HOUSING MARKET 101

Is this your year to buy a new home or to upgrade from renting to owning a home?  Here are a few things that may help you in your decision making process.

First, there is an ebb and flow to the real estate market and it impacts your ability to make a successful offer on a house.

Second, how can you create leverage to make a confident, smart decision when it comes time to buy or sell?

A little bit of knowledge can go a long way in understanding the current housing market and provide the leverage you need when it comes time to make that big deal.

HOUSING MARKET 101

Here are a few basic real estate terms that you need to become familiar with in order to survive and decipher your local market.

Buyer's Market:  A Buyer's Market exists when there are more properties for sale than active buyers.

Seller's Market: A Seller's Market exists when there are more buyers than properties for sale.

Balance Market: Often referred to as the "Goldilocks Effect", a balance market exists between the buyer's and seller's market when there's between three to six months of home inventory listed at any given time.

The Ebb and Flow Factors: The overall market is influenced by changes in the job market, consumer confidence, lending regulations and zoning laws.  

Unlike the stock market which can change instantly, the housing market is slow-moving by nature helping to prevent the housing market from crashing on a regular basis.

Final Thought:  Real estate is a highly localized industry with wide variations among property values, economic status, and real estate laws that differ from state to state.  It is important, therefore, to pay close attention to your local housing market.

Entering the real estate market with basic "101" knowledge is better than blindly stumbling over great deals.  Understanding your local market will make the biggest impact on your real estate deal.

HOUSING MARKET OUTLOOK FOR 2020

A quick review of the 2019 housing market reflects low rates, high demand and limited supply of lower-priced housing.  Will 2020 be the same? 

Here are 6 points mortgage, real estate and housing professional agree on is in store for 2020

1.  Mortgage rates will remain low.  Current rate is 3.75% but there is strong evidence to indicate the rate may go lower - possibly 3.5%- 3.6%.  Freddie Mac and Mortgage Bankers Association see this in the new year forecast.

2. Prices will keep rising - Home prices will continue to rise in large part due to high demand and limited inventory.   Redfin chief economist Daryl Fairweather explains, "We are not seeing a ton of listings.  Without more listings coming on the market, there will be competition starting off in early 2020 and that will lead to more price pressure."  

Ralph DeFranco, chief economist for mortgage insurer ArchMI, stated, "This is especially the case for lower price points, since builders have tended to focus on more expensive, higher-profit houses and less on replenishing low inventories of entry level homes."

3. Inventory will be tight.  "You can't buy what's not for sale," explains Odeta Kushi, deputy chief economist at title insurance and settlement provider First American.  Kushi further goes on to state, "As first-time buyers lock-in these historically amazing rates and existing homeowners refinance - in droves in recent months, everyone will stay put and not sell.  Where's the incentive?"

4. Millennials will maintain their buying streak, while Baby Boomers hold up inventory.  Millennials face an uphill battle even though they account for 46% of all mortgage originations.  The problem - Baby Boomers are choosing to age in place keeping more homes off the market.

5. The "Burbs" will be a big draw for Millennials.  As home prices continue to rise, Millennials will look to smaller suburban towns on the outskirts of major metro markets to buy homes.  The live-work-play neighborhoods that blend the safety and affordability of the suburbs with transit, walk-ability and 24 hour amenities of big cities will slowly breath new life into small towns outside major urban hubs.

6. The "Industry" will continue to ride the wave of new and efficient technology.  The mortgage and real estate spheres have been rapidly moving away from manual, paper-laden processes and embracing the every expanding tech offerings that exit.  Competition will narrow as companies combine technology across the board with well-established institutions.

WANT TO IMPROVE YOUR CREDIT SCORE?

You are feeling cramped in your current home and know you need to upgrade to a larger apartment or home, but are not certain if you will be able financially afford it with your current credit score.  Here are 6 things you can do to help yourself and your credit score.

Disclaimer:  I am not a financial adviser, but I do understand the basic concepts of finance.  I always recommend seeking a professional financial adviser if you are in need of financial guidance.

Steps To Establishing Good Credit

1. Pull your credit report - This will give you a clear picture of your financial health and help you establish a plan to improve your credit standing.  It will take discipline to create and stick with your plan no matter what.

2. Evaluate your spending habits - I know where the money is coming from the question now is where is it going.  Are you wasting your money on a lot of "nothings" or am I "robbing Peter to pay Paul"?  Can that money be better spent attacking my debts?

3. What is your WHY? - What is motivating you to get out of debt?  You need to clearly identify your WHY.  Write it down; paste it on your mirror in the bathroom; post-it on the steering wheel of your car, but keep it ever before you.  The clearer the WHY the more it will better serve to drive you to financial freedom.

4. Celebrate milestones - you need to psychologically and emotionally give yourself a "high five" when you see your credit score improve significantly.  Set measurable goals and celebrate (within reason) when you reach that goal.  Take pride in what you are doing and why you are doing it.

5. Take Action - the best laid plans are just that if you don't act on them - just plans.  You need to follow your plan, track your successes and fine tune areas that need improving.  

6. Give it away - find avenues where you can give to others.  Life is built on the principle of sowing and reaping.  Consciously look for ways to be able to help others through giving.  

Following these six things will achieve two things.  First, improve your credit score; but more importantly build your self-confidence knowing you have discipline and integrity through achieving financial freedom.

ARE THESE TWO THINGS HOLDING YOU BACK FROM BUYING?

Home ownership has long been a part of the American dream, but many buyers are holding off making a purchase.  A recent article in First American shared two common misconceptions confronting many potential home buyers.  

1. I need a 20% down payment - The First American stated, "Saving for a down payment is one of the biggest obstacles faced by first time home buyers."  As a result many qualified potential buyers do not even consider home ownership.  The Urban Institute report reveals that "16% of consumers believe that the minimum down payment required by lenders is 20% or more and another 40% did not know at all."

Many potential buyers often do not realize how many assistance programs are available with as little as 3% down required.  A little research may actually enable those potential buyers to enter the housing market much sooner.

2. I need FICO score of 780 or higher - Following close behind the confusion about the down payment is what FICO score it takes to qualify for a mortgage.  Many believe a 'good' credit score is 780 or higher. 

The latest Origination Insight Report focused on recently closed (approved ) loans.  The Report showed that 50.23% of approved mortgages had a credit score 500-749.  Those with credit scores ranging between 750-799 accounted for 35.64% of approved mortgages and only 14% for those with 800+ scores.

Buying that first home or moving up to your dream home may be closer than you think.  Believe it or not your dream home may already be within your reach.

A "SILVER TSUNAMI" IS IN THE WIND

What is a "Silver Tsunami"?  

A recent study predicts that a Silver Tsunami will build slowly as the number of adults aged 60 or older pass away each year.  The boomer generation, once over 76 million strong in the U.S., has dwarfed to 55 million.  The Boomers own about 1/3 of all U.S. properties and 27% will sell their home within the next 20 years.

From 2007 to 2017, roughly 730,000 U.S. homes were released into the market each year by seniors aged 60 or older.  

From 2017 to 2027 and from 2027 to 2037, that number will increase from 920,000 to 1.17 million per year.  

Retirement hubs like Florida and Arizona are likely to feel the sharpest impact - these areas might end up with excess housing.   

The differences in the share of homes released by Boomers among metros are small compared to the locations like Palm Springs which may see 45% of its owner occupied homes vacated by 2037.

Houses released by the Silver Tsunami - upwards of 20 million homes hitting the market through mid-2030s - will provide a substantial and sustained boost to supply, comparable to the fluctuation that new home construction experienced in the 2000s boom bust cycle.  

The Silver Tsunami will be enough to affect local economics in traditional retirement areas.