Wage Increases Make Home Buying More Affordable

Wage Increases Make Home Buying More Affordable | MyKCM

Everyone knows that housing affordability has been negatively impacted by rising prices and increasing mortgage rates, but there is another piece to the affordability equation – wages.

How much a family earns obviously impacts how easy or difficult it is for them to afford to own a home. Because of an improving economy, wages are finally beginning to increase – and that dramatically affects home affordability.

According to the National Association of Realtors’ (NAR) September 2018 Housing Affordability Index,wages have increased in every region of the country:

Wage Increases Make Home Buying More Affordable | MyKCM

After applying current salaries, home prices, and mortgage rates to their Home Affordability Index equation, the index, though still lower than this time last year (160.1 to 146.7), increased over the last month (141.2 to 146.7). For the complete methodology used by NAR, click here.

The percentage of income needed to own a home has also decreased each of the last three months. It currently sits at 17% which is substantially lower than historic numbers.

Wage Increases Make Home Buying More Affordable | MyKCM

Bottom Line

If you are a first-time buyer or a move-up buyer who believes that purchasing a home is not within your budget, let’s get together to determine if that is still true.

5 Tips When Buying a Newly Constructed Home

5 Tips When Buying a Newly Constructed Home | MyKCM

The lack of existing inventory for sale has forced many home buyers to begin looking at new construction. When you buy a newly constructed home instead of an existing home, there are many extra steps that must take place.

To ensure a hassle-free process, here are 5 tips to keep in mind if you are considering new construction:

1. Hire an Inspector

Despite the fact that builders must comply with town and city regulations, a home inspector will have your best interests in mind! When buying new construction, you will have between 1-3 inspections, depending on your preference (the foundation inspection, the pre-drywall inspection, and a final inspection).

These inspections are important because the inspector will often notice something that the builder missed. If possible, attend the inspection so that you can ask questions about your new home and make sure the builder fixes any problems found by the inspector.

2. Maintain good communication with your builder

Starting with the pre-construction meeting (where you will go over all the details of your home with your project manager), establish a line of communication. For example, will the builder email you every Friday with progress updates? If you are an out-of-state buyer, will you receive weekly pictures of the progress via email? Can you call the builder and if so, how often? How often can you visit the site?

3. Look for builder’s incentives

The good thing about buying a new home is that you can add the countertop you need, the mudroom you want, or an extra porch off the back of your home! However, there is always a price for such additions, and they add up quickly!

Some builders offer incentives that can help reduce the amount you spend on your home. Do your homework and see what sort of incentives the builders in your area are offering.

4. Schedule extra time into the process

There are many things that can impact the progress on your home. One of these things is the weather, especially if you are building in the fall and winter. Rain can delay the pouring of a foundation as well as other necessary steps at the beginning of construction, while snow can freeze pipes and slow your timeline.

Most builders already have a one-to-two-week buffer added into their timelines, but if you are also in the process of selling your current home, you must keep that in mind! Nobody wants to be between homes for a couple of weeks.

5. Visit the site often

As we mentioned earlier, be sure to schedule time with your project manager at least once a week to see the progress on your home. It’s easy for someone who is not there all the time to notice little details that the builder may have forgotten or overlooked. Additionally, don’t forget to take pictures! You might need them later to see exactly where that pipe is or where those electrical connections are once they’re covered up with drywall!

Bottom Line

Watching your home come to life is a wonderful experience that can sometimes come with hassles. To avoid some of these headaches, keep these tips in mind!

If you are ready to put your current home on the market and find out what new construction is available in your area, let’s get together to discuss your options! Give The Johnson Team a call today at (888) 713-3056 or email us at Info@JohnsonTeamRealEstate.com.

Don’t Fall Victim to Wire Fraud Scams!

Devastatingly effective wire fraud scams are becoming more and more common in real estate transactions.  Sophisticated hackers are monitoring client and/or broker email accounts and waiting for a window to steal monies from your clients.  The scammers convincingly impersonate the broker or escrow agent, and then send messages urging the clients to wire funds to fake accounts set up by the scammers.  The clients are left with no recourse to recover the stolen funds.  Are you prepared to protect yourself and your clients?

Beware of the following scam:

1. An email account is hacked (this could be broker’s, escrow’s, or consumer’s email).
2. Hacker monitors the account, waiting for the time when consumer must wire funds. Broker, escrow, and consumer have no knowledge they are being monitored.
3. Hacker, impersonating broker or escrow, instructs consumer to wire funds immediately. The wire instructions are for an account controlled by hacker. These instructions often create a sense of urgency and often explain that the broker or escrow officer cannot be reached by phone so any follow-up must be by email. When consumer replies to this email, consumer’s email is diverted to hacker.
4. Consumer wires the funds which are stolen by hacker with no recourse for consumer.

 

For further information or to obtain a brochure click here or give us a call toll free at 1-888-713-3056 today!

Where are Home Values Headed over the Next Few Years?

Where are Home Values Headed over the Next Few Years? | MyKCM

There are many questions about where home prices will be next year as well as where they may be headed over the next several years to come. We have gathered the most reliable sources to help answer these questions:

The Home Price Expectation Survey – A survey of over 100 market analysts, real estate experts, and economists conducted by Pulsenomics each quarter.

Zelman & Associates – The firm leverages unparalleled housing market expertise, extensive surveys of industry executives, and rigorous financial analysis to deliver proprietary research and advice to leading global institutional investors and senior-level company executives.

Mortgage Bankers Association (MBA) – As the leading advocate for the real estate finance industry, the MBA enables members to successfully deliver fair, sustainable, and responsible real estate financing within ever-changing business environments.

Freddie Mac – An organization whose mission is to provide liquidity, stability, and affordability to the U.S. housing market in all economic conditions extending to all communities from coast to coast.

The National Association of Realtors (NAR) – The largest association of real estate professionals in the world.

Fannie Mae – A leading source of financing for mortgage lenders, providing access to affordable mortgage financing in all markets always.

Here are their projections of prices going forward:

Where are Home Values Headed over the Next Few Years? | MyKCM

Bottom Line

Every source sees home prices continuing to appreciate – just at lower percentages as we move through the next several years.  Have questions? Call us today at 1-888-713-3056!

Bellingham Real Estate Market Update & Happenings!

Market Snap Shot Jan 18

As we look into our real estate crystal ball, the question always is “so where have we been & where are we going?”

The “where have we been part” is pretty simple as it’s already logged into the history books. Closed Bellingham residential sales for 2017 were 1042 homes as opposed to 1145 homes in 2016. The median sales price for a home in Bellingham in 2016 was $363,465 as opposed to $393,249 in 2017. We are started the year off with approximately 111 active listings with an additional 79 homes pending as opposed to 193 active listings a year ago with, at that time, 86 pending listings.

So with that in the rear view mirror, what does the road ahead look like & what are some of the chuck holes in the way that could throw a monkey wrench in things?

First, we have a new Tax Code.  As it was initially stated, it had all of the real estate pundits up in arms, but as it went through the Congressional “Grinder” it was trimmed down to the point where it may not have the negative impact people initially felt.  Now in the interest of full disclosure, even though I graduated fairly high in my class at the U of W (sorry Cougar fans), accounting was not necessarily my bailiwick.  Even if it was, I’d ask you to consult with your personal accountant or financial planner to see how it impacts you personally.

So “Where are we headed in 2018”? 

A local lender posts a current 30 year fixed rate of 4.125%.  All indications are that rates will increase in 2018 with Freddie Mac projections to 4.6 in the 4th quarter of 2018.

Population data indicates that between 2010 and 2016, Whatcom County has seen a significant increase of people in their 60s and 70s. During the same time there’s been a decrease in the number of people in their 20s and 40s

A recent article in the Bellingham Herald quoted Zillow Economists as predicting a 3.1% increase in Bellingham home prices over the next 12 months, saying that the hottest neighborhoods ie: Lettered Streets, will have a 12 month increase of 4%, the York District an increase of 3.8% & the Columbia District of 3.7%.

As of today’s date, there are 87 residential homes pending in Bellingham.  Of this number, 34 pended within 5 days or less of the list date.  While we won’t know until the homes close, my guess is that with the quick pending dates, the probability is that the homes sold in excess of their list prices.  In the past 30 days, 69 residential homes sold.  Of that number, 27 sold either at or greater than their list price.

With that ground work, from what I hear on the streets, in my open houses & see statistically, I think, in Bellingham,

  • Inventory will remain at historically low levels.

 

  • While rising interest rates will make it more difficult for entry level buyers to find homes, it will have less or no effect on an older population that appears to be moving into the area & many times buying without the need of a home loan.

 

  • As climate change affects other parts of the US, our weather & lifestyle in the Pacific North West will be more appealing to others, causing them to move in increasing numbers.

 

  • Demand for Bellingham real estate will continue to outstrip supply resulting in increased prices. Quite frankly, I think the increases we experience will outstrip those projected by Zillow’s forecasters

In a nut shell, prepare for more of the same from our fast & furious real estate market.

If you have questions about the market in general or about your property specifically, Mike, Fawn & I would be happy to help you any way that we can.

 

Get the Facts on the Bellingham Real Estate Market!

As I talk to people about real estate, I am increasingly told they feel things are cooling off.  When I ask why, the common replies are the frequency of price reduction signs, flipped sales, increased market times & listings going beyond the “offer review date”.  To get a better perspective of the “State of the Market”, let’s take a look at the following statistics for our local market.

 

Whatcom County has a 2.83 month supply of inventory.  Remember that a healthy real estate market has 4 to 6 months.  There are currently a total of 910 active residential & condos listings.

The average sale price of single family and condo sales closed in Whatcom County has increased almost $16,000 with the median price increasing $44,900 over the past 12 months A local lender’s interest rate as of 10.19.2017 for a 30 year fixed rate loan with 5% down is 3.875%. That same loan with the same lender was 3.75% 8.03.2017.  Rates are expected to rise in the coming months to more than 4%.

So let’s drill down further to see some specifics:

-A 5 bedroom, 3 bath, 1576 sq ft fixer built in 1900  on Jaeger St just closed with a full price offer @ $375,000.  It was such a fixer the agent didn’t even include interior photos of the home in the listing.

-Today there are 18 homes / condos that have pended after 5 or less days on the market.  The average market time for all pendings is 35 days. In the last 30 days, there have been 28 homes / condos in Bellingham that have closed within 5 days or less of the home being listed.  Of the 106 homes / condos that sold in Bellingham over the past 30 days, 29 sold in excess of their list price & 16 sold at the list price

-I recently talked to an agent who told me she has written offers recently for 5 different buyers & lost out on all five because there were multiple offers.

So to bring this all together:

There are certainly homes that languish on the market – there always has been & always will be.

Inventory is short to the extreme with no end in sight

Prices will continue to rise.  There is no reason to believe, in my opinion, that demand will slack off.  In fact as the Seattle market continues to heat up, buyers will be forced to look up & down the I-5 corridor to find affordable housing.  I just sold a home to a 1st time buyer in Ferndale.  He commutes to Seattle every day to work.  We will see more of that.

Interest rates are still good  but are increasing.

Here’s a great visual to break down inventory numbers over the past several years:

Market Snap Shot Oct. 17

If you or your friends have questions about real estate, Mike & I would be happy to help.  As many of you know, we have been licensed for years, are committed to helping our clients make good decisions & are not afraid to put in our time – we usually are the 1st ones at the office & the last ones to leave. If that’s the kind of commitment you want for yourselves or want to refer to your friends, please pass our names on.  We are the guys that turn the lights on in the morning & off in the evening.

 

Financial Planning: 4 Reasons to Buy a House Today

Financial Planning: 4 Reasons to Buy a House Today | MyKCM

 

Homeownership will always be a part of the American Dream. There are advantages to owning your own home (educational, health, social) that far transcend any economic impact. However, we want to look at several of the financial advantages of homeownership in today’s post.

1. Buying is Cheaper Than Renting

The results of the latest Rent vs. Buy Report from Trulia show that homeownership remains cheaper than renting with a traditional 30-year fixed rate mortgage in the 100 largest metro areas in the United States. The report reveals that:

“Interest rates have remained low, and even though home prices have appreciated around the country, they haven’t greatly outpaced rental appreciation…Nationally, rates would have to reach 9.1% for renting to be cheaper than buying. Rates haven’t been that high since January of 1995, according to Freddie Mac.”

2. Homeownership “Forces” You to Save

According to SavingAdvice.com, homeownership is a great way to save. Their advice is quite simple:

“Homeownership is a “forced” savings account because you own the home, you have no choice – that monthly housing cost has got to be paid no matter what…Homeownership can be an outstanding way to force yourself to be more frugal in the rest of your spending so that you can save and build equity in your home.”

3. Homeownership Offers Several Tax Deductions

According to the Tax Policy Center’s Briefing Book -“A citizen’s guide to the fascinating (though often complex) elements of the federal Tax System” – there are several tax advantages to homeownership. Here are three:

  1. Homeowners who itemize deductions may reduce their taxable income by deducting any interest paid on a home mortgage.
  2. Homeowners who itemize deductions may also reduce their taxable income by deducting property taxes they pay on their homes.
  3. Taxpayers who sell assets must generally pay capital gains tax on any profits made on the sale.

4. Experts Expect Home Price Appreciation to Continue

Every quarter, Pulsenomics surveys a nationwide panel of over one hundred economists, real estate experts, and investment & market strategists about where they believe prices are headed over the next five years. They then average the projections of all 100+ experts into a single number.

Over the next five years, home prices are expected to appreciate 3.22% per year on average and to grow by 17.3% cumulatively, according to Pulsenomics’ most recent Home Price Expectation Survey.

Bottom Line

Some are afraid that home values may have already peaked. However, we believe that purchasing a home now will prove to be a sound financial decision for years to come. As Warren Buffet said, “When others are greedy, be fearful. When others are fearful, be greedy.” If you have any questions about the market or buying or selling a home, please contact us at (360) 303-2734 or email us at info@johnsonteamrealestate.com.

Your Tax Return: Bring it Home

Your Tax Return: Bring it Home | MyKCM

This time of year, many people eagerly check their mailboxes looking for their tax return check from the IRS. But, what do most people plan to do with the money? GO Banking Rates recently surveyed Americans and asked the question – “What do you plan on doing with your tax refund?”

The results of the survey were interesting. Here is what they plan to do with their money:

  • 41% – Put it into savings
  • 38% – Pay off debt
  • 11% – Go on a vacation
  • 5% – Make a major purchase (car, home, etc.)
  • 5% – Splurge on a purchase

Upon seeing the research, The National Association of Realtors (NAR) wondered if this could help with a constant challenge cited by many people who wish to purchase a home – saving for the down payment.

In a recent post in NAR’s Economists’ Outlook Blog, they explained:

“With a sizable tax refund, the average American would have a decent down payment depending on which region or market you live in.”

They went on to add:

“[A]pproximately 5 percent of all respondents indicated they would make a major purchase which does not seem like a lot. However, there is a bigger group 41 percent who see saving the tax return is best and that group could be potential homebuyers if they are not already.”

In other words, putting that money toward purchasing a home is a form of savings.

Bottom Line

When one considers that first-time home buyers in 2016 had an average down payment of 6%, a decent tax return could go a long way toward the necessary funds needed for a down payment on a house. Or perhaps, the down payment needed by a son or daughter to make their homeownership dream a reality. How are you going to spend your return? If you are thinking of putting it towards real estate Johnson Team Real Estate is here to help! Call us today at 1-888-713-3056 or email us at Info@JohnsonTeamRealEstate.com .

Thinking of Selling? Now Is The Time To Act

Thinking of Selling? Now Is the Time to Act | MyKCM

If you thought about selling your house this year, now may be the time to do it. The inventory of homes for sale is well below historic norms and buyer demand is skyrocketing. We were still in high school when we learned the concept of supply and demand: the best time to sell something is when supply of that item is low and demand for that item is high. That defines today’s real estate market.

Jonathan Smoke, Chief Economist at realtor.com, revealed in a recent article that:

“The biggest challenge to buyers this spring will be simply finding a home to buy and getting it successfully under contract. That’s because the supply of homes for sale is at an all-time low, and yet demand is strong and getting stronger.”

Smoke goes on to say:

“We started the year with the lowest inventory of homes available for sale that we’ve ever seen on realtor.com. While we did see inventory grow 2% in February, total inventory was down 11% over last year.”

In this type of market, a seller may hold a major negotiating advantage when it comes to price and other aspects of the real estate transaction including the inspection, appraisal and financing contingencies.

Bottom Line

As a potential seller, you are in the driver’s seat right now. It might be time to hit the gas. Give us a call at (360) 303-2734 or email is at Info@JohnsonTeamRealEstate.com.

The Importance of Using a Professional to Sell Your Home

The Importance of Using a Professional to Sell Your Home | MyKCM

When a homeowner decides to sell their house, they obviously want the best possible price for it with the least amount of hassles along the way. However, for the vast majority of sellers, the most important result is actually getting their homes sold.

In order to accomplish all three goals, a seller should realize the importance of using a real estate professional. We realize that technology has changed the purchaser’s behavior during the home buying process. According to the National Association of Realtors’ 2016 Profile of Home Buyers & Sellers, the percentage of buyers who used the internet in their home search increased to 94%.

However, the report also revealed that 96% of buyers who used the internet when searching for homes purchased their homes through either a real estate agent/broker or from a builder or builder’s agent. Only 2% purchased their homes directly from a seller whom the buyer didn’t know.

Buyers search for a home online but then depend on an agent to find the home they will buy (50%), to negotiate the terms of the sale (47%) & price (36%), or to help understand the process (61%).

The plethora of information now available has resulted in an increase in the percentage of buyers that reach out to real estate professionals to “connect the dots.” This is obvious, as the percentage of overall buyers who have used agents to buy their homes has steadily increased from 69% in 2001.

Bottom Line

If you are thinking of selling your home, don’t underestimate the role a real estate professional can play in the process. Call Johnson Team Real Estate today at (360) 303-2734 or email us at info@johnsonteamrealestate.com.