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US Real Estate News for Global Investors　7-20-2021

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

3 Charts That Show This Isn’t a Housing Bubble 3 Charts That Show This Isn’t a Housing Bubble | MyKCM With home prices continuing to deliver double-digit increases, some are concerned we’re in a housing bubble like the one in 2006. However, a closer look at the market data indicates this is nothing like 2006 for three major reasons. 1. The housing market isn’t driven by risky mortgage loans. Back in 2006, nearly everyone could qualify for a loan. The Mortgage Credit Availability Index (MCAI) from the Mortgage Bankers’ Association is an indicator of the availability of mortgage money. The higher the index, the easier it is to obtain a mortgage. The MCAI more than doubled from 2004 (378) to 2006 (869). Today, the index stands at 130. As an example of the difference between today and 2006, let’s look at the volume of mortgages that originated when a buyer had less than a 620 credit score.3 Charts That Show This Isn’t a Housing Bubble | MyKCMDr. Frank Nothaft, Chief Economist for CoreLogic, reiterates this point: “There are marked differences in today’s run up in prices compared to 2005, which was a bubble fueled by risky loans and lenient underwriting. Today, loans with high-risk features are absent and mortgage underwriting is prudent.” 2. Homeowners aren’t using their homes as ATMs this time. During the housing bubble, as prices skyrocketed, people were refinancing their homes and pulling out large sums of cash. As prices began to fall, that caused many to spiral into a negative equity situation (where their mortgage was higher than the value of the house). Today, homeowners are letting their equity build. Tappable equity is the amount available for homeowners to access before hitting a maximum 80% combined loan-to-value ratio (thus still leaving them with at least 20% equity). In 2006, that number was $4.6 billion. Today, that number stands at over $8 billion. Yet, the percentage of cash-out refinances (where the homeowner takes out at least 5% more than their original mortgage amount) is half of what it was in 2006.3 Charts That Show This Isn’t a Housing Bubble | MyKCM 3. This time, it’s simply a matter of supply and demand. FOMO (the Fear Of Missing Out) dominated the housing market leading up to the 2006 housing bubble and drove up buyer demand. Back then, housing supply more than kept up as many homeowners put their houses on the market, as evidenced by the over seven months’ supply of existing housing inventory available for sale in 2006. Today, that number is barely two months. Builders also overbuilt during the bubble but pulled back significantly over the next decade. Sam Khater, VP and Chief Economist, Economic & Housing Research at Freddie Mac, explains that pullback is the major factor in the lack of available inventory today: “The main driver of the housing shortfall has been the long-term decline in the construction of single-family homes.” Here’s a chart that quantifies Khater’s remarks:3 Charts That Show This Isn’t a Housing Bubble | MyKCMToday, there are simply not enough homes to keep up with current demand. Bottom Line This market is nothing like the run-up to 2006. Bill McBride, the author of the prestigious Calculated Risk blog, predicted the last housing bubble and crash. This is what he has to say about today’s housing market: “It’s not clear at all to me that things are going to slow down significantly in the near future. In 2005, I had a strong sense that the hot market would turn and that, when it turned, things would get very ugly. Today, I don’t have that sense at all, because all of the fundamentals are there. Demand will be high for a while because Millennials need houses. Prices will keep rising for a while because inventory is so low.”

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US Real Estate News for Global Investors　7-19-2021

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

What You Should Do Before Interest Rates Rise What You Should Do Before Interest Rates Rise | MyKCM In today’s real estate market, mortgage interest rates are near record lows. If you’ve been in your current home for several years and haven’t refinanced lately, there’s a good chance you have a mortgage with an interest rate higher than today’s average. Here are some options you should consider if you want to take advantage of today’s current low rates before they rise. Sell and Move Up (or Downsize) Many of today’s homeowners are rethinking what they need in a home and redefining what their dream home means. For some, continued remote work is bringing about the need for additional space. For others, moving to a lower cost-of-living area or downsizing may be great options. If you’re considering either of these, there may not be a better time to move. Here’s why. The chart below shows average mortgage rates by decade compared to where they are today:What You Should Do Before Interest Rates Rise | MyKCMToday’s rates are below 3%, but experts forecast rates to rise over the next few years. If the interest rate on your current mortgage is higher than today’s average, take advantage of this opportunity by making a move and securing a lower rate. Lower rates mean you may be able to get more house for your money and still have a lower monthly mortgage payment than you might expect. Waiting, however, might mean you miss out on this historic opportunity. Below is a chart showing how your monthly payment will change if you buy a home as mortgage rates increase:What You Should Do Before Interest Rates Rise | MyKCM Breaking It All Down: Using the chart above, let’s look at the breakdown of a $300,000 mortgage: When mortgage rates rise, so does the monthly payment you can secure. Even the smallest increase in rates can make a difference in your monthly mortgage payment. As interest rates rise, you’ll need to look at a lower-priced home to try and keep the same target monthly payment, meaning you may end up with less home for your money. No matter what, whether you’re looking to make a move up or downsize to a home that better suits your needs, now is the time. Even a small change in interest rates can have a big impact on your purchasing power. Refinance If making a move right now still doesn’t feel right for you, consider refinancing. With the current low mortgage rates, refinancing is a great option if you’re looking to lower your monthly payments and stay in your current home. Bottom Line Take advantage of today’s low rates before they begin to rise. Whether you’re thinking about moving up, downsizing, or refinancing, let’s connect today to discuss which option is best for you.

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US Real Estate News for Global Investors　7-16-2021

Posted By Yoshi Takita on July 16, 2021 in Global Real Estate

Experts Agree: Options Are Improving for Buyers [INFOGRAPHIC] Experts Agree: Options Are Improving for Buyers [INFOGRAPHIC] | MyKCM Some Highlights Buyers hoping for more homes to choose from may be in luck as housing inventory begins to rise. Many experts agree – new sellers listing their homes is great news for buyers and the overall market. Although the supply increases are modest, more homes means more options for buyers. A rise in inventory may also help slow the price gains we’ve seen recently and could be a sign of good things to come. If you’re searching for a home, rising inventory is welcome news. Let’s connect today to discuss new listings in our area.

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US Real Estate News for Global Investors　7-15-2021

Posted By Yoshi Takita on July 15, 2021 in Global Real Estate

Diving Deep into Today’s Biggest Buyer Concerns Diving Deep into Today’s Biggest Buyer Concerns | MyKCM Last week, Fannie Mae released their Home Purchase Sentiment Index (HPSI). Though the survey showed 77% of respondents believe it’s a “good time to sell,” it also confirms what many are sensing: an increasing number of Americans believe it’s a “bad time to buy” a home. The percentage of those surveyed saying it’s a “bad time to buy” hit 64%, up from 56% last month and 38% last July. The latest HPSI explains: “Consumers also continued to cite high home prices as the predominant reason for their ongoing and significant divergence in sentiment toward homebuying and home-selling conditions. While all surveyed segments have expressed greater negativity toward homebuying over the last few months, renters who say they are planning to buy a home in the next few years have demonstrated an even steeper decline in homebuying sentiment than homeowners. It’s likely that affordability concerns are more greatly affecting those who aspire to be first-time homeowners than other consumer segments.” Let’s look closely at the market conditions that impact home affordability. A mortgage payment is determined by the price of the home and the mortgage rate on the loan used to purchase it. Lately, monthly mortgage payments have gone up for buyers for two key reasons: Mortgage rates have increased from 2.65% this past January to 2.9%. Home prices have increased by 15.4% over the last 12 months. Based on these rising factors, a home may be less affordable today, but it doesn’t mean it’s not affordable. Three weeks ago, ATTOM Data released their second-quarter 2021 U.S. Home Affordability Report which explained that the major ownership costs on the typical home as a percent of the average national wage had increased from 22.2% in the second quarter of 2020 to 25.2% in the second quarter of this year. They also went on to explain: “Still, the latest level is within the 28 percent standard lenders prefer for how much homeowners should spend on mortgage payments, home insurance and property taxes.” In the same report, Todd Teta, Chief Product Officer with ATTOM, confirms: “Average workers across the country can still manage the major expenses of owning a home, based on lender standards.” It’s true that monthly mortgage payments are greater than they were last year (as the ATTOM data shows), but they’re not unaffordable when compared to the last 30 years. While payments have increased dramatically during that several-decade span, if we adjust for inflation, today’s mortgage payments are 10.7% lower than they were in 1990. What’s that mean for you? While you may not get the homebuying deal someone you know got last year, that doesn’t mean you shouldn’t still buy a home. Here are your alternatives to buying and the trade-offs you’ll have with each. Alternative 1: I’ll rent instead. Some may consider renting as the better option. However, the monthly cost of renting a home is skyrocketing. According to the July National Rent Report from Apartment List: “…So far in 2021, rental prices have grown a staggering 9.2%. To put that in context, in previous years growth from January to June is usually just 2 to 3%. After this month’s spike, rents have been pushed well above our expectations of where they would have been had the pandemic not disrupted the market.” If you continue to rent, chances are your rent will keep increasing at a fast pace. That means you could end up spending significantly more of your income on your rental as time goes on, which could make it even harder to save for a home. Alternative 2: I’ll wait it out. Others may consider waiting for another year and hoping that purchasing a home will be less expensive then. Let’s look at that possibility. We’ve already established that a monthly mortgage payment is determined by the price of the home and the mortgage rate. A lower monthly payment would require one of those two elements to decrease over the next year. However, experts are forecasting the exact opposite: The Mortgage Bankers Association (MBA) projects mortgage rates will be at 4.2% by the end of next year. The Home Price Expectation Survey (HPES), a survey of over 100 economists, investment strategists, and housing market analysts, calls for home prices to increase by 5.12% in 2022. Based on these projections, let’s see the possible impact on a monthly mortgage payment:Diving Deep into Today’s Biggest Buyer Concerns | MyKCMBy waiting until next year, you’d potentially pay more for the home, need a larger down payment, pay a higher mortgage rate, and pay an additional $3,696 each year over the life of the mortgage. Bottom Line While you may have missed the absolute best time to buy a home, waiting any longer may not make sense. Mark Fleming, Chief Economist at First American, says it best: “Affordability is likely to worsen before it improves, so try to buy it now, if you can find it.”

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US Real Estate News for Global Investors　7-14-2021

Posted By Yoshi Takita on July 14, 2021 in Global Real Estate

Housing Supply Is Rising. What Does That Mean for You? Housing Supply Is Rising. What Does That Mean for You? | MyKCM An important factor in today’s market is the number of homes for sale. While inventory levels continue to sit near historic lows, there are indications we may have hit the lowest point we’ll see. Odeta Kushi, Deputy Chief Economist at First American, recently said of our supply challenges: “It looks like inventory may have hit a bottom (we’ve seen this in the higher frequency data as well). Unsold inventory in May was at 2.5 months supply, up from 2.4.” To put it into perspective, the graph below shows levels of inventory rising since the beginning of the year:Housing Supply Is Rising. What Does That Mean for You? | MyKCMWe’re still not close to a balanced market, which would be a 6 months’ supply of homes for sale. However, we are seeing a slow but steady increase in homes coming up for sale. And that leaves many buyers and sellers wondering the same thing: what does that mean for me? Buyers: More Options Are Arriving, so It’s Time To Act If you’re a buyer, more inventory coming to market is a welcome sight. More supply means more options and less competition, which could mean fewer bidding wars. According to the latest Monthly Housing Market Trends Report, supply levels are continuing to increase, which is different from the typical summer market: “In June, newly listed homes grew by 5.5% on a year-over-year basis, and by 10.9% on a month-over-month basis. Typically, fewer newly listed homes appear on the market in the month of June compared to May. This year, growth in new listings is continuing later into the summer season, a welcome sign for a tight housing market.” If you’re having trouble finding your next home, this news should give you the hope and motivation to keep your buying process moving forward. Experts project mortgage rates will begin increasing, which will make purchasing a home less affordable as time passes. You can still capitalize on today’s low interest rates, so stick with your search as more homes come to market. Sellers: Our Supply Challenges Aren’t Over Yet, so Now Is the Time To Sell If you’ve been putting off selling your house, you shouldn’t wait much longer. The year’s month-over-month gains in homes for sale have helped buyers, but we’re still very much in a sellers’ market. As the graph below shows, even with the number of homes for sale rising, we’re still well below the supply levels we’ve seen historically:Housing Supply Is Rising. What Does That Mean for You? | MyKCMOf course, more homes are coming to market now, and more are expected in the coming months. Selling your house this summer gives you the chance to get ahead of the competition and maximize your sales potential before more homes are put up for sale in your neighborhood. Bottom Line More homes for sale means more options for buyers and more competition for sellers. Whether you’re looking to buy or sell, let’s connect today to discuss your options and why it’s still a good time to make your move.

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US Real Estate News for Global Investors　7-13-2021

Posted By Yoshi Takita on July 13, 2021 in Global Real Estate

Why This Isn’t Your Typical Summer Housing Market Why This Isn’t Your Typical Summer Housing Market | MyKCM In real estate, it’s normal to see ebbs and flows in the market. Typically, the summer months are slower-paced than the traditionally busy spring. But this isn’t a typical summer. As the economy rebounds and life is returning to normal, the real estate market is expected to have an unusually strong summer season. Here’s how this summer is stacking up against the norm and what it means for you.Why This Isn’t Your Typical Summer Housing Market | MyKCM Inventory is increasing. According to the latest Existing Home Sales Report from the National Association of Realtors (NAR), inventory levels have been rising since February of this year. Looking at the graph below, there’s a clear upward trend, as shown in the green bars. Currently, there’s roughly a 2.5 months’ supply of homes for sale. And while inventory is trending up as more houses are coming to the market, it’s still much lower than several of the previous summers, as the orange bars indicate.Why This Isn’t Your Typical Summer Housing Market | MyKCMIf you’re looking to buy, some relief is on the way in the form of more homes coming to the market. Just remember, we still have less inventory than the norm, so be patient in your search. If you’re thinking of selling, now is the time. Work with your agent to list your house before it has more competition on the market. Time on the market is still shorter than normal. Unlike the typical summer trend, time on the market is moving at the fastest speed we’ve seen since NAR started collecting this survey-based information in 2011. The most recent Realtors Confidence Index shows that the average home is on the market for just 17 days, as shown in green in the graph below. This means houses are selling at a much faster pace than a typical summer, which the orange bars represent.Why This Isn’t Your Typical Summer Housing Market | MyKCMIf you’re looking to buy, this means you need to be prepared to move fast. Brace for a quick pace and rely on your agent to stay in the know on the available homes in your area. If you’re thinking of selling, data shows your house will likely sell quickly. If you’re worried about where you’ll go once your house sells, consider a newly built home as a good way to move up. Price appreciation is still rising. The last big factor making this an unusually strong market this summer is home price appreciation. According to the State House Price Index from the Federal Housing Finance Agency (FHFA), we’re currently experiencing double-digit house price appreciation and have an average of 12.6% appreciation across the country. The graph below uses data from NAR to show a more granular view of how prices have changed month-to-month over the past few years. The green bars show the current price appreciation we’re experiencing today. Our current levels are well above what we’ve seen in recent summers, shown by the orange bars.Why This Isn’t Your Typical Summer Housing Market | MyKCMIf you’re looking to buy, competition and bidding wars are driving prices up. Getting pre-approved can show the seller you’re serious and help you know what you can afford. Once you do, work with your agent to make a strong offer that stands out. If you’re thinking of selling, seize this opportunity to use your additional equity from this price appreciation to power your next move. Bottom Line This isn’t a typical summer. Whether you’re buying or selling, let’s connect to talk about how you can capitalize on today’s market conditions to sell your house or find your dream home.

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US Real Estate News for Global Investors　7-12-2021

Posted By Yoshi Takita on July 13, 2021 in Global Real Estate

4 Major Incentives To Sell This Summer 4 Major Incentives To Sell This Summer | MyKCM While the housing market forecast for the second half of the year remains positive, there may not be a better time to sell than right now. Here are four things to consider if you’re trying to decide if now’s the right time to make a move. 1. Your House Will Likely Sell Quickly According to the most recent Realtors Confidence Index released by the National Association of Realtors (NAR), homes continue to sell quickly. The report notes homes are selling in an average of just 17 days. Average days on market is a strong indicator of buyer competition, and homes selling quickly is a great sign for sellers. It’s one of several factors that indicate buyers are motivated to do what it takes to purchase the home of their dreams. 2. Buyers Are Willing To Compete for Your House In addition to selling fast, homes are receiving multiple offers. NAR reports sellers are seeing an average of 5 offers, and these offers are competitive ones. Shawn Telford, Chief Appraiser at CoreLogic, said in a recent interview: “The frequency of buyers being willing to pay more than the market data supports is increasing.” This confirms buyers are ready and willing to enter bidding wars for your home. Receiving several offers on your house means you can select the one that makes the most sense for your situation and financial well-being. 3. When Supply Is Low, Your House Is in the Spotlight One of the most significant challenges for motivated buyers is the current inventory of homes for sale, which while improving, remains at near-record lows. As NAR details: “Total housing inventory at the end of May amounted to 1.23 million units, up 7.0% from April's inventory and down 20.6% from one year ago (1.55 million). Unsold inventory sits at a 2.5-month supply at the present sales pace, marginally up from April's 2.4-month supply but down from 4.6-months in May 2020.” There are signs, however, that more homes are coming to market. Odeta Kushi, Deputy Chief Economist at First American, notes: “It looks like existing inventory is starting to inch up, which is good news for a housing market parched for more supply.” If you’re looking to take advantage of buyer demand and get the most attention for your house, selling now before more listings come to the market might be your best option. 4. If You’re Thinking of Moving Up, Now May Be the Time Over the past 12 months, homeowners have gained a significant amount of wealth through growing equity. In that same period, homeowners have also spent a considerable amount of time in their homes, and many have decided their house doesn’t meet their needs. If you’re not happy with your current home, you can leverage that equity to power your move now. Your equity, plus current low mortgage rates, can help you maximize your purchasing power. But these near-historic low rates won’t last forever. Experts forecast interest rates will increase in the coming months. Nadia Evangelou, Senior Economist and Director of Forecasting at NAR, says: “Nevertheless, as the economic outlook for the United States looks brighter for the rest of the year, mortgage rates are expected to rise in the following months.” As interest rates rise, even modestly, it could influence buyer demand and your purchasing power. If you’ve been waiting for the best time to sell to fuel your move up, you likely won’t find more favorable conditions than those we’re seeing today. Bottom Line With supply challenges, low mortgage rates, and extremely motivated buyers, sellers are well-positioned to take advantage of current market conditions right now. If you’re thinking about selling, let’s connect today to discuss why it makes sense to list your home sooner rather than later.

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US Real Estate News for Global Investors　7-9-2021

Posted By Yoshi Takita on July 09, 2021 in Global Real Estate

Your Home Equity Can Take You Places [INFOGRAPHIC] Your Home Equity Can Take You Places [INFOGRAPHIC] | MyKCM Some Highlights The amount of wealth Americans have stored in their homes has increased astronomically. On average, homeowners gained $33,400 in equity over the last 12 months, and the average equity on mortgaged homes is now $216,000. When it’s time to sell, your home equity can help accomplish your goals. Let’s connect to discuss how you can take advantage of today’s sellers’ market to get the most out of your home sale.

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US Real Estate News for Global Investors　7-8-2021

Posted By Yoshi Takita on July 08, 2021 in Global Real Estate

Selling Your House? Make Sure You Price It Right. Selling Your House? Make Sure You Price It Right. | MyKCM There’s no denying we’re in a sellers’ market. With low inventory and high buyer demand, homes today are selling above the asking price at a record rate. According to the latest Realtors Confidence Index Survey from the National Association of Realtors (NAR): Homes typically sell within 17 days (compared to 26 days one year ago). The average home sold has five offers to pick from. 54% of offers are over the asking price. Because so many buyers are competing for so few homes, bidding wars are driving up home prices. According to an average of leading expert projections, existing home prices are expected to increase by 8.9% this year. Yet even in today’s red-hot sellers’ market, it’s important to price your house right. While it may be tempting to price your house on the high side to capitalize on this trend, doing so could limit your house’s potential. Why Pricing Your House Right Matters Here’s the thing – a high price tag doesn’t mean you’re going to cash in big on the sale. While you may be trying to maximize your return, the tradeoff may be steep. A high list price is more likely to deter buyers, sit on the market longer, or require a price drop that can raise questions among prospective buyers. Instead, focus on setting a price that’s fair. Real estate professionals know the value of your home. By pricing your house based on its current condition and similar homes that have recently sold in your area, your agent can help you set a price that’s realistic and obtainable – and that’s good news for you and for buyers.Selling Your House? Make Sure You Price It Right. | MyKCMWhen you price your house right, you increase your home’s visibility, which drives more buyers to your front door. The more buyers that tour your home, the more likely you’ll have a multi-offer scenario to create a bidding war. When multiple buyers compete for your house, that sets you up for a bigger win. Bottom Line When it comes to pricing your house, working with a local real estate professional is essential. Let’s connect so we can optimize your exposure, your timeline, and the return on your investment, too.

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US Real Estate News for Global Investors　7-7-2021

Posted By Yoshi Takita on July 07, 2021 in Global Real Estate

The Truths Young Homebuyers Need To Hear The Truths Young Homebuyers Need To Hear | MyKCM For many young or first-time homebuyers, purchasing a home can feel intimidating. A recent survey shows some homebuyers ages 25 to 40 may be unsure about the homebuying process and what they can afford. It found: “1 in 4 underestimated their buying potential by $150k or more” “1 in 4 underestimated the increase in value by $100k or more” “47% don’t know what a good interest rate is” Because they feel uncertain, many young homebuyers have given up on their search, or worse, they’ve decided homebuying isn’t for them and never started on their journey to begin with. If you’re interested in buying but aren’t sure where to begin, here are three key concepts about homeownership you should understand before you get started. 1. What You Need To Know About Down Payments Saving for a down payment is sometimes viewed as one of the biggest obstacles for homebuyers, but that doesn’t have to be the case. As Freddie Mac says: “The most damaging down payment myth—since it stops the homebuying process before it can start—is the belief that 20% is necessary.” According to the most recent Home Buyers and Sellers Generational Trends Report from the National Association of Realtors (NAR), the median down payment for homes purchased between July 2019 and June 2020 was only 12%. That number is even lower when we control for age – for buyers in the 22 to 30 age range, the median down payment was only 6%. 2. You May Be Able To Afford More Home Than You Think Working remotely, exercising, and generally spending more time than ever in our homes has changed what many people are looking for in their living space. However, some young homebuyers don’t feel they can afford a home that suits their growing needs and have decided to continue renting instead. That means they’ll miss out on some of the long-term benefits of owning a home. As an article recently published by NAR points out: “Many young adults are underestimating how much they need for homeownership, the survey finds. Millennials underestimated how much home they can afford right now, how much interest they would pay over a 30-year mortgage, and how much home values appreciate, on average, over 10 years...” Knowing how much home you can afford when starting the buying process is critical and could be the game-changer that gets you from renting to buying. 3. Homeownership Will Become Less Affordable the Longer You Wait Finally, with mortgage rates starting to rise along with home prices appreciating, putting off buying a home now could cost you much more later. Sam Khater, Chief Economist at Freddie Mac, notes: “As the economy progresses and inflation remains elevated, we expect that rates will continually rise in the second half of the year.” Most experts forecast interest rates will rise in the months ahead, and even the smallest increase can influence your buying power. If you’ve been on the fence about buying a home, there’s no time like the present. Bottom Line If you feel overwhelmed by the prospect of starting your home search, you’re not alone. Let’s connect today so we can talk more about the process, what you’ll need to start your search, and what to expect.

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