home with the Latest News About Inflation? | MyKCM

While the Federal Reserve is working hard to bring down inflation, the latest data shows the inflation rate is still high, remaining around 8%. This news impacted the stock market and added fuel to the fire for conversations about a recession.

You’re likely feeling the impact in your day-to-day life as you watch the cost of goods and services climb. The pinch it’s creating on your wallet and the looming economic uncertainty may leave you wondering: “should I still buy a home right now?” If that question is top of mind for you, here’s what you need to know.

Homeownership Is Historically a Great Hedge Against Inflation

In an inflationary economy, prices rise across the board. Historically, homeownership is a great hedge against those rising costs because you can lock in what’s likely your largest monthly payment (your mortgage) for the duration of your loan. That helps stabilize some of your monthly expenses. James Royal, Senior Wealth Management Reporter at Bankrateexplains:

A fixed-rate mortgage allows you to maintain the biggest portion of housing expenses at the same payment. Sure, property taxes will rise and other expenses may creep up, but your monthly housing payment remains the same.”

And with rents being as high as they are, the ability to stabilize your monthly payments and protect yourself from future rent hikes may be even more important. Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), explains what happened to rents in the latest inflation report:

“Inflation refuses to budge. In September, consumer prices rose by 8.2%. Rents rose by 7.2%, the highest pace in 40 years.”

When you rent, your monthly payment is determined by your lease, which typically renews on an annual basis. With inflation high, your landlord may be more likely to increase your payments to offset the impact of inflation. That may be part of the reason why a survey from realtor.com shows 72% of landlords said they plan to raise the rent on one or more of their properties in the next year.

Becoming a homeowner, if you’re ready and able to do so, can provide lasting stability and a reliable shelter in times of economic uncertainty.

Bottom Line

The best hedge against inflation is a fixed housing cost. If you’re ready to learn more and start your journey to homeownership, let’s connect.

Oct. 13, 2022

Perspective Matters When Selling Your House Today

Perspective Matters When Selling Your House Today | MyKCM

Does the latest news about the housing market have you questioning your plans to sell your house? If so, perspective is key. Here are some of the ways a trusted real estate professional can explain the shift that’s happening today and why it’s still a sellers’ market even during the cooldown.

Fewer Homes for Sale than Pre-Pandemic

While the supply of homes available for sale has increased this year compared to last, we’re still nowhere near what’s considered a balanced market. A recent article from Calculated Risk helps put this year’s increased inventory into context (see graph below):

Perspective Matters When Selling Your House Today | MyKCM

It shows supply this year has surpassed 2021 levels by over 30%. But the further back you look, the more you’ll understand the big picture. Compared to 2020, we’re just barely above the level of inventory we saw then. And if you go all the way back to 2019, the last normal year in real estate, we’re roughly 40% below the housing supply we had at that time.

Why does this matter to you? When inventory is low, there is still demand for your house because there just aren’t enough homes available for sale.

Homes Are Still Selling Faster Than More Normal Years

And while homes aren’t selling as quickly as they did a few months ago, the average number of days on the market is still well below pre-pandemic norms – in large part because inventory is so low. The graph below uses data from the Realtors’ Confidence Index by the National Association of Realtors (NAR) to illustrate this trend:

Perspective Matters When Selling Your House Today | MyKCM

As the graph shows, the pre-pandemic numbers (shown in blue) are higher than the numbers we saw during the pandemic (shown in green). That’s because the average days on the market started to decrease as homes sold at record pace during the pandemic. Most recently, due to the cooldown in the housing market, the average days on the market have started to tick back up slightly (shown in orange) but are still far below the pre-pandemic norm.

What does this mean for you? While it may not be as fast as it was a couple of months ago, homes are still selling much faster than they did in more normal, pre-pandemic years. And if you price it right, your home could still go under contract quickly.

Buyer Demand Has Moderated and Is Now in Line with More Typical Years

Buyer demand has softened this year in response to rising mortgage rates. But again, perspective is key. Getting 3-5 offers like sellers did during the pandemic isn’t the norm. The graph below uses data from NAR going back to 2018 to help tell the story of this shift over time (see graph below):

Perspective Matters When Selling Your House Today | MyKCM

Prior to the pandemic, it was typical for homes sold to see roughly 2-2.5 offers (shown in blue). As the market heated up during the pandemic, the average number of offers skyrocketed as record-low mortgage rates drove up demand (shown in green). But most recently, the number of offers on homes sold today (shown in orange) has started to return to pre-pandemic levels as the market cools from the frenzy.

What’s the takeaway for you? Buyer demand has moderated from the pandemic peak, but it hasn’t disappeared. The buyers are still out there, and if you price your house at current market value, you’ll still be able sell your house today.

Bottom Line

If you have questions about selling your house in today’s housing market, let’s connect. That way you have context around what’s happening now, so you’re up to date on what you can expect when you’re ready to move.

Oct. 6, 2022

The Long-Term Benefit of Homeownership

The Long-Term Benefit of Homeownership | MyKCM

Today’s cooling housing market, the rise in mortgage rates, and mounting economic concerns have some people questioning: should I still buy a home this year? While it’s true this year has unique challenges for homebuyers, it’s important to factor the long-term benefits of homeownership into your decision.

Consider this: if you know people who bought a home 5, 10, or even 30 years ago, you’re probably going to have a hard time finding someone who regrets their decision. Why is that? The reason is tied to how you gain equity and wealth as home values grow with time.

The National Association of Realtors (NAR) explains:

“Home equity gains are built up through price appreciation and by paying off the mortgage through principal payments.

Here’s a look at how just the home price appreciation piece can really add up over the years.

Home Price Growth Over Time

Even though home price appreciation has moderated this year, home values have still increased significantly in recent years. The map below uses data from the Federal Housing Finance Agency (FHFA) to show just how noteworthy those gains have been over the last five years.

The Long-Term Benefit of Homeownership | MyKCM

If you look at the percent change in home prices, you can see home prices grew on average by almost 64% nationwide over that period. 

That means a home’s value can increase substantially in a short time. And if you expand that time frame even more, the benefit of homeownership and the drastic gains you stand to make become even clearer (see map below):

The Long-Term Benefit of Homeownership | MyKCM

The second map shows, nationwide, home prices appreciated by an average of over 290% over roughly a thirty-year span.

While home price growth varies by state and local area, the nationwide average tells you the typical homeowner who bought a house thirty years ago saw their home almost triple in value over that time. This is why homeowners who bought their homes years ago are still happy with their decision.

Even if home price appreciation eases as the market cools this year, experts say home prices are still expected to appreciate nationally in 2023. That means, in most markets, your home should grow in value over the next year even if the pace is slower than it was during the peak market frenzy when prices skyrocketed.

The alternative to buying a home is renting, and rental prices have been climbing for decades. So why rent and fight annual lease hikes for no long-term financial benefit? Instead, consider buying a home. It’s an investment in your future that could set you up for long-term gains.

Bottom Line

Don’t let the shifting market delay your dreams. Data shows home values typically appreciate over time, and that gives your net worth a nice boost. If you’re ready to start your journey to homeownership, let’s connect today.

Sept. 29, 2022

Why You Should Consider Condos as Part of Your Home Search

Why You Should Consider Condos as Part of Your Home Search | MyKCM

The historically low inventory over the past few years led to challenges for many buyers trying to find a home that met their needs and their budget. If you’re in the same boat, you should know the recent shift in the housing market may have opened up doors for you to restart your search.

The inventory of homes for sale has increased this year, and that’s giving buyers much needed options. As Danielle Hale, Chief Economist at realtor.comsays:

“. . . today’s shoppers have more than 5 homes to consider for every 4 they had at this time a year ago.”

But perspective is important. Overall, housing supply is still low. If you need even more choices, expanding your search by adding additional housing types, like condominiums, could help.

Exploring Condos Could Add Options That Fit Your Budget

One thing to consider is condos generally differ from single-family homes in average space and floorplans. But that size difference is one reason why condos can be a more affordable option. According to a recent report from realtor.com, condo buyers paid roughly 7% less for their home than buyers of other housing types last year. With rising mortgage rates and home prices, the relative affordability of a condo could be worth considering.

Remember, your first home doesn’t have to be your forever home. The important thing is to get your foot in the door as a homeowner. Buying a condo now can springboard you into a bigger home later on. An article from the Urban Institute explains:

Because condos and co-ops are generally more affordable, they tend to help first-time homebuyers step onto the first rung of the homeownership ladder. These buyers often use the equity on their condo to then purchase a larger single-family home.

In other words, owning a condo will help you start building wealth in the form of home equity. In time, the equity you build can fuel a future purchase should you decide you want to buy a home with more space or different amenities.

Condo Living Provides Several Great Perks

Boosting the number of options in your budget during your home search is just one reason to consider condos, but there are several other benefits to condo living.

First, they tend to require minimal upkeep and lower maintenance – and that can give you more time to spend doing the things you enjoy. A recent article from Bankrate highlights this, saying:

Condos can be a good option for anyone who wants to keep home maintenance to a minimum . . . if the roof is leaking or the carpet in the lobby needs to be replaced, that’s not your responsibility — the condo association handles those duties.”

Plus, since many condos are located in or near city centers, they offer the added benefit of being in close proximity to work and leisure. Again, realtor.com explains:

“Buying a condo, which is generally less expensive than a single-family home, enables a household to afford to own in the middle of it all, and often means a newer-built home with less maintenance responsibility.”

Ultimately, owning and living in a condo can be a lifestyle choice. And if that appeals to you, they could give you the added options you need to buy your first home.

Bottom Line

Adding condominiums to your housing search could be a great move. If you’re ready to search condos in our area, let’s connect today.