NEWS ARTICLES


REAL ESTATE INDUSTRY NEWS

US Real Estate News for Global Investors 9-2-2021

Posted By Yoshi Takita on September 02, 2021 in Global Real Estate

5 Reasons Today’s Housing Market Is Anything but Normal 5 Reasons Today's Housing Market Is Anything but Normal | MyKCM There are many headlines out there that claim we’re reverting to a more normal real estate market. That would indicate the housing market is returning to the pre-pandemic numbers we saw from 2015-2019. But that’s not happening. The market is still extremely vibrant as demand is still strong even while housing supply is slowly returning. Here’s the definition of normal from the Merriam-Webster Dictionary: “conforming to a type, standard, or regular pattern: characterized by that which is considered usual, typical, or routine.” Using this definition, here are five housing industry metrics that prove we’re nowhere near normal. 1. Mortgage Rates If we look at the 30-year mortgage rate chronicled by Freddie Mac, we can see the average rates by decade: 1970s: 8.86% 1980s: 12.7% 1990s: 8.12% 2000s: 6.29% 2010s: 4.09% Today, the average mortgage rate stands at 2.87%, which is very close to the historic low. Currently, mortgage rates are anything but usual, typical, or routine. 2. Home Price Appreciation According to Black Knight, a housing data and analytics company, the average annual appreciation on residential real estate prices since 1995 has been 4.14%. According to the latest forecast from the National Association of Realtors (NAR), home price appreciation will hit 14.1% this year, which will be greater than any year since Black Knight began collecting this data. Currently, home price appreciation is anything but usual, typical, or routine. 3. Months’ Supply of Inventory (Homes for Sale) According to NAR: “Months’ supply refers to the number of months it would take for the current inventory of homes on the market to sell given the current sales pace. Historically, six months of supply is associated with moderate price appreciation, and a lower level of months’ supply tends to push prices up more rapidly.” As of the latest Existing Homes Sales Report from NAR, the current months’ supply of inventory stands at 2.6. That’s less than half of a normal supply. Currently, the supply of homes for sale is anything but usual, typical, or routine. 4. Days It Takes To Sell a Home The days-on-market metric gives an indication of how hot a market is and how quickly homes are selling. In 2019, prior to the pandemic, the average days on market stood at 35, according to NAR. Today, that number is cut in half and is now at 17 days. Currently, the days-on-market metric is anything but usual, typical, or routine. 5. Number of Offers per Listing According to NAR, the number of offers per listing stood at 2.2 in 2019. Today, that number is double at 4.5. Currently, the number of offers per listing is anything but usual, typical, or routine. Bottom Line When… Mortgage rates are near historic lows Price appreciation is at historic highs Housing inventory is less than half of the normal amount The time it takes to sell a home is cut in half, and There are twice as many offers on each house …it’s hard to say we’re in a normal market.

Continuing Reading

US Real Estate News for Global Investors 8-31-2021

Posted By Yoshi Takita on August 31, 2021 in Global Real Estate

What Buyers and Sellers Need To Know About the Appraisal Gap What Buyers and Sellers Need To Know About the Appraisal Gap | MyKCM It’s economy 101 – when supply is low and demand is high, prices naturally rise. That’s what’s happening in today’s housing market. Home prices are appreciating at near-historic rates, and that’s creating some challenges when it comes to home appraisals. In recent months, it’s become increasingly common for an appraisal to come in below the contract price on the house. Shawn Telford, Chief Appraiser for CoreLogic, explains it like this: “Recently, we observed buyers paying prices above listing price and higher than the market data available to appraisers can support. This difference is known as ‘the appraisal gap . . . .’” Why does an appraisal gap happen? Basically, with the heightened buyer demand, purchasers are often willing to pay over asking to secure the home of their dreams. If you’ve ever toured a house you’ve fallen in love with, you understand. Once you start to picture yourself and your furniture in the rooms, you want to do everything you can to land the property, including putting in a high offer to try to beat out other would-be buyers. When the appraiser comes in, they look at things a bit more objectively. Their job is to assess the inherent value of the home, so they’re going to study the facts. Dustin Harris, Appraiser Coach, drives this point home: “It’s important for everyone to understand that the appraiser’s job in the end is to remain that unbiased third party, to truly tell the client what that home is worth in the current market, regardless of what decisions have been made on the price side of things.” In simple terms, while homebuyers may be willing to pay more, appraisers are there to assess the market value of the home. Their goal is to make sure the lender isn’t loaning more money than the home is worth. It’s objective, rather than emotional. In a highly competitive market like today’s, having a discrepancy between the two numbers isn’t unusual. Here’s a look at the increasing rate of appraisal gaps, according to data from CoreLogic (see graph below):What Buyers and Sellers Need To Know About the Appraisal Gap | MyKCM What does this mean for you? Ultimately, knowledge is power. The best thing you can do is understand appraisal gaps may impact your transaction if you’re buying or selling. If you do encounter an appraisal below your contract price, know that in today’s sellers’ market, the most common approach is for the seller to ask the buyer to make up the difference in price. Buyers, be prepared to bring extra money to the table if you really want the home. Above all else, lean on your real estate agent. Whether you’re a buyer or seller, your trusted advisor is your ally if you come up against an appraisal gap. We’ll help you understand your options and handle any additional negotiations that need to happen. Bottom Line In today’s real estate market, it’s important to stay informed on the latest trends. Let’s connect so you have an ally to help you navigate an appraisal gap to get the best possible outcome.

Continuing Reading

US Real Estate News for Global Investors 8-30-2021

Posted By Yoshi Takita on August 30, 2021 in Global Real Estate

The Difference in Net Worth Between Homeowners and Renters Is Widening The Difference in Net Worth Between Homeowners and Renters Is Widening | MyKCM Becoming financially secure is an important goal for many people today, but some don’t realize just how much homeownership can help them achieve that dream. A recent report, The Journey Toward Financial Freedom, surveys Americans about their perspective on financial wellness and their goals. It shows there may be a significant misconception about the role owning a home plays in building wealth: “Home ownership is one of the indicators Americans say is least connected to financial health." Two major personal wealth goals – homeownership and net worth – work hand-in-hand. Below are just a few reasons why, if you’re looking for financial security, homeownership should be a top priority. Homeownership Is an Important Cornerstone of Building Wealth Every three years, the Federal Reserve releases the Survey of Consumer Finances which highlights the difference in wealth between homeowners and renters. The graph below shows the findings across the previous surveys including the latest data (2019), and the results are staggering:The Difference in Net Worth Between Homeowners and Renters Is Widening | MyKCMAs the graph illustrates, the gap between homeowners and renters continues to widen. That’s because homeownership contributes massively to an individual’s overall net worth. Odeta Kushi, Deputy Chief Economist at First American, highlights this idea: “. . . between 2016 and 2019, housing wealth was the single biggest contributor to the increase in net worth across all income groups . . . .” When we look even closer at the most recent data from 2019, the average homeowner’s net worth is more than 40 times greater than that of the average renter (see graph below):The Difference in Net Worth Between Homeowners and Renters Is Widening | MyKCMThe gap exists in large part because homeowners build equity as their home appreciates in value and they pay off a portion of their mortgage each month. When you own your home, your monthly mortgage payment is, in essence, forced savings that come back to you when you sell your home or refinance. As a renter, you’ll never see a return on the money you pay out in rent every month. If you’re ready to start building your net worth, the current real estate market offers several opportunities you should consider. For example, with today’s low mortgage rates, your purchasing power may be higher now than it has been in some time. That means there may be no better time than now to start working towards your homeownership goals – especially since rates are anticipated to rise in the coming months. Bottom Line Owning a home provides one of the strongest foundations for building individual wealth and lasting financial security. If you’re ready to start your path towards homeownership, let’s connect today.

Continuing Reading

US Real Estate News for Global Investors 8-27-2021

Posted By Yoshi Takita on August 27, 2021 in Global Real Estate

Your Checklist To Get Ready To Sell [INFOGRAPHIC] Your Checklist To Get Ready To Sell [INFOGRAPHIC] | MyKCM Some Highlights When it comes to selling your house, you want it to look its best inside and out. It’s important to focus on tasks that can make it inviting, show it’s cared for, and boost your curb appeal for prospective buyers. Let’s connect to make sure your house shows well and catches a buyer’s eye.

Continuing Reading

US Real Estate News for Global Investors 8-26-2021

Posted By Yoshi Takita on August 26, 2021 in Global Real Estate

If Housing Affordability Is About the Money, Don’t Forget This. If Housing Affordability Is About the Money, Don’t Forget This. | MyKCM There are many non-financial benefits of buying your own home. However, today’s headlines seem to be focusing primarily on the financial aspects of homeownership – specifically affordability. Many articles are making the claim that it’s not affordable to buy a home in today’s market, but that isn’t the case. Today’s buyers are spending approximately 20% of their income on their monthly mortgage payments. According to The Essential Guide to Creating a Homebuying Budget from Freddie Mac, the 20% of income that purchasers are currently paying is well within the 28% guideline suggested: “Most lenders agree that you should spend no more than 28% of your gross monthly income on a mortgage payment (including principal, interest, taxes and insurance).” So why is there so much talk about challenges regarding affordability? It’s Not That Homes Are Unaffordable – It’s That They’re Less Affordable. Since home prices are rising, it’s true that homes are less affordable than they have been since the housing crash fifteen years ago. Headlines making these claims aren’t incorrect; they just don’t tell the whole story. To paint the full picture, you have to look at how today stacks up with historical data. A closer analysis of affordability going further back in time reveals that homes today are more affordable than any time from 1975 to 2005. Despite that, the chatter about affordability is pushing some buyers to the sidelines. They don’t feel comfortable knowing someone else got a better deal a year ago. However, Are Homes Really Less Affordable if We Consider Equity? In a recent post, Odeta Kushi, Deputy Chief Economist at First American, offers a different take on the financial components of housing affordability. Kushi proposes we should at least consider the impact equity build-up has on the affordability equation, stating: “For those trying to buy a home, rapid house price appreciation can be intimidating and makes the purchase more expensive. However, once the home is purchased, appreciation helps build equity in the home, and becomes a benefit rather than a cost. When accounting for the appreciation benefit in our rent versus own analysis, it was cheaper to own in every one of the top 50 markets.” Let’s look at an example. In the above-mentioned post, Kushi examines the rent versus buy situation in Dallas, Texas. Kushi chose Dallas because home prices there sit near the median of the top 50 markets in the nation. Kushi first calculates the monthly mortgage payment on a median-priced home with a 5% down payment and a mortgage rate of 3% (see chart below):If Housing Affordability Is About the Money, Don’t Forget This. | MyKCMKushi then takes the monthly cost and subtracts the appreciation the home had over the previous twelve months. The average house price in Dallas increased 17.5% in the second quarter of 2021 compared to last year (this is in line with the national pace). That equates to an equity benefit of approximately $3,550 each month if the pace remains the same (see chart below):If Housing Affordability Is About the Money, Don’t Forget This. | MyKCMWe can see the equity gained each month was greater than the monthly mortgage payment, resulting in a negative cost to own. The buyer could build their net worth by $1,830 each month – after paying their mortgage. Kushi then compares the monthly cost of owning to the cost of renting (see chart below):If Housing Affordability Is About the Money, Don’t Forget This. | MyKCMWhen adding equity build-up into the equation, the cost of renting is $3,140 more expensive than owning. Again, the First American analysis shows that it’s less expensive to own in each of the top 50 markets in the country when including the equity component. Bottom Line If you’re on the fence about whether to buy or rent right now, let’s connect so we can determine if the equity increase in our local market should impact your decision.

Continuing Reading

US Real Estate News for Global Investors 8-25-2021

Posted By Yoshi Takita on August 25, 2021 in Global Real Estate

Why 2021 Is Still the Year To Sell Your House Why 2021 Is Still the Year To Sell Your House | MyKCM If you’re trying to decide whether or not to sell your house, this is the time to think seriously about making a move. Fannie Mae’s recent Home Purchase Sentiment Index (HPSI) reveals the number of respondents who say it’s a good time to sell is higher now than it was over the past few summers (see graph below). Today, the majority of consumers, 75 percent, say it’s a good time to sell a house.Why 2021 Is Still the Year To Sell Your House | MyKCM Why is sellers sentiment up year-over-year? The higher good time to sell sentiment has to do with today’s market conditions, specifically low housing supply and high buyer demand. In the simplest terms, we don’t have enough houses available for sale to meet buyer demand. According to the latest data from the National Association of Realtors (NAR), we’re still firmly in a sellers’ market because housing supply is well below a balanced norm (shown in the graph below).Why 2021 Is Still the Year To Sell Your House | MyKCMClearly, the scales are tipped in a seller’s favor today. But while housing supply is undeniably low, the right side of the graph shows how the inventory situation is improving little by little each month as more sellers list their homes for sale. As a seller, that means each month, buyers have more options to pick from. By extension, that means your house may get less buyer attention with time. Danielle Hale, Chief Economist for realtor.com, explains it like this: “More homeowners continue to list homes for sale compared to a year ago… Notably, while new listings continue to lag behind a more ‘normal’ 2019 pace, the gap is shrinking. Even though homes continue to sell quickly thanks to high demand and limited supply, new listings are subtly shifting the balance of market conditions in favor of buyers.” So, what’s that mean for you? If you’ve been waiting for the perfect time to sell, there may not be a better chance than right now. Inventory is gradually increasing each month, so selling sooner rather than later will help you maximize your home’s potential. Bottom Line If you’re planning to sell your house, 2021 is still the year to do it. The unique mix of low supply and high demand won’t last forever. Let’s connect to discuss what you need to do now to sell your house and take advantage of this sellers’ market.

Continuing Reading

US Real Estate News for Global Investors 8-24-2021

Posted By Yoshi Takita on August 24, 2021 in Global Real Estate

What To Do with Your Vacation Home as Summer Ends What To Do with Your Vacation Home as Summer Ends | MyKCM As summer comes to a close, is it time to think about selling your vacation home? Based on recent data and expert opinions, it’s something you may want to consider. According to research from the National Association of Realtors (NAR), vacation home sales are up 57.2% year-over-year for January-April 2021. If you’ve taken your last vacation this summer, here are reasons you should consider selling your vacation home this year. 1. Remote work continues to drive demand for vacation homes. As the report from NAR says, based on continuously evolving work needs, there could be more interest in your second home than you think: “In 2020, across all nine divisions, the fraction of the workforce that work from home is typically higher in the vacation home counties than in the non-vacation home counties… The opportunity to work from home could further raise the demand for vacation homes in future years. Recent data shows we’ll likely see a sustained increase in the rate of remote work over the next five years. That means your vacation home could be highly sought after by certain buyers. Lawrence Yun, Chief Economist at NAR, puts it best, saying: "Vacation homes are a hot commodity at the moment . . . . With many businesses and employers still extending an option to work remotely to workers, vacation housing and second homes will remain a popular choice among buyers." 2. Selling could allow you to upgrade your vacation spot – or even your day-to-day scenery. When demand is high, so is buyer competition. When competition is strong, buyers will do everything they can to make their offer on your vacation home as appealing as possible. This can include things like all-cash offers and more. If you sell now, you’ll be able to benefit from high buyer competition and pick the offer with the best possible terms for you. That offer could give you the opportunity to purchase the primary residence of your dreams. Or, if you find that you’ll continue working from home, you could consider taking up more permanent residence in your vacation home and selling your primary residence instead. While this isn’t a choice everyone can consider, it could be a great option. No matter what the situation, you don’t have to make the decision on your own. Your trusted real estate advisor can help you determine your best option when you’re ready to sell. Bottom Line Buyers remain interested in vacation homes this year for a number of reasons. Now that summer is winding down, it’s time to think about taking advantage of today’s demand for vacation homes. Let’s connect today if you’re ready to give your second home its day in the sun.

Continuing Reading

US Real Estate News for Global Investors 8-23-2021

Posted By Yoshi Takita on August 24, 2021 in Global Real Estate

What Do Experts Say About Today’s Mortgage Rates? What Do Experts Say About Today’s Mortgage Rates? | MyKCM Mortgage rates are hovering near record lows, and that’s good news for today’s homebuyers. The graph below shows mortgage rates dating back to 2016 and where today falls by comparison.What Do Experts Say About Today’s Mortgage Rates? | MyKCMGenerally speaking, when rates are low, you can afford more home for your money. That’s why experts across the industry agree – today’s low rates present buyers with an incredible opportunity. Here’s what they have to say: Sam Khater, Chief Economist at Freddie Mac, points out the historic nature of today’s rates: “As the economy works to get back to its pre-pandemic self, and the fight against COVID-19 variants unfolds, owners and buyers continue to benefit from some of the lowest mortgage rates of all-time.” Mark Fleming, Chief Economist at First American, talks about how rates impact a buyer’s bottom line: “Mortgage rates are generally the same across the country, so a decline in mortgage rates boosts affordability equally in each market.” Danielle Hale, Chief Economist at realtor.com, also notes the significance of today’s low rates and urges buyers to carefully consider their timing: “Those who haven’t yet taken advantage of low rates to buy a home or refinance still have the opportunity to do so this summer.” Hale goes on to say that buyers who don’t act soon could see higher rates in the coming months, negatively impacting their purchasing power: “We expect mortgage rates to fluctuate near historic lows through the summer before beginning to climb this fall.” And while mortgage rates are still low today, the data from Freddie Mac indicates rates are fluctuating ever so slightly right now, as they moved up one week before inching slightly back down in their latest release. It’s important to keep in mind the influence rates have on your monthly mortgage payment. Even small increases can have a big impact on what you pay each month. Trust the experts. Today’s rates give you opportunity and flexibility in what you can afford. Don’t wait on the sidelines and hope for a better rate to come along; the rates we’re seeing today are worth capitalizing on. Bottom Line Mortgage rates hover near record lows today, but experts forecast they’ll rise in the coming months. Waiting could prove costly when that happens. Let’s connect today to discuss today’s rates and determine if now’s the time for you to buy.

Continuing Reading

US Real Estate News for Global Investors 8-20-2021

Posted By Yoshi Takita on August 20, 2021 in Global Real Estate

Options for First-Time Homebuyers [INFOGRAPHIC] Options for First-Time Homebuyers [INFOGRAPHIC] | MyKCM Some Highlights With a housing market this competitive, sometimes you have to think outside the box. Work with your trusted real estate advisors to do things like assess your budget, expand your search radius, look into other options, and determine your true needs. If you're having trouble finding your first home, let’s connect to explore your options. It's out there!

Continuing Reading

US Real Estate News for Global Investors 8-19-2021

Posted By Yoshi Takita on August 19, 2021 in Global Real Estate

More Young People Are Buying Homes More Young People Are Buying Homes | MyKCM There’s a common misconception that younger generations aren’t interested in homeownership. Many people point to the fact that millennials put off purchasing their first home as a reason for this belief. Odeta Kushi, Deputy Chief Economist for First American, explains why millennials have put off certain milestones linked to homeownership. Those delays led to their homeownership rates trailing slightly behind older generations: “Historically, millennials have delayed the critical lifestyle choices often linked to buying a first home, including getting married and having children, in order to further their education. This is clear in cross-generational comparisons of homeownership rates which show millennials lagging their generational predecessors.” So, it’s partially true that some millennials have waited on homeownership to focus on other things in their lives – and that’s impacting certain housing market trends. Data from the National Association of Realtors (NAR) indicates the average age of a first-time homebuyer is higher today than it’s been over the past 40 years. As the graph below shows, homebuyers today are purchasing their first home an average of 4 years later than people in the 1980s and early 1990s:More Young People Are Buying Homes | MyKCMBut just because millennials are hitting certain milestones later in life doesn’t mean they’re not interested in becoming homeowners. The recent U.S. Census reveals a significant increase in homeownership rates for millennials and other young homebuyers.More Young People Are Buying Homes | MyKCMAs the graph above shows, millennials are entering the market in full force, and their share of the market is growing. Based on the data, the belief that younger generations don’t want to buy homes is a misconception. In fact, the recent Capital Market Outlook report from Merrill-Lynch further drives home this point, as it specifically mentions the effect millennials are having on demand: “Demand is very strong because the biggest demographic cohort in history is moving through the household-formation and peak home-buying stages of its life cycle." Kushi is following the trend of millennial homeownership and puts it more simply, saying: “. . . it's clear that younger households (millennials!) are driving homeownership growth.” As the largest generation, millennials’ impact on the market is growing as more and more people from that generation reach homebuying age – and Generation Z isn’t far behind, either. That means younger generations will likely continue to drive demand in the housing market for years to come. Bottom Line If you're a member of a younger generation and interested in purchasing a home, you're not alone. Many of your peers are on their path to homeownership, too. Let's connect today and discuss what you can do to accomplish your homebuying goals.

Continuing Reading