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Today’s Buyers Are Serious about Purchasing a Home

Today’s homebuyers are not just talking about their plans, they’re actively engaged in the buying process – and they’re serious about it. A recent report by the National Association of Home Builders (NAHB) indicates:

“…. Of American adults considering a future home purchase in the second quarter of 2020, about half (49%) are not simply planning it, they are actively engaged in the process to find a home. That is a significantly higher share than the comparable figure a year ago (41%), which suggests that the COVID-19 crisis and its accompanying record-low mortgage rates have converted some prospective buyers into active buyers.”

Today’s Buyers Are Serious about Purchasing a Home | MyKCMIt’s no surprise that buyers are out in full force today. Many Americans now need more space to work from home, and the current low mortgage rates are providing an extra boost of motivation to enter the housing market.

If you’re considering selling your house, know that today’s buyers are serious about making a move. Your opportunity to sell your house in a market with high demand is growing, especially as more millennials enter the housing market too. The same report also notes:

Of Millennials planning a home purchase in the next year, 57% are already actively searching for a home.”

Odeta Kushi, Deputy Chief Economist at First American, explains:

“When breaking down house-buying power by educational attainment for millennials in 2019, we find that the higher the education, the higher the household income, and the higher the house-buying power. In 2019, median house-buying power for millennials increased 16 percent relative to 2018.”

As demand for homes to buy grows and more millennials enter the market with growing buying power, the opportunity to sell your house grows too.

Bottom Line

Today’s buyers are serious ones and more millennials are helping to fuel that charge. So, if you’re considering selling your home, let’s connect today to determine your next steps in the process while buyers are actively looking.

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What If I Need to Sell My Home Now? What Can I Do?

Every day that passes, people have a need to buy and sell homes. That doesn’t stop during the current pandemic. If you’ve had a major life change recently, whether with your job or your family situation, you may be in a position where you need to sell your home – and fast. While you probably feel like timing with the current pandemic isn’t on your side, making a move is still possible. Rest assured, with technology at your side and fewer sellers on the market in most areas, you can list your house and make it happen safely and effectively, especially when following the current COVID-19 guidelines set forth by the National Association of Realtors (NAR) and the Centers for Disease Control and Prevention (CDC).

You may have a new baby, a new employment situation, a parent who moved in with you, you just built a home that’s finally ready to move into, or some other major part of your life that has changed in recent weeks. Buyers have those needs too, so rest assured that someone is likely looking for a home just like yours.

According to the NAR Flash Survey: Economic Pulse taken April 5 – 6, real estate agents indicate, not surprisingly, that there’s a noticeable decline in current homebuyer interest. That said, 10% of agents said in the same survey that they saw no change or even an increase in buyer activity. So, while buyer interest is low compared to normal spring markets, there are still buyers in the market. Don’t forget, you only need one buyer – the right one for your home.

Here’s the other thing – people are spending a lot of time on the Internet right now, given the stay-at-home orders implemented across the country. Buyers are actively looking at homes for sale online. Some of them are reaching out to real estate professionals for virtual tours and getting ready to make offers too. Homes are being sold in many markets.

There Is Less Competition Right Now

The same survey indicates that 56% of NAR members said sellers are removing their homes from the market right now. This can definitely work in your favor. If other sellers are removing their listings, your home has a better chance of rising to the top of a buyer’s search list and being seen. Keep in mind, listings will pick up again soon, as 57% of the respondents note that sellers are only planning to delay the process by a couple of months. If you need to sell right now, don’t wait for the competition to get back into the market again.

This year, delayed listings from the typically busy spring season will push into the summer months, so more competition will be coming to the market as the pandemic passes. Getting ahead of that wave now might be your biggest opportunity.

Your Trusted Real Estate Advisor Can Help

Real estate agents are working hard every single day under untraditional circumstances, utilizing technology to help both buyers and sellers who need to continue with their plans. We’re using virtual tours to show homes currently on the market, staying connected with the buyers and sellers through video chats, and leveraging resources to complete transactions electronically. We’re making sure the families we support remain safe and can keep their real estate needs on track, especially as life is changing so rapidly.

Bottom Line

Homes are still being bought and sold in the midst of this pandemic. If you need to sell your house and would like to know the current status in our local market, let’s work together to create a safe and effective plan that works for you and your family.

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How Technology Is Enabling the Real Estate Process

Today’s everyday reality is pretty different than it looked just a few weeks ago. We’re learning how to do a lot of things in new ways, from how we work remotely to how we engage with our friends and neighbors. Almost everything right now is shifting to a virtual format. One of the big changes we’re adapting to is the revisions to the common real estate transaction, which all vary by state and locality. Technology, however, is making it possible for many of us to continue on the quest for homeownership, an essential need for all.

Here’s a look at some of the elements of the process that are changing (at least in the near-term), due to stay-at-home orders and social distancing, and what you may need to know about each one if you’re thinking of buying or selling a home sooner rather than later.

1. Virtual Consultations – Instead of heading into an office, you can meet with real estate and lending professionals through video chat. Whether it’s your first initial needs analysis as a buyer or your listing appointment as a seller, you can still get the process started remotely and create a plan together. Your trusted advisor is still on your side.

2. Home Searches & Virtual Showings – According to theNational Association of Realtors (NAR), the Internet is one of the three most popular information sources buyers use when searching for homes. Your real estate agent can send you listing information and help you request a virtual showing when you’re ready to start looking. This means you can virtually walk through the homes on your wish list while keeping your family safe. As a seller, you can still have virtual open houses and virtual tours too, so as not to miss those buyers looking to find a home right now.

3. Document Signing – Although this is another area that varies by state, today more portions of the transaction are being done digitally. In many areas, your agent or loan officer can set up an account where you can upload all of the required documents and sign electronically right from your computer.

4. Sending Money – Whether you need to pay for an appraisal or submit closing costs, there are options available. Depending on the transaction and local regulations, you may be able to pay by credit card, and most banks will also allow you to wire funds from your account. Sometimes you can send a check by mail, and in some states, a mobile escrow agent will pick up a check from your home.

5. Closing Process – Again, depending on your area, a mobile notary may be able to bring the required documents to your home before the closing. If your state requires an attorney to be present, check with your legal counsel to see what options are available. Also, depending on the title company, some are allowing drive-thru closings, which is similar to doing a transaction at a bank window.

Although these virtual processes are starting to become more widely accepted, it does not mean that this is the way things are going to get done from now on. Under the current circumstances, however, technology is making it possible to continue much of the real estate transaction today.

Bottom Line

If you need to move today, technology can help make it happen; there are options available. Let’s touch base today to discuss your situation and our local regulations, so you don’t have to put your real estate plans on hold.

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Will Surging Unemployment Crush Home Sales?

Ten million Americans lost their jobs over the last two weeks. The next announced unemployment rate on May 8th is expected to be in the double digits. Because the health crisis brought the economy to a screeching halt, many are feeling a personal financial crisis. James Bullard, President of the Federal Reserve Bank of St. Louis, explained that the government is trying to find ways to assist those who have lost their jobs and the companies which were forced to close (think: your neighborhood restaurant). In a recent interview he said:

“This is a planned, organized partial shutdown of the U.S. economy in the second quarter. The overall goal is to keep everyone, households and businesses, whole.”

That’s promising, but we’re still uncertain as to when the recently unemployed will be able to return to work.

Another concern: how badly will the U.S. economy be damaged if people can’t buy homes?

A new concern is whether the high number of unemployed Americans will cause the residential real estate market to crash, putting a greater strain on the economy and leading to even more job losses. The housing industry is a major piece of the overall economy in this country.

Chris Herbert, Managing Director of the Joint Center for Housing Studies of Harvard University, in a post titled Responding to the Covid-19 Pandemic, addressed the toll this crisis will have on our nation, explaining:

“Housing is a foundational element of every person’s well-being. And with nearly a fifth of US gross domestic product rooted in housing-related expenditures, it is also critical to the well-being of our broader economy.”

How has the unemployment rate affected home sales in the past?

It’s logical to think there would be a direct correlation between the unemployment rate and home sales: as the unemployment rate went up, home sales would go down, and when the unemployment rate went down, home sales would go up.

However, research reviewing the last thirty years doesn’t show that direct relationship, as noted in the graph below. The blue and grey bars represent home sales, while the yellow line is the unemployment rate. Take a look at numbers 1 through 4:Will Surging Unemployment Crush Home Sales? | MyKCM

  1. The unemployment rate was rising between 1992-1993, yet home sales increased.
  2. The unemployment rate was rising between 2001-2003, and home sales increased.
  3. The unemployment rate was rising between 2007-2010, and home sales significantly decreased.
  4. The unemployment rate was falling continuously between 2015-2019, and home sales remained relatively flat.

The impact of the unemployment rate on home sales doesn’t seem to be as strong as we may have thought.

Isn’t this time different?

Yes. There is no doubt the country hasn’t seen job losses this quickly in almost one hundred years. How bad could it get? Goldman Sachs projects the unemployment rate to be 15% in the third quarter of 2020, flattening to single digits by the fourth quarter of this year, and then just over 6% percent by the fourth quarter of 2021. Not ideal for the housing industry, but manageable.

How does this compare to the other financial crises?

Some believe this is going to be reminiscent of The Great Depression. From the standpoint of unemployment rates alone (the only thing this article addresses), it does not compare. Here are the unemployment rates during the Great Depression, the Great Recession, and the projected rates moving forward:Will Surging Unemployment Crush Home Sales? | MyKCM

Bottom Line

We’ve given you the facts as we know them. The housing market will have challenges this year. However, with the help being given to those who have lost their jobs and the fact that we’re looking at a quick recovery for the economy after we address the health problem, the housing industry should be fine in the long term. Stay safe.

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Two Big Myths in the Homebuying Process

Two Big Myths in the Homebuying Process

The 2020 Millennial Home Buyer Report shows how this generation is not really any different from previous ones when it comes to homeownership goals:

“The majority of millennials not only want to own a home, but 84% of millennials in 2019 considered it a major part of the American Dream.”

Unfortunately, the myths surrounding the barriers to homeownership – especially those related to down payments and FICO® scores – might be keeping many buyers out of the arena. The piece also reveals:

“Millennials have to navigate a lot of obstacles to be able to own a home. According to our 2020 survey, saving for a down payment is the biggest barrier for 50% of millennials.”

Millennial or not, unpacking two of the biggest myths that may be standing in the way of homeownership among all generations is a great place to start the debunking process.

Myth #1: “I Need a 20% Down Payment”

Many buyers often overestimate what they need to qualify for a home loan. According to the same article:

“A down payment of 20% for a home of that price [$210,000] would be about $42,000; only about 30% of the millennials in our survey have enough in savings to cover that, not to mention the additional closing costs.”

While many potential buyers still think they need to put at least 20% down for the home of their dreams, they often don’t realize how many assistance programs are available with as little as 3% down. With a bit of research, many renters may be able to enter the housing market sooner than they ever imagined.

Myth #2: “I Need a 780 FICO® Score or Higher”

In addition to down payments, buyers are also often confused about the FICO® score it takes to qualify for a mortgage, believing they need a credit score of 780 or higher.

Ellie Mae’s latest Origination Insight Report, which focuses on recently closed (approved) loans, shows the truth is, over 50% of approved loans were granted with a FICO® score below 750 (see graph below):Two Big Myths in the Homebuying Process | MyKCMEven today, many of the myths of the homebuying process are unfortunately keeping plenty of motivated buyers on the sidelines. In reality, it really doesn’t have to be that way.

Bottom Line

If you’re thinking of buying a home, you may have more options than you think. Let’s connect to answer your questions and help you determine your next steps.

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Confidence Is the Key to Success for Young Homebuyers

Tips for Young Homebuyers

Buying your first home can seem overwhelming. Thankfully, there’s a lot of great information out there to help you feel more confident as you learn about the process. For those in younger generations who aspire to buy, here are three things to consider sooner rather than later in your journey:

1. Understand What it Takes to Purchase a Home

Overall, Millennials make up the largest group of homebuyers in today’s real estate market, and Gen Z is not too far behind. A recent study shared by Freddie Mac shows, however, that Generation Z isn’t as confident in the homebuying process as Millennials. The best thing potential young buyers can do is understand what it takes to buy a home. Learn as much as you can about the mortgage processdown payment options, and the overall steps to take along the way. 

2. Realize Your Opportunity to Build Wealth 

Homeownership allows you the chance to put a small portion of the home’s value down when you buy, and then watch your appreciation grow on the full value of the home – not just on the down payment. It’s one of the best investments you can make, and a form of forced savings working in your favor over time. The added bonus? You get to live there, too.

3. Find Someone You Trust to Help You Through the Process 

Having someone you trust to guide you through this process is invaluable. Finding a local real estate expert to help you navigate through the transaction and feel more confident as you make important decisions could be the best choice you make.

For Millennials and Gen Z’ers thinking about buying, today’s historically low interest rates combined with the outlook for future home appreciation is a big win. This means whatever you buy today, you’ll be bragging about 10 years from now. You can feel confident about that!

Bottom Line

If you’re ready, buying your first home sooner rather than later is one of the best decisions you can make. But there are many things to consider before taking that step, so let’s work together to help you confidently navigate the full journey.

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How Trusted Professionals Make Homebuying Easier to Understand

A Trusted Real Estate Professional Makes Homebuying Easier

In the spring, many excited buyers get ready to enter the housing market. Others continue dreaming about the homes they’d like to buy. The truth is, many potential buyers continue to dream longer than they need to, simply because they’re confused about the homebuying process. Thankfully, working with a trusted real estate professional can help ease those concerns and make the process to homeownership much easier to understand.

A recent survey conducted by Ipson and Freddie Mac reveals the confidence level of Gen Z and Millennial buyers regarding the homebuying process. The graph below shows the breakdown of the top results, clearly indicating there’s a significant portion of younger buyers who are not yet confident with some of the steps in the homebuying process.How Trusted Professionals Make Homebuying Easier to Understand | MyKCMBetween the homebuying process and the mortgage process, there are 230 possible steps in the transaction. With trusted professionals on your side, you certainly don’t have to know them all to have a successful experience.

There are many reasons why these steps can change as you move through each one. Depending on your personal circumstances, the term or your mortgage, and the type of loan you use, the path you take may need to vary. That’s why guidance and support from the experts is key.

In addition to the process itself, respondents in the survey definitely expressed concerns about understanding the types of loans available. Here are just a few of the basic loans to consider. Be sure to speak with your lender about the specifics of what will work best for you:

  • FHA: Loans guaranteed by the Federal Housing Administration for first-time buyers. They generally enable qualified borrowers to enter the housing market with a lower down payment.
  • Conventional: Loans that usually require a larger down payment. Repeat buyers usually use these types of loans since they have an established credit history as well as more money from the sale of their previous home (called equity) for a bigger down payment.
  • VA: Loans available for Veterans of the U.S. Armed Forces and their spouses. They are guaranteed by the Department of Veteran Affairs.
  • USDA: Loans for those living in rural and suburban areas. A qualified lender can issue a USDA home loan, and they are guaranteed by the United States Department of Agriculture (USDA).

Interest rates also popped up as a common area of confusion among Gen Z and Millennial respondents in the survey. With today’s rates hovering at near historic lows, it’s a fantastic time for buyers to get more house for their money in the current market. Why? When mortgage rates are this low and wages are increasing as they are today, overall affordability increases, enabling home buyers to stretch their mortgage dollars further. It’s just another area where a trusted professional can help simplify the process and give guidance along the way.

Bottom Line

There are many possible steps in a real estate transaction, but they don’t have to be confusing. To understand your best course of action, let’s get together today to ensure you have a trusted advisor who will help you feel confident and informed at every turn.

Mortgage Rates Rise to Their Highest Level in Over Four Years

Are you thinking about buying a home in the near future? Do you need a mortgage loan to finance your purchase? Here’s a trend you should know about. This week, the average rate for a 30-year fixed-rate mortgage loan rose to its highest level since 2013. This is based on the weekly industry survey conducted by Freddie Mac.

Mortgage Rates Hit 4-Year High in April 2018

On April 26, 2018, Freddie Mac published the latest results of its Primary Mortgage Market Survey (PMMS). This survey has been running for decades, and it gives us good insight into various trends. The company describes it as “the foremost reliable, representative source of regional and national mortgage rate trends.”

Here are the results of the survey for the week of April 26, 2018:

•    30-year fixed mortgage loans had an average rate of 4.58%.
•    15-year fixed mortgage loans had an average rate of 4.02%.
•    5/1 adjustable (ARM) loans had an average rate of 3.74%.

Here’s what is truly noteworthy about these latest indicators. The average rate for a 30-year fixed mortgage (the most popular loan product used by home buyers) just hit its highest level in years. To date, the average rate for a 30-year home loan hasn’t been this high since August 2013.

As Freddie Mac officials reported in their April 26 report:

“Mortgage rates increased for the third consecutive week, climbing 11 basis points to 4.58 percent. Rates are now at their highest level since the week of August 22, 2013. Higher Treasury yields, driven by rising commodity prices, more Treasury issuances and the steady stream of solid economic news, are behind the uptick in rates over the past week.”

Buying a Home Now Versus Later

Granted, the interest rates that are actually assigned to home loans can vary from one borrower to the next, and for a number of reasons. Loan type, credit scores, and discount points all play a role. The numbers above are merely averages across all of the surveyed lenders.

It’s the overall trend here that’s most important. And the trend is that average mortgage rates have shot up quite a bit over the last few months.

Home prices, meanwhile, continue to rise in most cities across the country. According to the real estate information company Zillow, the nationwide median home value rose by around 8% over the last year (as of April 2018). And while prices have slowed a down a bit in many areas, they are expected to continue moving north over the coming months — and into 2019.

These are important trends for home buyers, particularly those who need mortgage financing to complete their purchases. Rising rates can chip away at your buying power, as can rising home values. So those who are planning to buy a home in 2018 might want to consider purchasing sooner rather than later.

Homes Expected to Sell Fast in 2018, Like Last Year

Homes Expected to Sell Fast in 2018, Like Last Year

A recent report showed that homes across the U.S. sold faster than ever during 2017. And experts believe that 2018 could be an even hotter real estate market, due to a chronically low level of homes for sale. So buyers should be prepared for competition.

A Fast-Moving Real Estate Market in 2018

Here’s the big message for home buyers and house hunters in 2018: Be prepared to move quickly when you find a house you want to buy. Nationwide, homes sold at their fastest pace on record last year. And this year could match, or even outpace, that record.

According to a recent report from the real estate information company Zillow, it took a median of 81 days to sell a home in 2017. That was nine days faster than the previous year. The fastest-selling month for houses was June of 2017 when it took about 73 days for a home to sell (including the actual closing process). Since it can take between four and six weeks to close a sale, this means the typical home was on the market for around 30 days, before going under contract.

Buyers Still Dealing With Limited Inventory

So here we are in spring 2018, and housing markets across the country are still red-hot. This is largely due to the dearth of inventory seen in many areas. Home buyers in 2018 are facing limited inventory this home-shopping season, which has been the case for the last three years.

According to the latest figures, housing market inventory across the country has declined on a year-over-year basis for 37 months in a row. This leaves fewer options for home buyers while boosting competition and prices. In 2017, nearly a quarter of all homes sold across the U.S. went for more than the list price. This shows that stiff competition could be leading to bidding wars and driving prices higher.

According to Aaron Terrazas, senior economist at Zillow, 2018 will be marked by fast home sales.

“As demand has outpaced supply in the housing market over the past three years, buying a home has become an exercise in speed and agility,” Terrazas said in a recent news release. “This [year] is shaping up to be another competitive home shopping season for buyers, who may have to linger on the market until they find the right home but then sprint across the finish line once they do.”

Tips for Buying in a ‘Fast’ Market

Fortunately, there are some things you can do to make the house-hunting process more efficient and to make your offer stand out.

  1. Here are five tips for buying in a competitive market:

  2. Review recent home sales in your target area, to get a feel for pricing.

  3. Work with an experienced real estate agent who knows the local market.

  4. Get pre-approved for mortgage financing to help narrow your price range.

  5. Move quickly with a strong offer when the right house comes along.

  6. Keep the big picture in mind; don’t quibble with the seller over “nickels and dimes.”

The fastest-selling real estate markets of 2017 were mostly located in California and the Pacific Northwest, where inventory is most constrained. San Jose, California; San Francisco and Seattle topped the list. But these conditions are affecting many cities and towns across the country, to varying degrees.

The Home Buying Process

The Home Buying Process: 7 Steps to Success

The Home Buying Process: 7 Steps to Success

Home buyers tend to have a lot of questions about the house hunting and buying process. This is particularly true for first-time buyers who have never navigated their way through it before. This article lays it all out for you, from start to finish. Here are seven steps you should take when buying a home.

1. Review your credit situation

Credit scores are an important qualifying factor for home buyers who need mortgage financing. The FICO score, in particular, is the one most commonly used by mortgage lenders. According to industry experts, home buyers generally need a credit score of 600 or higher to qualify for a loan. But that number is not set in stone, and some loan programs are more flexible than others.

You can order your credit reports from Experian, Equifax, and TransUnion, and then review them for errors. You can also order your credit scores (different from your reports) to see how you stack up against the national average. A higher score could help you qualify for a better mortgage rate.

2. Determine your monthly housing budget

A mortgage lender cannot tell you how much of a monthly payment you can comfortably afford. They can only tell you the amount you qualify for. You should determine your home-buying budget for yourself, before shopping for a loan. The idea is to get a basic budget on paper, including the most you are comfortable spending each month toward your housing costs. This will come in handy later on.

3. Get pre-approved for a mortgage loan

If you’re planning to pay cash for a home, you can obviously skip this step. But if you’re like most home buyers, and you need mortgage financing to complete your purchase, you can benefit from getting pre-approved.

Pre-approval is when a mortgage lender reviews your financial and credit history to determine your “creditworthiness.” When you get pre-approved for a specific loan amount, you’ll be able to narrow your house search to that price range.

Having a pre-approval letter also shows sellers that you are serious about (and capable of) purchasing their home. This can make a big difference in active real estate markets, where the seller may receive multiple offers from competing buyers.

4. Find a real estate agent to help you

All home buyers can benefit from having professional help from an agent. This is especially true if you are buying a home for the first time, or in a new city you’re not familiar with. An agent can help you find a home that meets your needs, evaluate the seller’s asking price, put together a strong offer, and negotiate effectively based on current market conditions.

5. Start house hunting

House hunting is the most exciting part of the home buying process. This is where you and your agent visit homes to find one that matches your needs. If you have a smart phone, be sure to bring it along so you can take pictures. And focus on the more permanent features of the home, such as the location, the lot, the square footage, etc. Don’t worry about the paint or the decor — you can always change those things.

6. Make a smart offer based on market conditions

Once you’ve determined that the seller’s asking price is fair and reasonable, you are ready to make an offer on the property. In most cases, it’s wise to make the offer contingent upon the home inspection. It gives you a way to back out of the deal if the inspector uncovers an issue you’re not comfortable with. Your agent will help you prepare an effective offer. It’s one of their core skills.

7. Attend closing to sign your paperwork – – and get your keys!

Once you’ve made it through the inspection stage, you’re ready to attend the closing. (It’s also called “settlement” in some parts of the country.) This is when the title to the property is transferred from the seller to the buyer. You’ll also be signing a lot of paperwork and paying any other fees that are due.