Myths: The Earth Is Flat and Newspapers Sell Houses

With the housing market beginning to heat up, we are afraid some sellers may consider trying to sell their house as a For Sale By Owner (FSBO). This week we will be posting on the reasons that we believe trying to sell on your own may be a mistake. – KCM Crew

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It is amazing how masses of people can believe something that is absolutely untrue. The greatest example of this is that at one time the vast majority of people believed the world to be flat. Today, we want to debunk another commonly held belief – that newspapers sell houses. Somehow this notion gained believability even though the facts consistently prove it to not be true.

When you are selling your house, you should know what methods perspective purchasers use to find the home of their dreams. That would enable you to develop the best marketing strategy to attract a buyer.

Google recently teamed with the National Association of Realtors (NAR) on a new report, The Digital House Hunt: Consumer and Market Trends in Real Estate.

Let’s look at the actual search habits of today’s buyers revealed by the report:

  • § 90% of buyers now begin their search for a home online
  • § Real estate related searches on Google.com have grown 253% over the past 4 years

Of the 90% who use the internet, they gain information from these sources (with percentages):

  • § The internet – 100%
  • § A real estate agent – 89%
  • § A yard sign – 53%
  • § An open house – 46%
  • § Print newspaper – 28%

If you want to develop a great marketing strategy giving your house maximum exposure, forget newspapers. Less than 30% of buyers will ever see your home. Instead, look toward the internet and a real estate agent.

Where on the internet should you advertise your home?

The buyer is attracted to the type of sites that have the greatest number of listings. These sites are normally generated by the real estate industry. You should make sure your home is on as many of these sites as possible. That will give you the best chance of attracting your buyer.

Bottom Line

Print media never was a great way to market a house for sale and its effectiveness is diminishing each year. Meet with a local real estate professional and put together an internet marketing strategy worthy of your home.

How Housing Is Leading Us Out of the Great Recession

 

How Housing Is Leading Us Out of the Great Recession

We are often asked if the housing market can truly rebound if the all-round economy remains sluggish. We answer by explaining the housing market is not dependent on the economy but rather the economy is reliant on the housing market. Mark Zandi, Chief Economist at Moodys.com, addressed this issue in a recent report.

“Historically, housing has always led the U.S. out of recessions. It is the most interest rate-sensitive part of the economy, and as rates fall during recessions, housing rises first.”phoenix

How does real estate impact the economy?

Real estate impacts the economy in several ways. As Zandi explains:

“Housing’s resurrection is crucial to the creation of more jobs. Every new single-family home creates and sustains almost five jobs for about a year. These include not only construction jobs, but manufacturing positions for producing lumber, paint, nails, plumbing fixtures, carpets, wall board and so on. Truckers are hired to move this material around, and retailers add workers as new homeowners shop at home-improvement and hardware stores. Realtors, mortgage bankers, landscapers and cable installers all increase staff.”

Is the current market momentum sustainable?

If the economy is dependent on a recovering housing market, we need to know whether the current good news being reported in the real estate industry will continue as we move forward. Again, Mr. Zandi:

“The pace of construction has risen to 900,000 homes per year and is set to double to 1.8 million in the next few years. Even this will be only enough to meet demand; in an average year, 1.25 million households are formed, 350,000 houses are irreparably damaged or demolished, and an additional 200,000 are built for use as vacation or second homes. Given pent-up household formation—hundreds of thousands have put off their plans because of the tough job market—there could be a couple of years in which closer to 2 million homes will need to be built to meet demand.”

Housing will remain strong for the next several years. That will enable the economy to continue to heal until it fully recovers.

 

Thank you to The KCM crew for the post~

Will Millennials Drive House Sales in 2013?

Will Millennials Drive House Sales in 2013?

The cover story of last month’s Barron’s Magazine discussed the Millennial generation and the impact they will have on the economy including the housing sector. There have been many contrasting views about this age group and their feelings on whether or not homeownership is a part of their personal American Dream.Millenials

Here are few questions about this generation that have been debated over the last several years… along with some current findings.

Is the Number of Millennials Large Enough to Make an Impact?

The Barron’s article quantifies their potential impact:

“Millennials sometimes called Generation Y, and defined by many demographers as ranging from ages 18 to 37 — make up the largest population cohort the U.S. has ever seen. Eighty-six million strong, it is 7% larger than the baby-boom generation, which came of age in the 1970s and ’80s. And the Millennial population could keep growing to 88.5 million people by 2020, owing to immigration, says demographer Peter Francese, an analyst at the MetLife Mature Market Institute.”

Do Millennials Even Believe in Homeownership?

There have been many recent studies showing this generation’s belief in homeownership is as strong as previous generations. Just last month, Gallup released a poll, American Dream of Owning Home Lives On, Even for Young, which revealed that 91% of young adults between 18 and 29 years old either own a home or plan to buy one. The report says:

“Nearly 7 in 10 Americans aged 18 to 29 currently do not own a home, but plan on buying one… Coupling this with the 21% of younger Americans who say they already are homeowners leaves few adults under 30 who say they don’t own a home and have no plans on buying one.”

What about Student Debt?

Barron’s explains the challenge may not be as crippling as some think.

“There is almost $1 trillion of student debt outstanding in the U.S. today, which could limit the purchasing power of Millennials…But, total figures are misleading. The average student loan among Gen Y-ers is $25,000, and the median loan is nearly $14,000, according to the Federal Reserve Bank of Kansas City. Less than 1% of student loans are larger than $100,000.”

Are They Ready to Leave Mom & Dad’s?

The economy forced many young adults to return home after college to live with their parents. Barron’s explains that, as the economy improves, this anomaly will correct itself:

“As the millennials’ employment situation improves, more young adults living at home will pack their bags and move out. That could spur an increase in U.S. household formation, which turned negative in 2007-08. Since then, the number of newly created households has recovered to about a million a year, still well below an annual average of 1.5 million since the 1970s, according to Census Bureau data.”

According to the latest CoreLogic Market Pulse Report, this correction is already occurring. They explain:

“The recession curtailed household formations, causing doubling-up in living arrangements and driving young potential buyers back to their parents. More recent data shows a shift with household formations returning in force.”

Also, Freddie Mac recently projected new household formations to again return to the 1.5 million levels in 2013.

Will They Prefer Owning over Renting?

The Barron’s story gives a good reason why they might:

“Greater financial security could mean an increase in the birth rate, which typically slumps during economic downturns. Francese sees the average birth rate for U.S. women rising to 2.1-2.2 in coming years from a depressed 1.9 recently. ‘A lot of Millennials put off having babies, and now they will get to work,’ he says. That suggests they will also start buying homes.”

CoreLogic believes that the first time homebuyer is poised to return to the market this year. They explain:

“As new renter-households are formed, rental prices are bid up, making the prospect of owning more attractive to existing renters. Sustained low interest rates add to the appeal for current renters to convert to homeownership. The expectation this spring is that more renters will take advantage of historically low interest rates and low home prices to become homeowners.”

We agree.

 

Thank you to The KCM crew for the post~

How Difficult Is the Mortgage Process for Buyers?

 

 

How Difficult Is the Mortgage Process for Buyers?

TD Bank recently announced the results of their inaugural Mortgage Service Index. The index was designed to identify best practices and trouble areas in home financing and act as a service indicator for lending institutions. Below are some of the key findings of the survey.

Positive Experiencesresearch

The index identified the percentage of respondents who had a positive (“excellent” or “very good”) experience in certain parts of the home buying experience:

  • § 64% had a positive experience during the home buying experience
  • § 55% finding a good Realtor
  • § 55% with the home appraisal/inspection process
  • § 53% finding the right lender
  • § 53% with the length of the entire home buying process

What Creates an Overall Positive Experience?

Certain key aspects of the relationship with the lender were important to those who said they had a very positive overall home buying experience. They rated their lender as “excellent” or “very good” in the following categories:

  • § Responsive 74%
  • § Accessible 76%
  • § Honest and transparent 76%
  • § Instilled confidence throughout the process 73%
  • § Helped buyers understand the process 73%
  • § Kept buyer informed during process 73%
  • § Explained the mortgage and available options 72%

Other Key Findings:

1. On average, home buyers considered approximately two banks or lenders when applying for a mortgage

2. An equal number of those surveyed (43%) obtained information on the lending process from their bank and from their Realtor, demonstrating that Realtors are used as informative resources by consumers during the mortgage process

3. Only 34% of home buyers obtained a mortgage at their primary bank

Michael Copley, Executive Vice President, Retail Lending at TD Bank concluded:

“As the housing market continues to rebound, the growing number of buyers should be aware of what to look for in a mortgage partner and seek out a lender who will best guide them through the home financing process in order to create a positive home buying experience.”

Buy or Rent: Which Makes More Sense Financially?

Every potential home buyer has to stop for at least a moment and consider this question. Today, we want to look at one of the many financial reasons to buy instead of rent: the housing expense moving forward.rent buy

According to the latest Existing Home Sales Report from the National Association of Realtors, the median sales price of a home in the U.S. is $184,300. The mortgage payment (principal & interest) on that purchase would be $661.89 assuming a 20% down payment and a 3.5% mortgage interest rate. Currently, the median asking rent in the U.S. according to the Census Bureau is $717 a month.

We realize that the two payments do not necessarily reflect the housing cost on a similar residence. However, that is not the point of the post. All we are saying is that the monthly housing expense on a median price home is $661.89 and the median rent is $717. We now want to discuss what will happen to these costs over time.

The principal and interest portion of the mortgage payment is locked in for the next 30 years. We know real estate taxes may be included in the payment and will increase to some degree over that time. We also acknowledge that the homeowner will have occasion to spend money on repairs. They also receive many tax advantages as a homeowner.

However, the actual monthly housing expense remains the same for the next 30 years.

Now, let’s look at what happens to a rent payment. The best thing to do to predict the future is to study the past. Here is a graph of the median asking rent since 1988 based on Census Bureau data:

Rents

We believe rents will follow their historically pattern and increase dramatically over the next 30 years. Buyers have a choice: either lock in your housing expense or deal with the uncertainty of rental increases.

 

Thank you to The KCM Crew for this post~

3 Reason to Sell Your Arizona Home Today! (Part 3)

home-builder-300x300This week, we are going to look at the three reasons to sell your house now instead of waiting: demand is strong, supply is low and new construction will soon be your competition.

Part III – New Construction Will Soon Be Your Competition

Over the last several years, most homeowners selling their home did not have to compete with a new construction project around the block. As the market is recovering, more and more builders are jumping back in. As an example, the National Association of Realtors revealed, relative to last year, year-to-date new home sales are up 19%.

These ‘shiny’ new homes will again become competition as they can be an attractive alternative to many of today’s home purchasers.

Here are the numbers regarding new construction about to come to market from the Census Bureau:

BUILDING PERMITS
Single-family authorizations in February were at a rate of 600,000.
This is 25.5% above February 2012.
HOUSING UNDER CONSTRUCTION
Single-family housing starts in February were at a rate of 618,000.
This is 18.5% above February 2012.
HOUSING COMPLETIONS
Single-family housing completions in February were at a rate of 574,000.
This is 32.9% above February 2012.

As we mentioned, new construction can be strong competition to a seller of an existing home. It may make sense to list your home before this new inventory makes its way to market.

Thank you to KCM for the post

3 Reasons to Sell Your Arizona Home Today! (Part 2)

Homes-for-Sale-300x286This week, we are going to look at the three reasons to sell your house now instead of waiting: demand is strong, supply is low and new construction will soon be your competition.

Part II – Housing Supply is Low
A seller’s ability to sell their home in today’s real estate market will be determined by both the supply of homes for sale and the demand for that housing. In real estate, supply is represented by the current month’s supply of homes for sale (the number of homes for sale divided by the number of homes sold in the previous month).

While there is no steadfast rule that will apply to pricing in every category of housing, here is a great guideline:

1-4 months’ supply creates a sellers’ market where there are not enough homes to satisfy buyer demand. Appreciation is guaranteed.
5-6 months’ supply creates a balanced market. Historically home values appreciate at a rate a little greater than inflation.
7-8 months’ supply creates a buyers’ market where the number of homes for sale exceeds the demand. Depreciation follows.
What is happening across the country right now?
In most parts of the country, supply is dropping like a rock. According to the National Association of Realtors, total housing inventory is below a five months’ supply. This is almost 20% below inventory numbers of just a year ago and at levels we haven’t seen since 2005.

Based on the table above, we can see that the supply/demand ratio is showing a sellers’ market where prices appreciate. This has created positive movement in housing values in most parts of the country.

Sellers have a great opportunity right now. Historically, inventory increases dramatically as we approach summer. Selling now while demand is high and supply is low may garner you your best price.

Thank you to KCM for the post

3 Reasons to Sell Your Arizona Home Today! (Part 1)

HouseKeysBlue-930x1024This week, we are going to look at three reasons to sell your house now instead of waiting: demand is strong, supply is low and new construction will soon be your competition.

Part I – Demand for Real Estate is Much Stronger This Year
When selling anything, owners can only hope there is a strong demand for that which they are selling. The great news for today’s home sellers is that the current housing market is experiencing a stronger demand than we have seen in some time.

The spring housing market of 2013 is projected to be one of the best in years.

Home Sales
The National Association of Realtors (NAR) reports monthly on both pending sales (houses going into contract) and existing home sales (actual closed sales).

In the first quarter of 2013, pending sales have consistently outperformed the numbers reported in 2012. Contract activity has been above year-ago levels for the past 22 months. Before this year, the last time the index showed a higher reading was in April 2010, shortly before the deadline for the home buyer tax credit.

NAR also revealed that closed home sales have been above year-ago levels for 20 consecutive months and sales are at the highest level since the tax credit period of 2009-2010.

Impact on Sellers
This increase in demand has created bidding wars for properly priced homes across the country. This has resulted in two favorable changes for home sellers:

They are receiving offers closer to (if not greater than) the list price.
The average days it takes to sell a home has dropped by over 20% from last year.
If you are thinking about selling your home, don’t miss out on the strong demand that exists in the current spring market.

Thank you to KCM for the post