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Need Space? Ditch Your Dining Room!

More and more, we see families on the go. Dinners have evolved and formal dining is becoming a way of the past – or is reserved just for special occasions. With that in mind, we see more and more often that dining rooms are left untouched a mass majority of the year. Many people still have fully furnished dining rooms, for a few reasons. They may have been told they can’t sell their home without one, or they already have a dining set, or it just hadn’t occurred to them to not have one.

If you’re willing to think outside the box and you’re looking for ways to have more room without financing a home addition, take a second to think about what you really need and don’t need in your home. There’s a good chance that maybe, you don’t really need a dining room.

A better solution might be to create a slightly larger, less formal dining space. A space that can be more flexible, taking the place of the formal dining room and the breakfast room. Most of the time, this other dining space works great for meals, crafts, and everything in between. You can just add a nice tablecloth, some candles and once again it is a temporary space for elegant dining. If space allows, you can add a nook to your kitchen (if you haven’t already) and completely remove your formal dining furniture from your dining room. Now, you have a full room for play, design, or maybe an office – it’s up to you!

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Virtual School Is Changing Homebuyer Needs

Virtual School Is Changing Homebuyer Needs

Virtual School Is Changing Homebuyer Needs [INFOGRAPHIC] | My KCM

Some Highlights

  • With remote learning sweeping the nation this academic year, organized spaces with enough room for kids to learn effectively are high on buyer wish lists.
  • If you’re trying to make room for your family’s growing needs, multi-purpose rooms and dedicated workspaces may be features to consider in your next home.
  • Let’s connect today so you can find a home where your kids feel confident and comfortable too.
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Homebuyer Demand Is Far Above Last Year’s Pace

Homebuyer Demand Is Far Above Last Year’s Pace

Homebuyer Demand Is Far Above Last Year’s Pace | MyKCM

Homebuying has been on the rise over the past few months, with record-breaking sales powering through the market in June and July. Buyers are actively purchasing homes, and the momentum is continuing into the fall. It is, however, becoming harder for buyers to find homes to purchase. If you’ve been thinking about selling your house, the coming weeks might just be the timing you’ve been waiting for.

According to the Pending Home Sales Report from the National Association of Realtors (NAR):

Pending home sales in July achieved another month of positive contract activity, marking three consecutive months of growth.

The Pending Home Sales Index (PHSI), a forward-looking indicator of home sales based on contract signings, rose 5.9% to 122.1 in July. Year-over-year, contract signings rose 15.5%. An index of 100 is equal to the level of contract activity in 2001.”

This means that for the past several months, buyers have signed an increasing number of contracts to purchase homes – well above where the market was at this time last year. Lawrence Yun, Chief Economist at NAR notes:

“We are witnessing a true V-shaped sales recovery as homebuyers continue their strong return to the housing market…Home sellers are seeing their homes go under contract in record time, with nine new contracts for every 10 new listings.”

Below is a graph that shows the impressive recovery of homes sales compared to previous years. The deep blue v marks the slowdown from this spring that turned into an exponential jump in sales that followed through the summer, skyrocketing above years past:Homebuyer Demand Is Far Above Last Year’s Pace | MyKCM

What Does This Mean for Sellers?

If you were thinking about putting your house on the market in the spring, but decided to wait due to the health crisis, it may be time to make your move. Buyers are in the market right now. With so few homes available to purchase, homeowners today are experiencing more bidding wars, creating an optimal time to sell.

Is This Trend Going to Continue?

As CNBC notes, there are no signs of slowing buyer demand this fall:

The usual summer slowdown in the housing market is not happening this year. Buyers continue to show strong demand, spurred by the new stay-at-home world of the coronavirus and by record low mortgage rates.”

Danielle Hale, Chief Economist at realtor.com, concurred:

“In a typical year in the housing market, buyer interest begins to wane before seller interest causing the usual seasonal slowdown as we move into the fall. Due to a delayed spring season and low mortgage rates, we could see buyer interest extend longer than usual into the typically quieter fall. Whether this means more home sales will depend on whether sellers participate or decide to stay on the sidelines.”

As Hale mentioned, homeowners who are willing to sell their houses right now will play a big role in whether the trend continues. The market needs more homes to satisfy ongoing buyer demand. Maybe it’s time to leverage your equity and move up while eager home shoppers are ready to purchase a house just like yours.

Bottom Line

If your current home doesn’t meet your family’s changing needs, let’s connect to help you sell your house and make the move you’ve been waiting for all year.

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Two Big Myths in the Homebuying Process

Two Big Myths in the Homebuying Process

Two Big Myths in the Homebuying Process | MyKCM

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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2020 Luxury Market Forecast

2020 Luxury Market Forecast

2020 Luxury Market Forecast | MyKCM

By the end of last year, many homeowners found themselves with more equity than they realized, and at the same time their wages were increasing. When those two factors unite, it can spark homeowners to think about making a move to a larger or more expensive home in the luxury space. That said, now is a perfect opportunity to take a look at the forecast for the 2020 luxury market.

Three Things to Think About in the 2020 Luxury Housing Market

1. Prices

The U.S. economy is strong today, with buying opportunities throughout the luxury end of the market. Thomas Veraguth, Strategist at UBS Global Wealth Management, says in Barrons.com,

“There’s a good link between luxury real estate prices and [economic] growth.”

Available inventory is a key element that can impact home prices. At the upper range, the inventory is greater in comparison to the entry-level market, making moving up to a luxury home a growing reality for many buyers right now.

2. Activity in the Market

With more buying opportunities at the higher end, we should start to see an increase in activity. The same article states,

“Affluent homebuyers will start to come out of the woodwork as they find rising luxury rents less appealing and sellers get even more negotiable on price.”

Buyers looking in the luxury market are taking the opportunity to negotiate on price in a segment where there are more choices, too. According to the Luxury Market Report, homes sold for an average of 96.94% of the list price in December.

Buyers are also getting more for their money with greater purchasing power due to the current low interest rates.

3. Buyers Are Coming Back

Keep in mind, buyers are often sellers too, especially those looking to move up. Homeowners with an entry-level home can take advantage of the inventory shortage at the lower end of the market, thus driving higher sales prices for their current homes. Combined with growing equity in the homes they’re listing, it’s a great time for those who are ready to make a luxury move.

The extra equity and greater purchasing power are bringing many buyers back to the market. The same article mentioned that,

“We’ve already seen buyers who’ve been on the sidelines for two years tread back into the market.”

Bottom Line

If you’re considering entering the luxury market, 2020 is shaping up to be a great year for those who are ready to make that move. Let’s get together to set your real estate plan for the year.

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Just How Strong Is the Housing Recovery?

Just How Strong Is the Housing Recovery?

Just How Strong Is the Housing Recovery? | MyKCM

The residential real estate market has definitely been the shining light in this country’s current economic situation. All-time low mortgage rates coupled with a new appreciation of what a home truly means has caused the housing market to push forward through this major health crisis. Let’s look at two measures that explain the resilience of the real estate market.

Purchase Mortgages

The number of buyers getting a mortgage to purchase a home is a strong indicator of the strength of a housing market. Below is a graph of the week-over-week percent change in that number, as reported by the Mortgage Bankers’ Association:Just How Strong Is the Housing Recovery? | MyKCMThe number dropped dramatically in March and mid-April when the economy was shut down in response to COVID. It increased substantially from later in April through the middle of June. The strong increase in May and June was the result of the pent-up demand from earlier in the spring along with the normal business that would have been done during that time.

Since July, the market has remained consistent on a weekly basis, but still reflects a double-digit increase from the levels one year ago. The August 12 report shows a whopping 22% increase over last year.

Pending Contracts

Like purchase mortgages, pending contracts are also a powerful indicator of the strength of the real estate market. Zillow reports each week on the percent change in the number of homes going into contract. Here’s a graph of their data:Just How Strong Is the Housing Recovery? | MyKCMThe graph mirrors the one above, showing a drop in early spring followed by a strong recovery in late spring and early summer. Then, in July, it settles into a consistent level of deals. That level, like the one for purchase mortgages, is well ahead of the level seen last year. The last report revealed that pending deals were 16.9% greater than the same time last year.

Bottom Line

Both indicators prove the housing market recovered quickly from the early setback caused by the shelter-in-home orders. They also show that Americans have realized the importance of their homes during this time and are buying more houses than they did prior to the pandemic.

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Why Foreclosures Won’t Crush the Housing Market Next Year

Why Foreclosures Won’t Crush the Housing Market Next Year

Why Foreclosures Won’t Crush the Housing Market Next Year | MyKCM

With the strength of the current housing market growing every day and more Americans returning to work, a faster-than-expected recovery in the housing sector is already well underway. Regardless, many are still asking the question: will we see a wave of foreclosures as a result of the current crisis? Thankfully, research shows the number of foreclosures is expected to be much lower than what this country experienced during the last recession. Here’s why.

According to Black Knight Inc., the number of those in active forbearance has been leveling-off over the past month (see graph below):Why Foreclosures Won’t Crush the Housing Market Next Year | MyKCMBlack Knight Inc. also notes, of the original 4,208,000 families granted forbearance, only 2,588,000 of these homeowners got an extension. Many homeowners have once again started to pay their mortgages, paid off their homes, or never went delinquent on their payments in the first place. They may have applied for forbearance out of precaution, but never fully acted on it (see graph below):Why Foreclosures Won’t Crush the Housing Market Next Year | MyKCMThe housing market, and homeowners, therefore, are in a much better position than many may think. Much of that has to do with the fact that today’s homeowners have more equity than most realize. According to John Burns Consulting, over 42% of homes are owned free and clear, meaning they are not tied to a mortgage. Of the remaining 58%, the average homeowner has $177,000 in equity. That number is keeping many homeowners afloat today and giving them options to avoid foreclosure.

While ATTOM Data Solutions indicates that there is a potential for the number of foreclosures to increase throughout the country, it’s important to understand why they won’t rock the housing market this time around:

“The United States faces a possible foreclosure surge over the coming months that could more than double the number of households threatened with eviction for not paying their mortgages.”

That number may sound massive, but it is actually much smaller than it seems at first glance. Today’s actual quarterly active foreclosure number is 74,860. That’s over 7.5x lower than the number of foreclosures the country saw at the peak of the housing crash in 2009. When looking at the graph below, it’s clear that even if the number of quarterly foreclosures today doubles, as ATTOM Data Solutions indicates is a possibility (not a given), they will only reach what historically-speaking is a normalized range, far below what up-ended the housing market roughly 10 years ago.Why Foreclosures Won’t Crush the Housing Market Next Year | MyKCMEquity is growing, jobs are returning, and the economy is slowly recovering, so the perfect storm for a wave of foreclosures is not realistically in the housing market forecast. As Odeta Kushi, Deputy Chief Economist for First American notes:

“Alone, economic hardship and a lack of equity are each necessary, but not sufficient to trigger a foreclosure. It is only when both conditions exist that a foreclosure becomes a likely outcome.”

While our hearts are with anyone who may end up in foreclosure as a result of this crisis, we do know that today’s homeowners have more options than they did 10 years ago. For some, it may mean selling their house and downsizing with that equity, which is a far better outcome than foreclosure.

Bottom Line

Homeowners today have many options to avoid foreclosure, and equity is surely helping to keep many afloat. Even if today’s rate of foreclosures doubles, it will still only hit a mark that is more in line with a historically normalized range, a very good sign for homeowners and the housing market.

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Current Buyer & Seller Perks in the Housing Market

Current Buyer & Seller Perks in the Housing Market

Current Buyer & Seller Perks in the Housing Market | MyKCM

Today’s housing market is making a truly impressive turnaround, and it’s also setting up some outstanding opportunities for buyers and sellers. Whether you’re thinking of buying or selling a home this year, there are perks today that are rarely available, and definitely worth looking into. Here are the top two.

The Biggest Perk for Buyers: Low Mortgage Rates

The most impressive buyer incentive today is the average mortgage interest rate. Just last week, mortgage rates hit an all-time low for the eighth time this year. The 30-year fixed-rate is now averaging 2.88%, the lowest rate in the survey’s history, which dates back to 1971 (See graph below):Current Buyer & Seller Perks in the Housing Market | MyKCMThis is a huge advantage for buyers. To put it in perspective, it means that today you can get a lower rate than any of the past two generations of homebuyers in your family if you decide to purchase at this time.

In addition, the National Mortgage News notes how today’s buyers have increasing purchasing power due to these low mortgage rates:

“Purchasing power rose 10% year-over-year…With interest rates hitting record lows, buyers were able to afford $32,000 “more house” as of July 23 than they could the year before with the same monthly payment.”

This is a great perk for buyers who are hoping to potentially get more for their money in a home, something many are considering today as they re-evaluate the amount of space they ideally need for their families. It is an opportunity not seen in 50 years, and one not to be missed if the time is right for you to buy a home.

The Biggest Perk for Sellers: Low Inventory

Today, there are simply not enough houses on the market for the number of buyers looking to purchase them. According to the National Association of Realtors (NAR):

“Total housing inventory at the end of June totaled 1.57 million units, up 1.3% from May, but still down 18.2% from one year ago (1.92 million).”

The red bars in the graph below indicate that the inventory of homes coming into the market continues to decline. It was low as we entered the pandemic and has reduced even further this year. Houses today are selling faster than they’re being listed, and that’s creating an even greater supply shortage (See graph below):Current Buyer & Seller Perks in the Housing Market | MyKCMThe lack of inventory has been a challenging situation for a while now, and with low mortgage rates fueling buyer demand, inventory is even harder for buyers to find today. Buyers are eager to purchase, and because of the shortage of homes available, they’re encountering more bidding warsThis is one of the factors keeping home prices strong, an advantage for sellers. Lawrence Yun, Chief Economist for NAR notes that this trend may continue, too:

“Home prices rose during the lockdown and could rise even further due to heavy buyer competition and a significant shortage of supply.”

With low inventory and high buyer demand, homeowners can potentially earn an increasing profit on their houses and sell them quickly in this sizzling summer market.

Bottom Line

Whether you’re thinking about buying or selling at home, there are some key perks available right now. Let’s connect today to discuss how they may play to your advantage in our local market.

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Unemployment Report: Slow and Steady Improvement

The Latest Unemployment Report: Slow and Steady Improvement

The Latest Unemployment Report: Slow and Steady Improvement | MyKCM

Last Friday, the Bureau of Labor Statistics (BLS) released its latest Employment Situation Summary. Going into the release, the expert consensus was for 1.58 million jobs to be added in July, and for the unemployment rate to fall to 10.5%.

When the official report came out, it revealed that 1.8 million jobs were added, and the unemployment rate fell to 10.2% (from 11.1% last month). Once again, this is excellent news as this was the third consecutive month the unemployment rate decreased.The Latest Unemployment Report: Slow and Steady Improvement | MyKCMThere is, however, still a long way to go before the job market fully recovers. The Wall Street Journal (WSJ) put a potential date on that recovery:

“July’s payroll growth, at 1.8 million, still leaves total payrolls 12.9 million lower than in February. And yet if job gains continued at July’s pace, that deficit will be erased by March 2021. If payrolls reclaim their last peak in 13 months, that would be remarkably fast. It took more than six years after the last recession.”

Permanent vs. Temporary Unemployment

During a pandemic, it’s important to differentiate those who have lost their jobs on a temporary basis from those who have lost them on a permanent basis. Morgan Stanley economists noted in the same WSJ article:

“The rate of churn in the labor market remains incredibly high, but a notable positive detail in this month’s report was the downtick in the rate of new permanent layoffs.”

To address this, the core unemployment rate becomes increasingly important. It identifies the number of people who have permanently lost their jobs. This measure subtracts temporary layoffs and adds unemployed who did not search for a job recently. Jed Kolko, Chief Economist at Indeed and the founder of the index reported:

“Core unemployment fell in July for the first time in the pandemic. That’s the good news I was hoping for.”

What about the housing market?

The housing market has continued to show tremendous resilience during the pandemic. Commenting on the labor report, Robert Dietz, Chief Economist for the National Association of Home Builders (NAHB), tweeted:

“Housing continues to rebound in another positive labor market report. Home builder and remodeler job gains of 24K for July. Residential construction employment down just 56.4K compared to a year ago. Total residential construction employment at 2.85 million.”

Bottom Line

We should remain cautious in our optimism, as the recovery is ultimately tied to our future success in mitigating the ongoing health crisis. However, as Mike Fratantoni, Chief Economist for the Mortgage Bankers Association, reminds us“The pace of job growth slowed in July, but the gains over the past three months represent an impressive rebound during the ongoing economic challenges brought forth by the pandemic.”

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The Concern Of More Foreclosures

Two Reasons We Won’t See a Rush of Foreclosures This Fall

 

The health crisis we face as a country has led businesses all over the nation to reduce or discontinue their services altogether. This pause in the economy has greatly impacted the workforce and as a result, many people have been laid off or furloughed. Naturally, that would lead many to believe we might see a rush of foreclosures like we saw in 2008. The market today, however, is very different from 2008.

The concern of more foreclosures based on those that are out of work is one that we need to understand fully. There are two reasons we won’t see a rush of foreclosures this fall: forbearance extension options and strong homeowner equity.

1. Forbearance Extension

Forbearance, according to the Consumer Financial Protection Bureau (CFPB), is when your mortgage servicer or lender allows you to temporarily pay your mortgage at a lower payment or pause paying your mortgage.” This is an option for those who need immediate relief. In today’s economy, the CFPB has given homeowners a way to extend their forbearance, which will greatly assist those families who need it at this critical time.

Under the CARES Act, the CFPB notes:

 “If you experience financial hardship due to the coronavirus pandemic, you have a right to request and obtain a forbearance for up to 180 days. You also have the right to request and obtain an extension for up to another 180 days (for a total of up to 360 days).” 

2. Strong Homeowner Equity

Equity is also working in favor of today’s homeowners. This savings is another reason why we won’t see substantial foreclosures in the near future. Today’s homeowners who are in forbearance actually have more equity in their homes than what the market experienced in 2008.

The Mortgage Monitor report from Black Knight indicates that of all active forbearances which are past due on their mortgage payment, 77% have at least 20% equity in their homes (See graph below):Two Reasons We Won’t See a Rush of Foreclosures This Fall | MyKCMBlack Knight notes:

“The high level of equity provides options for homeowners, policymakers, mortgage investors and servicers in helping to avoid downstream foreclosure activity and default-related losses.”

Bottom Line

Many think we may see a rush of foreclosures this fall, but the facts just don’t add up in this case. Today’s real estate market is very different from 2008 when we saw many homeowners walk away when they owed more than their homes were worth. This time, equity is stronger and plans are in place to help those affected weather the storm.