Here's some thoughts on today's real estate market.... do you agree or disagree?

Top 3 Myths About Today’s Real Estate Market

 from Keeping Current Matters: Wednesday August 29th, 2018  First Time Home Buyers, For Buyers, For Sellers, Housing Market Updates, Move-Up Buyers

There are many conflicting headlines when it comes to describing today’s real estate market. Some are making comparisons to the market we experienced 10 years ago and are starting to believe that we may be doomed to repeat ourselves. Others are just plain wrong when it comes to what it takes to qualify for a mortgage.

Today, we want to try and clear the air by shedding some light on what’s causing some of these headlines, as well as what’s truly going on.

Myth #1: We Are Headed for Another Housing Bubble

Home prices have appreciated year-over-year for the last 76 straight months. Many areas of the country are at or near their peak prices achieved before the last housing bubble burst. This has many worried that we are headed towards another housing bubble.

Reality: The biggest challenge facing today’s real estate market is a lack of homes for sale! Demand is strong, as many renters have come off the fence and are searching for their dream homes.

Historically, a normal market requires a 6-month supply of inventory in order for prices to rise with the rate of inflation. According to the National Association of Realtors (NAR) there is currently a 4.3-month supply of inventory.

The US housing market hasn’t had 6-months inventory since August 2012! The concept of supply and demand is what is driving home prices up!

Myth #2: The Rumored Recession Will Lead to Another Housing Market Crash

Economists and analysts know that the country has experienced economic growth for almost a decade. When this happens, they also know that a recession can’t be too far off. But what is a recession?

Merriam-Webster defines a recession as “a period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two consecutive quarters.”

Reality: Recession DOES NOT equal housing crisis. Many people associate these two terms with one another because the last time we had a recession it was caused by a housing crisis. According to the Federal Reserve, over the last 40 years, there have been six recessions. In each of the previous five recessions, home values appreciated.

Myth #3: There is an Affordability Crisis Looming

Rising home prices have many concerned that the average family will no longer be able to afford the most precious piece of the American Dream – their own home.

There are many different affordability indexes supported by different organizations that all measure different data. For this reason, there is a lot of confusion about what “affordable” actually means.

The monthly cost of a home is determined by the home’s price and the interest rate on the mortgage used to purchase it. According to Freddie Mac, interest rates have risen from 3.95% in January to 4.59% just last week.

Reality: As we mentioned earlier, home prices have appreciated year-over-year for the last 76 months, largely driven by high demand and low supply.

According to a recent study by Zillow, the percentage of median income necessary to buy a home in today’s market (17.1%) is well below the mark reached in 1985 – 2000 (21%), as well as the mark reached in 2006 (25.4)! Interest rates would have to increase to 6% before buying a home would be less affordable than historical norms.

The starter-home market has appreciated at higher levels (9.4% year-over-year) than any other market. One reason for this is the fact that many of the first-time buyers who have flocked to the starter-home market are being met with high competition. For some hopeful buyers, it may take more than a good offer to stand out from the crowd!

Bottom Line

There is a lot of confusion in today’s real estate market. If your future plans include buying or selling, make sure you have a trusted advisor and market expert by your side to help guide you to the best decision for you and your family.

Could a drop in new home construction be fueling a drop in existing home sales....

Why are Existing Home Sales Down?

 From Keeping Current Matters: Thursday August 30th, 2018  For Buyers, For Sellers, Housing Market Updates, Move-Up Buyers,Pricing

The latest Existing Home Sales Report issued by the National Association of Realtors (NAR) revealed that home sales have decreased for four consecutive months and are at their slowest pace in over two years. This has some industry leaders puzzled considering the fact that the economy is strengthening, unemployment is down, and wages are beginning to rise. This begs the question: “Where are the buyers?”

Actually, agents in the field of most communities are still seeing strong desire from prospective purchasers. They have a list of potential buyers ready to go if the right houses come on the market and they claim it is not a shortage of demand, but is instead a shortage of inventory that is causing the market to soften.

Why is there a shortage of inventory?

You only need to look at the graph below to understand:

New construction sales over the last ten years are far below historic numbers from 1995-2002.

A recent industry report looked at building permits and concluded:

“If construction over the past decade matched historic norms, accounting for population change, the country would have had 2.3 million more single-family home permits.”

That decade of not building enough homes is the primary reason for the concerns about today’s market.

Wait, weren’t we talking about ‘existing’ home sales?

Some may argue that NAR’s sales report deals with existing home sales and not new construction, and they would be correct. However, reports have shown that one of the main reasons why existing homeowners are not selling is because they can’t find homes that meet the needs of their current lifestyles. Historically, the upgrades in a newly constructed home were the answers to those needs.

Over the last decade, however, there were fewer homes built to satisfy this move-up seller. Consequently, there are many homeowners who stayed in their homes for a longer tenure, instead of putting their homes up for sale.

Bottom Line

As more new homes are being built, there will be more housing inventory to satisfy current demand which will cause prices to moderate and sales volumes to increase.

Here's some recent Corvallis Oregon real estate stats

What's the outlook for home sales next year?

Home Sales Expected to Continue Increasing in 2019

 From Keeping Current Matters:Tuesday August 28th, 2018  For Sellers, Housing Market Updates, Move-Up Buyers

Freddie Mac, Fannie Mae, and the Mortgage Bankers Association are all projecting that home sales will increase nicely in 2019. Below is a chart depicting the projections of each entity for the remainder of 2018, as well as for 2019.

As we can see, Freddie Mac, Fannie Mae, and the Mortgage Bankers Association all believe that homes sales will increase steadily over the next year. If you are a homeowner who has considered selling your house recently, now may be the best time to put it on the market.

Here's another way to look at Rent vs. Buying... would you rather pay your mortgage, or your landlord's?

Rent or Buy: Either Way You’re Paying A Mortgage!

 from Keeping Current Matters:Monday August 27th, 2018  First Time Home Buyers, For Buyers, Interest Rates, Move-Up Buyers,Rent vs. Buy

There are some people who have not purchased homes because they are uncomfortable taking on the obligation of a mortgage. Everyone should realize, however, that unless you are living with your parents rent-free, you are paying a mortgage – either yours or your landlord’s.

As Entrepreneur Magazine, a premier source for small business, explained in their article, “12 Practical Steps to Getting Rich”:

“While renting on a temporary basis isn’t terrible, you should most certainly own the roof over your head if you’re serious about your finances. It won’t make you rich overnight, but by renting, you’re paying someone else’s mortgage. In effect, you’re making someone else rich.”

With home prices rising, many renters are concerned about their house-buying power. Mark Fleming, Chief Economist at First American, explained:

“Over the last three years, renter house-buying power has increased fast enough to keep pace with house price appreciation, so the share of homes that a renter can afford to buy has remained the same since 2015.

Although mortgage rates are expected to rise, they are still low by historic standards, and real household incomes are the highest they have ever been. Assuming this trend continues, our measure of affordability, which takes into account income, interest rates, and house prices, indicates thathomeownership is still within reach for renters.”

As an owner, your mortgage payment is a form of ‘forced savings’ which allows you to build equity in your home that you can tap into later in life. As a renter, you guarantee the landlord is the person building that equity.

Interest rates are still at historic lows, making it one of the best times to secure a mortgage and make a move into your dream home. Freddie Mac’s latest report shows that rates across the country were at 4.51% last week.

Bottom Line

Whether you are looking for a primary residence for the first time or are considering a vacation home on the shore, now may be the time to buy.

Here's some Lebanon Oregon real estate stitistics from July of 2018....

 Keller Williams compiles local statistics from the WVMLS and passes it along to their agents each month and we in turn are welcome to share it with the public.  It's kind of a handy snapshot to have to see what is going on locally.  Click on the pick for a larger view.

Click here for Corvallis real estate stats.

To see Albany real estate stats click here.

Crowdfunding your down payment? Yep, people ARE doing just that....

Having Trouble Saving Enough for Your Down Payment? Crowdfund It!

  from Keeping Current Matters: Wednesday August 22nd, 2018  Down Payments, First Time Home Buyers, For Buyers, Millennials,Move-Up Buyers

You read that right! First-time buyers across the country are getting creative when it comes to saving the necessary down payment to buy a home.

Many couples are asking their wedding guests to contribute to their “Down Payment Fund” rather than fulfilling a traditional registry. This is fueled by the fact that many couples live together prior to marriage and already have the necessary items to make a house a home…they just need the house!

The average wedding in the United States has 120 guests who give wedding gifts valued, on average, at $186. This means that couples could walk away from their nuptials with over $22,000 towards their down payment!

Services like HomeFundMe allow friends, family members, and almost anyone else in a buyer’s network to contribute funds toward the buyer’s down payment. Contributors can determine, at the time of their donation, if their gifts are ‘conditional’ or ‘non-conditional’ on the beneficiary buying a home.

According to a recent Wall Street Journal article, “about 400 borrowers have used HomeFundMe to help buy homes since the program launched in October and on average, they raise about $2,500.” The article went on to explain that most borrowers use these funds in combination with their personal savings to shorten the time needed to achieve their goal of homeownership.

There are more and more programs surfacing from lenders that allow buyers to put down as little as 3% to buy their dream home. Fannie Mae and Freddie Mac loan programs require 3% down payments, while FHA programs require as little as 3.5%, and VA Loans are often approved with 0% down!

Bottom Line

Gone are the days of 20% down or no loan! If your dreams include buying a home of your own in the next year, you can get creative with your down payment savings to make it happen!

Here's some information on cost of living compared between the states.....

Hanging out at the Starker Arts Park in Corvallis...

Listening to Adam Larson and Company followed by Hillstomp for the final SAGE Summer Concert  Series show of the summer.

Here's some Corvallis real estate statistics from July of 2018...

 Keller Williams compiles local statistics from the WVMLS and passes it along to their agents each month and we in turn are welcome to share it with the public.  It's kind of a handy snapshot to have to see what is going on locally.  Click on the pick for a larger view.

To see the July 2018 statistics for Albany click here....

Floating the Willamette River Between Corvallis and Albany on an inflatable kayak....

This last weekend we decided to break out the inflatable kayaks and float the Willamette River between the boat ramp below the Old Spaghetti Factory in Corvallis down to Hayak Park just this side of Albany.

During the summer, particularly late summer, the Willamette can become fairly busy with drifters and paddlers on kayaks, canoes, innertubes and all manners of watercraft. By late summer the water is relatively comfortable temperature and on a sunny summer day it can be wonderful to be out on the river.

This Sunday was particularly nice, as the smoke from fires froum around the northwest had blown off and the sky was gorgeous. It's about a 9 mile drift/paddle fromthe boat ramp in Corvallis to Hayak Park, and took us about 3.5 hours of time to pretty much float it (with occasional paddling).  We left the boat ramp about 10 minutes behind a group of drifters on tubes and maybe beat them by all of 2-4 minutes by the time we'd made it to the park paddling part time. I'd call this stretch of water quite calm. There's an occasional snag along the river's edge you'd want to avoid, but otherwise very little going on as far as fast water or obstacles.  The county sheriff's department has a boat and they do check on people throughout the day. Remember your safety accessories... I belive a lifejacket or PFD and a whistle within reach are mandatory. The inflatable kayaks start at 65-85 bucks, other types of rafts or tubes can be less, so it's not an overly expensive event to do, espectially if you plan on doing a bunch of it.

I was surprised by how much there was to look at. I wish I had a better camera ready to go, and be on a boat so I wouldn't be afraid to get it wet.  I was using my cell phone in a $5.99 dry box and fumbling around pointing in general directions because I couldn't see in the bright sun.  On the float we saw... several osprey (including nesting osprey with chicks), a couple of juvenile bald eagles (they are huge birds, but they are mottled colored until their heads turn white a couple years on), fish jumping, lots of varieties of ducks (including a read headed mohawked one) a great blue heron, a white heron or crane, vultures, swifts and more.

It takes two vehicles to do this, leaving one at each boat ramp, but I can see doing this a lot more in future summers... this was my first time out on the Willamette in years.  I've been missing out.

Looks like there's been an increase in the number of price reductions on listings nationally, what can that mean...

What Does the Recent Rash of Price Reductions Mean to the Real Estate Market?

 from Keeping Current Matters: Thursday August 23rd, 2018  For Sellers, Housing Market Updates, Move-Up Buyers, Pricing

Last week, in a new report from Zillow, it was revealed that there has been a rash of price reductions across the country. According to the report:

• There are more price cuts now than a year ago in over two-thirds of the nation’s largest metros
• About 14% of all listings had a price cut in June
• Since the beginning of the year, the share of listings with a price cut increased 1.2%
• This is the greatest January-to-June increase ever reported, and more than double the January-to-June increase last year

Senior Economist Aaron Terrazas further explained:

“A rising share of on-market listings are seeing price cuts, though these price cuts are concentrated at the most expensive price-points and primarily in markets that have seen outsized price gains in recent years.”

What this DOESN’T MEAN for the real estate market…

This doesn’t mean home values have depreciated or are about to depreciate.

A seller may put a home worth $300,000 on the market for $325,000 hoping a bidding war will occur and an overanxious buyer will pay more than its actual value. That has happened often over the last few years. If the seller gets no offers and reduces the price to $300,000, it doesn’t mean the home dropped in value. It is still worth $300,000.

Home prices will continue to appreciate over the next 12 months. In this same report, Terrazas remarks:

“It’s far too soon to call this a buyer’s market, home values are still expected to appreciate at double their historic rate over the next 12 months, but the frenetic pace of the housing market over the past few years is starting to return toward a more normal trend.”

What this DOES MEAN for the real estate market…

This does mean that sellers should be more conservative when it comes to the price at which they list their homes – especially sellers in the upper end of each market.

Sellers have been listing their homes at inflated prices hoping a super-hot market will deliver a buyer willing to pay virtually any price to ensure they don’t lose the house. That strategy has worked somewhat successfully over the last two years. However, the time that strategy would have worked may have passed.

Again, quoting Aaron Terrazas in the report:

“The housing market has tilted sharply in favor of sellers over the past two years, but there are very early preliminary signs that the winds may be starting to shift ever-so-slightly.”

Bottom Line

Prices are not depreciating. However, if you want to sell your house quickly and with the least amount of hassles, pricing it correctly from the beginning makes the most sense.

Home ownership can be a great way to build wealth...

The Net Worth of a Homeowner is 44x Greater Than A Renter!

 from Keeping Current Matters: Monday August 20th, 2018  First Time Home Buyers, For Buyers, Move-Up Buyers, Rent vs. Buy

Every three years, the Federal Reserve conducts their Survey of Consumer Finances in which they collect data across all economic and social groups. Their latest survey data, covering 2013-2016 was recently released.

The study revealed that the median net worth of a homeowner was $231,400 – a 15% increase since 2013. At the same time, the median net worth of renters decreased by 5% ($5,200 today compared to $5,500 in 2013).

These numbers reveal that the net worth of a homeowner is over 44 times greater than that of a renter.

Owning a home is a great way to build family wealth

As we’ve said before, simply put, homeownership is a form of ‘forced savings.’ Every time you pay your mortgage, you are contributing to your net worth by increasing the equity in your home.

That is why, for the fifth year in a row, Gallup reported that Americans picked real estate as the best long-term investment. This year’s results showed that 34% of Americans chose real estate, followed by stocks at 26% and then gold, savings accounts/CDs, or bonds.

Greater equity in your home gives you options

If you want to find out how you can use the increased equity in your home to move to a home that better fits your current lifestyle, let’s get together to discuss the process.

Here's some Albany Oregon real estate statistics from July 2018...

 Keller Williams compiles local statistics from the WVMLS and passes it along to their agents each month and we in turn are welcome to share it with the public.  It's kind of a handy snapshot to have to see what is going on locally.  Click on the pick for a larger view.

It looks as though inventory is still down from last year, but things are selling well.  One note: When looking at the Days on Market category, keep in mind those numbers include all of the time a home was under contract and many or most had 30-45 days to close once they went under contract. It would also include properties that went under contract, the deal fell through, then went back under contract, and other's that have yet to sell, so when you are looking at 60-100 days on the market, a great many of those (especially when you are looking at that 150k to 300k price range) may have had accepted offers in just a few days.  Homes are selling well.

To see the Corvallis Oregon July 2018 statistics click here....

Does everyone need 20% down to buy a house.... NO!

First-Time Home Buyers Continue to Put Down Less Than 6%!

 Monday July 16th, 2018  Buying Myths, Down Payments, First Time Home Buyers, For Buyers, Rent vs. Buy

According to the Realtors Confidence Index from the National Association of Realtors, 61% of first-time homebuyers purchased their homes with down payments below 6% in 2017.

Many potential homebuyers believe that a 20% down payment is necessary to buy a home and have disqualified themselves without even trying, but in March, 71% of first-time buyers and 54% of all buyers put less than 20% down.

Ralph McLaughlin, Chief Economist and Founder of Veritas Urbis Economics, recently shed light on why buyer demand has remained strong,

“The fact that we now have four consecutive quarters where owner households increased while renters households fell is a strong sign households are making the switch from renting to buying.

Households under 35 – which represent the largest potential pool of new homeowners in the U.S. – have shown some of the largest gains. While they only make up a third of all homebuyers, the steady uptick in their homeownership rate over the past year suggests their enormous purchasing power may be finally coming to [the] housing market.”

It’s no surprise that with rents rising, more and more first-time buyers are taking advantage of low-down-payment mortgage options to secure their monthly housing costs and finally attain their dream homes.

Bottom Line

If you are one of the many first-time buyers unsure of whether or not they would qualify for a low-down payment mortgage, let’s get together and set you on your path to homeownership!

Here's a national real estate statistics chart by the NAR....Looks like we've had 3 years of shrinking inventory levels....

 

And we just had a year over year increase in the last month for the first time in a while if I'm reading this Nationa Association of Realtors graphic correctly.

How much will higher interest rates on home loans cost me if I wait to buy?...

The Cost of Waiting: Interest Rates Edition [INFOGRAPHIC]

 From Keeping Current Matters: Friday August 17th, 2018  First Time Home Buyers, For Buyers, Infographics, Interest Rates, Move-Up Buyers

Some Highlights:

• Interest rates are projected to increase steadily heading into 2019.
• The higher your interest rate, the more money you end up paying for your home and the higher your monthly payment will be.
• Rates are still low right now – don’t wait until they hit 5% to start searching for your dream home!

A visit to Avery Park.....

Tonight is movie night at Avery Park.

They are showing "Goonies" once it gets dark

How's the housing market? Compared to a decade ago the inventory of homes available for sale is quite low....

Housing Market: Another Gigantic Difference Between 2008 and 2018

 From Keeping Current Matters: Thursday August 16th, 2018  First Time Home Buyers, For Buyers, For Sellers, Housing Market Updates, Move-Up Buyers

Some are attempting to compare the current housing market to the market leading up to the “boom and bust” that we experienced a decade ago. They look at price appreciation and conclude that we are on a similar trajectory, speeding toward another housing crisis.

However, there is a major difference between the two markets. Last decade, while demand was being artificially created by extremely loose lending standards, a tremendous amount of inventory was coming to the market to satisfy that demand. Below is a graph of the inventory of homes available for sale leading up to the 2008 crash.

A normal market should have approximately 6 months supply of housing inventory. As we can see, that number jumped to over 11 months supply leading up to the housing crisis. When questionable mortgage practices ceased, and demand dried up, there was a glut of inventory on the market which caused prices to drop as there was too much supply and not enough demand.

Today is radically different!

There are those who believe that low mortgage rates have created an artificial demand in the current market. They fear that if mortgage rates continue to rise, some of the current demand will dry up (which is a possibility).

However, if we look at supply again, we can see that the current supply of homes is well below the norm of 6 months.

Bottom Line

We will not have a glut of inventory like we did back in 2008 and home values won’t come tumbling down. Instead, if demand weakens, we will return to a normal market (approximately a 6-month supply) with historic levels of appreciation (3.6% annually).