Thinking of Selling Your Home? The Waiting Is The Hardest Part.

Thinking of Selling Your Home? The Waiting Is The Hardest Part. | MyKCM

 

Tom Petty famously penned the words, “the waiting is the hardest part” in his early 80’s hit song The Waiting, and his thought process can surprisingly also be applied to individuals considering selling their homes today. Traditional thinking would suggest it may be best to wait until the spring to sell when there is a flood of buyers in the market, but right now may in fact be an even better time to list your home.

We can see the overall economy is good: wages are rising, there are near record-low unemployment rates, and mortgage interest rates are still very low too. Over the past 10+ years the housing market has stabilized, so what (if anything) is the biggest challenge in the housing market today?

The answer is simple: it’s inventory.

According to the Existing Home Sales Report by the National Association of Realtors,

“Total housing inventory at the end of September sat at 1.83 million, approximately equal to the amount of existing-homes available for sale in August, but a 2.7% decrease from 1.88 million one year ago. Unsold inventory is at a 4.1-month supply at the current sales pace, up from 4.0 months in August and down from the 4.4-month figure recorded in September 2018.”

What does this mean?

While homes are coming to the market, they aren’t coming fast enough! Right now, across the country there is less than 6 months of overall inventory of homes for sale, putting us in a seller’s market. The challenge is that there are not enough homes for sale to increase the supply needed for the number of people who want to buy, especially in the starter and middle-level markets.

To be in a balanced market (meaning we have enough inventory for the number of buyers in the market), we need to have 6 months of inventory available. Today we are nowhere near that number, and as a matter of fact, the last time we reached that height was August 2012 (as shown in the graph below):Thinking of Selling Your Home? The Waiting Is The Hardest Part. | MyKCMWhen we look at the inventory challenge today, we can see that now is a great time to sell your house. Truthfully, waiting may end up being the hardest part in the long run. This landscape is a great place for sellers who own homes in the starter and middle-level markets to take the opportunity to sell in a sellers’ market, before inventory catches up with demand. Serious buyers are actively in the market and ready to make a move at this time of year. When inventory is limited at the lower end, like it is today, selling before more homes are listed could mean a significant seller’s advantage to those who are ready to move up. The upper level of the market has much more inventory available to move into, so it’s a win across the board.

Bottom  Line

If you’re considering selling your home, don’t wait – now is the time to make your move! Take advantage of the high housing demand and the low inventory of homes for sale at the lower end of the market and use your purchasing power while mortgage rates are low to go after the move-up home of your dreams. Let’s get together to decide if now is the right time for you.

DISCLAIMER: The information contained in this Blog is for general information purposes only. While we endeavor to keep the information up to date and correct, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy or reliability of the Blog posts or any other information contained in this website.


Posted on October 29, 2019 at 5:32 pm
DAWIT WOLDE | Posted in Blog |

Home-ownership is the Top Contributor to Your Net Worth

Homeownership is the Top Contributor to Your Net Worth | MyKCM

Many people plan to build their net worth by buying CDs or stocks, or just having a savings account. Recently, however, Economist Jonathan Eggleston and Survey Statistician Donald Hays, both of the U.S. Census Bureau, shared the biggest determinants of wealth,

“The biggest determinants of household wealth [are] owning a home and having a retirement account.” (Shown in the graph below):

Homeownership is the Top Contributor to Your Net Worth | MyKCMThis does not come as a surprise, as we often mention that homeownership can help you to increase your family’s wealth. This study reinforces that idea,

 “Net worth is an important indicator of economic well-being and provides insights into a household’s economic health.”

Having equity in your home can help your family move in that direction, building toward substantial financial growth. According to the report noted above, people are not only creating net worth in the homes they live in, but many are also earning equity in rental property investments too. (See below):Homeownership is the Top Contributor to Your Net Worth | MyKCMJohn Paulson said it well,

If you don’t own a home, buy one. If you own one home, buy another one, and if you own two homes buy a third and lend your relatives the money to buy a home.”

Bottom Line

There are financial and non-financial benefits to owning a home. If you would like to increase your net worth, let’s get together so you can learn all the benefits of becoming a homeowner.

DISCLAIMER: The information contained in this Blog is for general information purposes only. While we endeavor to keep the information up to date and correct, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy or reliability of the Blog posts or any other information contained in this website.


Posted on October 16, 2019 at 4:32 am
DAWIT WOLDE | Posted in Blog |

Southern Nevada Home Prices Inch Up as Supply Stays Tight in September 2019

 

 

LAS VEGAS – A report released Tuesday by the Greater Las Vegas Association of REALTORS® (GLVAR) shows home prices in Southern Nevada inching back towards their all-time high as the local housing supply remains tight.

GLVAR reported that the median price of existing single-family homes sold in Southern Nevada through its Multiple Listing Service (MLS) during September was $310,000. That’s up 3.3% from an even $300,000 in September of 2018. Meanwhile, the median price of local condos and townhomes sold in September was $171,000. That was up 0.6% from $170,000 in September of 2018.

 

 

“When you look at how gradually home prices have been going up lately, the rate of appreciation is more like what we considered to be normal for many years. In past decades, when prices went up by 3 to 5% per year, we thought that was pretty good appreciation,” said 2019 GLVAR President Janet Carpenter, a longtime local REALTOR®. “With demand staying strong and our local housing supply remaining tight, I wouldn’t be surprised to see this trend continue into the foreseeable future.”

According to GLVAR, the median price of existing single-family homes sold in Southern Nevada is now within $5,000 of the $315,000 peak set in June of 2006 before prices began falling during the recession.

As for inventory, by the end of September, GLVAR reported 7,334 single-family homes listed for sale without any sort of offer. That’s up 19.3% from one year ago. For condos and townhomes, the 1,830 properties listed without offers in September represented a 35.0% increase from one year ago.

 

 

While the local housing supply is up from one year ago, Carpenter said it’s still well below the six-month supply that is considered to be a more balanced market. At the current sales pace, she said Southern Nevada has less than a three-month supply of homes available for sale.

About the GLVAR: GLVAR was founded in 1947 and provides its more than 14,000 local members with education, training and political representation. The local representative of the National Association of REALTORS®, GLVAR is the largest professional organization in Southern Nevada.

DISCLAIMER: The information contained in this Blog is for general information purposes only. While we endeavor to keep the information up to date and correct, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy or reliability of the Blog posts or any other information contained in this website.


Posted on October 14, 2019 at 6:38 pm
DAWIT WOLDE | Posted in Blog |

What Is the Probability That Home Values Sink?

What Is the Probability That Home Values Sink?| MyKCM

 

With the current uncertainty about the economy triggered by a potential trade war, some people are waiting to purchase their first home or move-up to their dream house because they think or hope home prices will drop over the next few years. However, the experts disagree with this perspective.

Here is a table showing the predicted levels of appreciation from six major housing sources:What Is the Probability That Home Values Sink?| MyKCMAs we can see, every source believes home prices will continue to appreciate (albeit at lower levels than we have seen over the last several years). But, not one source is calling for residential real estate values to depreciate.

Additionally, ARCH Mortgage Insurance Company in their current Housing and Mortgage Market Review revealed their latest ARCH Risk Index, which estimates the probability of home prices being lower in two years. There was not one state that even had a moderate probability of home prices lowering. In fact, 34 of the 50 states had a minimal probability.What Is the Probability That Home Values Sink?| MyKCM

Bottom Line

Those waiting for prices to fall before purchasing a home should realize that the probability of that happening anytime soon is very low. With mortgage rates already at near historic lows, now may be the time to act.

DISCLAIMER: The information contained in this Blog is for general information purposes only. While we endeavor to keep the information up to date and correct, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy or reliability of the Blog posts or any other information contained in this website.


Posted on September 22, 2019 at 11:46 pm
DAWIT WOLDE | Posted in Blog |

Las Vegas’ Real Estate Roller-Coast Ride Slows in August

 

 

According to the Greater Las Vegas Association of Realtors, the Las Vegas’ real estate roller-coaster ride slowed down in August 2019.

GLVAR reported that the median price for existing single-family homes sold in Southern Nevada through its Multiple Listing Service (MLS) during August was $305,000. That’s up 3.4% from $295,000 in August of 2018.

Meanwhile, the median price of local condos and townhomes sold in August was $177,000. That was up 4.1% from $169,950 in August of 2018.

 

 

“If you look at a graph of our local home prices over the past 15 years or so, it looks like a roller coaster, soaring through the mid-2000s and then falling during the Great Recession before ramping back up from 2012 until now. If you look at it that way, I guess you can say we’re coasting along right now,” said 2019 GLVAR President Janet Carpenter. “Local home prices are still appreciating compared to last year at this time, but at a rate more in line with historic averages.”

Just as prices have been rising more gradually this year, Carpenter said fewer homes have been selling this year compared to the previous few years.

 

 

The total number of existing local homes, condos and townhomes sold during August was 3,935. Compared to one year ago, August sales were up 3.1% for homes, but down 5.1% for condos and townhomes.

By the end of August, GLVAR reported 7,766 single-family homes listed for sale without any sort of offer. That’s up 33.5% from one year ago. For condos and townhomes, the 1,860 properties listed without offers in August represented a 57.1% increase from one year ago. This is a significant increase in inventory, although the year-over-year increase is down substantially from earlier this year.

While the local housing supply is up from one year ago, Carpenter said it’s still below what would normally be considered a balanced market. At the current sales pace, she said Southern Nevada has about a 2.5-month supply of homes available for sale that makes our months of inventory still low.

About the GLVAR: GLVAR was founded in 1947 and provides its more than 14,000 local members with education, training and political representation. The local representative of the National Association of REALTORS®, GLVAR is the largest professional organization in Southern Nevada.

DISCLAIMER: The information contained in this Blog is for general information purposes only. While we endeavor to keep the information up to date and correct, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy or reliability of the Blog posts or any other information contained in this website.


Posted on September 18, 2019 at 6:17 am
DAWIT WOLDE | Posted in Blog |

Everybody Calm Down! This Is NOT 2008

 

Everybody Calm Down! This Is NOT 2008 | MyKCM

Last week realtor.com released the results of a survey that produced three major revelations:

  1. 53% of home purchasers (first-time and repeat buyers) currently in the market believe a recession will occur this year or next.
  2. 57% believe the next recession will be as bad or worse than 2008.
  3. 55% said they would cancel plans to move if a recession occurred.

Since we are currently experiencing the longest-ever economic expansion in American history, there is reason to believe a recession could occur in the not-too-distant future. And, it does make sense that buyers and sellers remember the horrors of 2008 when they hear the word “recession.”

Ali Wolf, Director of Economic Research at the real estate consulting firm Meyers Research, addressed this point in a recent interview:

“With people having PTSD from the last time, they’re still afraid of buying at the wrong time.”

Most experts, however, believe if there is a recession, it will not resemble 2008. This housing market is in no way the same as it was just over a decade ago.

Zillow Economist, Jeff Tucker, explained the difference in a recent article, Recessions Typically Have Limited Effect on the Housing Market:

 “As we look ahead to the next recession, it’s important to recognize how unusual the conditions were that caused the last one, and what’s different about the housing market today. Rather than abundant homes, we have a shortage of new home supply. Rather than risky borrowers taking on adjustable-rate mortgages, we have buyers with sterling credit scores taking out predictable 30-year fixed-rate mortgages. The housing market is simply much less risky than it was 15 years ago.”

George Ratiu, Senior Economist at realtor.com, also weighed in on the subject:

“This is going to be a much shorter recession than the last one, I don’t think the next recession will be a repeat of 2008…The housing market is in a better position.”

In the past 23 years, there have been two national recessions – the dot-com crash in 2001 and the Great Recession in 2008. It is true that home values fell 19.7% during the 2008 recession, which was caused by a mortgage meltdown that heavily impacted the housing market. However, while stock prices fell almost 25% in 2001, home values appreciated 6.6%. The triggers of the next recession will more closely mirror those from 2001 – not those from 2008.

Bottom Line

No one can accurately predict when the next recession will occur, but expecting one could possibly take place in the next 18-24 months is understandable. It is, however, important to realize that the impact of a recession on the housing market will in no way resemble 2008.

DISCLAIMER: The information contained in this Blog is for general information purposes only. While we endeavor to keep the information up to date and correct, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy or reliability of the Blog posts or any other information contained in this website.


Posted on September 5, 2019 at 5:17 pm
DAWIT WOLDE | Posted in Blog |

Local Home Prices Still Higher Than One Year Ago, But Not by Much

 

 

LAS VEGAS – Local home prices continue to be higher than they were a year ago, but not by much. So says a report released Wednesday by the Greater Las Vegas Association of REALTORS® (GLVAR).

GLVAR reported that the median price for existing single-family homes sold in Southern Nevada through its Multiple Listing Service (MLS) during July 2019 was $303,000. That’s up 4.5% from $290,000 in July of 2018.

Meanwhile, the median price of local condos and townhomes sold in July was $175,000. That was up 5.4% from $166,000 in July of 2018.  “Local home prices are appreciating, but at a more gradual rate than they have been in many years. As we’ve been saying for months, the local housing market hasn’t been this stable in nearly 20 years.” said 2019 GLVAR President Janet Carpenter, a longtime local REALTOR®.

 

 

Before slowing down this year, local home prices had generally been soaring since early 2012, climbing back toward their all-time peak. According to GLVAR, the median price of existing single-family homes sold in Southern Nevada peaked at $315,000 in June of 2006 before falling during the Great Recession. Local home prices hit a post-recession bottom of $118,000 in January of 2012.

Just as prices have been appreciating more gradually, Carpenter said fewer homes have been selling this year compared to the previous few years. GLVAR reported a total of 42,876 local property sales in 2018, down from 45,388 in all of 2017. And 2019 continues to trail last year’s sales pace.

The total number of existing local homes, condos and townhomes sold during July was 3,883. Compared to one year ago, July sales were down 0.8% for homes and down 5.9% for condos and townhomes.

 

 

By the end of July, GLVAR reported 7,808 single-family homes listed for sale without any sort of offer. That’s up 63.1% from one year ago. For condos and townhomes, the 1,864 properties listed without offers in July represented a 112.3% jump from one year ago.

While the local housing supply is up from one year ago, Carpenter said it’s still below what would normally be considered a balanced market. At the current sales pace, she said Southern Nevada still has less than a three-month supply of homes available for sale.

About the GLVAR: GLVAR was founded in 1947 and provides its more than 14,000 local members with education, training and political representation. The local representative of the National Association of REALTORS®, GLVAR is the largest professional organization in Southern Nevada.

DISCLAIMER: The information contained in this Blog is for general information purposes only. While we endeavor to keep the information up to date and correct, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy or reliability of the Blog posts or any other information contained in this website.

 


Posted on August 13, 2019 at 7:19 am
DAWIT WOLDE | Posted in Blog |

Local Home Prices Increase Slightly After Three-Month Holding Pattern

 

 

LAS VEGAS – Local home prices broke out of a three-month holding pattern to post a slight increase during June, according to a report released Tuesday by the Greater Las Vegas Association of REALTORS® (GLVAR).

GLVAR reported that the median price for existing single-family homes sold in Southern Nevada  through its Multiple Listing Service (MLS) during June was $304,000. That’s up 4.8% from $290,000 in June of 2018. Meanwhile, the median price of local condos and townhomes sold in June was $177,900. That was up 6.5% from June of 2018.

 

 

“It’s normal for home prices and sales to increase this time of year, though prices only went up slightly and we actually sold fewer homes this June than last June,” said 2019 GLVAR President Janet Carpenter, a longtime local REALTOR®. “Overall, I think the takeaway from this month’s GLVAR report is that the local housing market is surprisingly stable. In fact, this is probably as stable as the local housing market has been in nearly two decades.”

Just as prices have been appreciating more slowly, Carpenter said fewer homes have been selling this year compared to the previous few years. GLVAR reported a total of 42,876 local property sales in 2018, down from 45,388 in all of 2017. And she said 2019 is running behind last year’s sales pace.

The total number of existing local homes, condos and townhomes sold during June was 3,626. Compared to one year ago, June sales were down 11.1% for homes and down 12.0% for condos and townhomes.

 

 

At the current sales pace, Carpenter said Southern Nevada still has less than a three-month supply of homes available for sale. While the local housing supply is up from one year ago, she said it’s still below what would normally be considered a balanced market.

By the end of June, GLVAR reported 7,815 single-family homes listed for sale without any sort of offer. That’s up 80.3% from one year ago. For condos and townhomes, the 1,937 properties listed without offers in June represented a 135.6% jump from one year ago.

 

About the GLVAR: GLVAR was founded in 1947 and provides its more than 14,000 local members with education, training and political representation. The local representative of the National Association of REALTORS®, GLVAR is the largest professional organization in Southern Nevada.

DISCLAIMER: The information contained in this Blog is for general information purposes only. While we endeavor to keep the information up to date and correct, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy or reliability of the Blog posts or any other information contained in this website.

 


Posted on July 16, 2019 at 7:39 pm
DAWIT WOLDE | Posted in Blog |

Debt to Income Ratio: More Important Than Your Credit Score?

The debt-to-income ratio is one of the most important factors mortgage lenders use to evaluate the creditworthiness of borrowers. It measures the size of your monthly debt burden relative to the size of your monthly pay. And in addition to your credit score and other financial information, it helps lenders decide whether you’re capable of taking on another loan. It is the way a bank or lender determines what you can afford in the way of a mortgage payment.

By dividing all of your monthly liabilities (including the proposed housing payment) by your gross monthly income, they come up with a percentage. This key figure is known as your DTI, and must fall under a certain number in order to qualify for a mortgage.

Typical monthly costs included in the debt-to-income ratio:

  • credit card payments
  • student loans
  • auto loan/leases
  • personal loans
  • alimony
  • child support
  • housing costs on subject property including homeowner’s insurance, mortgage insurance, property tax, HOA dues

The maximum debt-to-income ratio will vary by mortgage lender, loan program, and investor, but the number generally ranges between 40-50%.

Let’s look at a basic example of the debt-to-income ratio:

  • Annual gross income (as reported on your tax returns/W-2 form): $120,000
  • Monthly gross income: $10,000
  • Monthly liabilities: $3,500

In this example, your debt-to-income ratio would be 35% ($3,500/$10,000). Pretty simple, right?

Well, before you think you’re done calculating your DTI, you should know that the debt-to-income ratio goes into greater detail and comes up with two separate percentages.

Front-End and Back-End Debt-to-Income Ratios

  • There are actually two DTI ratios
  • One for all of your monthly liabilities divided by your gross monthly income (back-end DTI ratio),
  • And one for just your proposed monthly housing expense (including taxes and insurance) divided by income (front-end DTI ratio).

In the example above, if your proposed monthly housing payment makes up $2,000 of your $3,500 in monthly liabilities, your front-end DTI ratio would be 20% ($2,000/$10,000), and your back-end DTI ratio would be 35% ($3,500/$10,000).

Some banks and lenders require both numbers to fall under a certain percentage, though the back-end DTI ratio is more important since it considers all your monthly debts, and is thus more representative of the risk you present to the lender.

You may see a debt-to-income requirement of say 30/45. Using our same example, your front-end DTI ratio of 20% for the housing expense only would be 10% below the 30% limit, and your back-end DTI ratio of 35% would also have 10% clearance, allowing you to qualify for the loan program, at least as far as income is concerned.

Max DTI for Conventional Loans

  • Historic max is 28/36
  • Fannie and Freddie allow up to 43% DTI
  • But may go as high as 45-50% with compensating factors

The classic, “rule of thumb” ratios are 28/36, meaning your front-end ratio shouldn’t exceed 28%, and your back-end ratio shouldn’t exceed 36%.

Max DTI Ratio for FHA Loans

  • General guideline is max ratios of 31/43
  • Though it can potentially be much higher
  • Based on the findings from an automated underwrite
  • Potentially as high as 55% (or even higher case-by-case)

The max DTI for FHA loans depends on both the lender and if it’s automatically or manually underwritten.

These limits can be even higher if the borrower has compensating factors, such as a large down payment, accumulated savings, solid credit history, potential for increased earnings, a minimal housing expense increase (no payment shock), and so on.

What Is a Good Debt-to-Income Ratio?

  • The lower the better

Unlike a credit score, where higher is better, a good debt-to-income ratio for a mortgage is one that is low. Having a higher DTI means that your debt takes up most of your monthly income. This heightens the risk of defaulting on the loan since there is now less disposable income each month.

DISCLAIMER: The information contained in this Blog is for general information purposes only. While we endeavor to keep the information up to date and correct, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy or reliability of the Blog posts or any other information contained in this website.


Posted on June 17, 2019 at 10:40 pm
DAWIT WOLDE | Posted in Blog |

Local Home Prices Stuck At $300,000, With More Homes on The Market

 

 

LAS VEGAS – For the third straight month, the Greater Las Vegas Association of REALTORS® (GLVAR) reported that local home prices are hovering at $300,000 while the number of homes on the market continues to increase.

In its monthly housing statistics released last week, GLVAR reported that the median price for existing single-family homes sold in Southern Nevada through its Multiple Listing Service (MLS) during May was an even $300,000 – the same price GLVAR reported for both March and April. That’s up 1.7% from $295,000 in May of 2018.

Meanwhile, the median price of local condos and townhomes sold in May was $179,500. That was up 12.2% from May of 2018.

 

 

The total number of existing local homes, condos and townhomes sold during May was 4,045. Compared to one year ago, May sales were up 4.5% for homes and up 1.9% for condos and townhomes.

At the current sales pace, Carpenter said Southern Nevada still has less than a three-month supply of homes available for sale. The housing supply is up from one year ago, but still below what would normally be considered a balanced market.

 

 

By the end of May, GLVAR reported 7,855 single-family homes listed for sale without any sort of offer. That’s up 90.7% from one year ago. For condos and townhomes, the 1,876 properties listed without offers in May represented a 134.8% jump from one year ago.

About the GLVAR: GLVAR was founded in 1947 and provides its more than 14,000 local members with education, training and political representation. The local representative of the National Association of REALTORS®, GLVAR is the largest professional organization in Southern Nevada.

DISCLAIMER: The information contained in this Blog is for general information purposes only. While we endeavor to keep the information up to date and correct, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy or reliability of the Blog posts or any other information contained in this website.


Posted on June 12, 2019 at 6:05 pm
DAWIT WOLDE | Posted in Blog |

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