Renters Outspend Owners on Housing
According to the October CoreLogic U.S. Housing and Mortgage Trends report, renters now spend 5% more of their monthly budgets on housing costs than homeowners, and as rents rise, the gap is expected to widen.

Rates are under 4% this week for 30 year fixed. Why would you rent?

A Window of Opportunity for House Sellers

by The KCM Crew on June 21, 2011 · 7 comments

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There has been much confusion as to where housing prices are headed. We have actually blogged on the issue recently. Today, we want to give our opinion on this subject for the short term. We believe sellers have a window of opportunity for the next 90-120 days in which to sell their homes for maximum price. We believe there will be increased downward pressure on home prices later this year and the first half of 2012.

Why renewed downward pressure?

Any item’s price is determined by ‘supply and demand’. In many parts of the country existing housing inventory is already high and actually increasing. In addition, an inventory of distressed properties (foreclosures and short sales) will be coming to market later this year. This inventory has been delayed for the last several months because of faulty paperwork by the banks when they originally attempted foreclosure proceedings on these homes.

Celia Chen, of Moody’s Analytics explains:

“Foreclosures are weighing on the outlook for U.S. house prices, and the slow resolution of issues surrounding the so-called robo-signing scandal is keeping distressed homes off the market”.

The New York Times also recently reported on this issue. They looked at the delays in certain states. As an example, this is what they found in New York:

“Last September, before the documentation crisis, nearly 1,500 New Yorkers lost their houses as a result of foreclosure, according to LPS. The average over the last six months: 286. That is far lower than at any point since the recession began.”

Banks are now correcting these errors.

There is evidence that the banks are getting their documentation in order and about to again increase their foreclosure repossessions. Housing Wire reported:

“Since major lenders delayed foreclosures to fix a broken process late last year, the amount of filings declined, but in May signs emerged the effect might be wearing off.”

They went on to quote RealtyTrac CEO James Saccacio:

“…lenders are somewhat unevenly pushing batches of bad loans through foreclosure as they overhaul their paperwork and documentation procedures and as they determine that some local markets are able to absorb more foreclosure inventory… Foreclosure processing delays continue to mask the true face of the foreclosure situation, although there were some clues in the May numbers of what lies behind that mask.”

What will this mean to home prices?

As this inventory comes to market, it will impact prices in two ways:

1. It will provide discounted competition for buyers
2. It will impact the appraisal values of all homes in the area

Again, we quote Celia Chen:

“It is quite possible that house prices will pick up slightly in the second or third quarter of this year, as foreclosure sales remain depressed while nondistress sales pick up…By the fourth quarter of this year, however, the distress share will rise, sending the house price index back down…

House prices will founder until early next year and start rising in earnest at the end of 2012.”

Bottom Line

There is a window of opportunity currently which sellers should take advantage of. Waiting until later this year or until next year will not guarantee a higher sales price. If anything, it probably guarantees the exact opposite.

GRAND JUNCTION, Colo. (KKCO)_ It’s no secret that the housing market has seen it’s share of troubled waters. But according to a new article on BusinessInsider.com, Grand Junction has the worst out–look across the country.

The article is called “13 Cites Where Investing is a Terrible Idea,” citing Zillow.com as its data source. But now even zillow says it’s not completely accurate.

Zillow says it compiled a list showing the best places to invest in 2011. Comparing price-to-income ratio, home values year–over–year and foreclosure re–sales. But according to the people at Zillow, BusinessInsider used this data out of context to create its article and didn’t take into account that only 100 cities were looked at and that the study focused primarily on investors who were looking at long term–rental income.

Local Realtors agree the market isn’t out of the woods yet, but say it’s definitely turning around.

“I think Grand Junction is an excellent place to invest in both for residential and investment properties. We are still in a slump I know we will see more foreclosures in 2011 more than 2010 but the market is picking up,” says Bray Realtor Betty Fulton.

Bray Realty also says last month was one of it’s best Decembers in several years with sales up around 5%. Low rates are expected to bottom out in 2012 actually making now a good time to invest.

by The KCM Crew on December 21, 2010 · 4 comments

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Selling
your house in today’s market can be extremely difficult. It is for that
reason that every seller should take advantage of each and every chance
that appears. There is a fantastic opportunity available right
now. Meet with your real estate agent and mortgage professional today
and see whether it is the right time for you and your family to make a
move.

Here are five reasons you should consider selling in the first 90 days of 2011.

1. Interest rates have spiked up.

Rates have jumped over 1/2 point in the last several weeks. The short
term result of increasing rates is a surge of buyers jumping off the
fence to purchase in fear that rates may continue climbing upward. This
is a short window of opportunity. If rates fall again, buyers will jump
back on the fence. If rates continue to rise, it limits the number of
buyers who can qualify at each price point. Now is the best time to sell
your house.

2. If you are moving up, you can save thousands.

If your family goal is to sell your
current house and take advantage of the fabulous selection of properties
currently available to buy the home of your dreams a at bargain
basement price, DO IT NOW! Prices will continue to soften in most
markets. However, if you are buying, COST should be more important than
PRICE. Cost can be dramatically impacted by rising mortgage interest rates. Do the math and decide if now is the time.

3. During the winter months, the buyers are serious.

We all realize that buyers are not quick to pull the trigger on the
purchase of a home today. There is no sense of urgency with the supply
of eligible properties at all time highs. However, at this time of year,
the ‘lookers’ are either staying warm (in the North) or just busy with
other priorities. The home buyers left in the market are serious and are
more apt to buy. Less showings – but to more motivated purchasers.

4. You beat the rush of inventory that is coming next year.

Every year there is an increase of inventory which comes to market
from January through April as homeowners put their houses up for sale in
preparation for the spring market. Here is the number of listings
available for sale in 2010.

• January – 3,277,000
• February – 3,531,000
• March – 3,626,000
• April – 4,029,000

We believe there is a pent-up selling demand (homeowners who have
held off selling over the last year) that will lead to an increase in
these numbers this spring. You won’t have to worry about this increasing
competition if you sell now.

5. You have less ‘discounted’ inventory with which to compete.

This year, sellers of non-distressed properties have been given an
early holiday present. With banks trying to rectify their foreclosure
procedures, there has been a large supply of discounted properties
removed from competition. No one knows how long it will take banks to
return to the normal flow of foreclosed properties to the market. However, until they do, every homeowner has a better chance of selling their property.

Bottom Line

If you are looking to sell in 2011, there may not be a more opportune
time than this right now. Serious buyers, great move-up deals and less
competition from super-motivated sellers and foreclosures creates the
perfect selling situation. Don’t miss it!

by The KCM Crew on December 10, 2010 · 4 comments

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There has been much volatility in the 30 year mortgage rate over the last few weeks. According to Freddie Mac, rates have soared almost a half of a percent in just the last four weeks and now are as high as they have been in the last six months.

Frank Nothaft, vice president and chief economist of Freddie Mac, explained:

After Europe made strides in its debt situation, investors left the security of U.S. Treasury debt causing bond yields to rise and mortgage rates along with them.  Interest rates for 30-year fixed mortgages are now almost a half percentage point higher than the record low set in mid-November.

No one knows exactly what will happen as we move forward. The only thing we know for sure is that rising rates have a tremendous impact on a buyer’s payment. There are home buyers standing on the sidelines waiting for the prices of real estate to bottom out. If you are one of these buyers, be careful. You should be as concerned about the monthly COST as much as you are concerned about the PRICE.

Below is a table showing the impact rising rates have on the monthly payment – even if prices continue to soften:

Bottom Line

You want the best value possible whenever you purchase anything. When buying real estate, the best value is not determined by price alone. Value is determined by price and financing costs. Take both into consideration when timing your purchase.

by The KCM Crew on January 4, 2011 · 9 comments

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If
you are thinking about purchasing a home right now, you are surely
getting a lot of advice. And most of that advice is probably negative.
Why buy now with prices still falling? Don’t you realize real estate is
no longer a good investment? Don’t you know that people who bought five
years ago lost their shirt? We understand the concern your friends and
family have. However, let’s look at whether or not now is actually the
perfect time to buy a home.

There are three questions you should ask before purchasing in today’s market:

1. Why should I buy if house prices are still depreciating?

We believe that in most parts of the country prices will in fact
soften in 2011. Price is the major concern for anyone selling a home.
When you are buying, COST should be your primary concern however. Your
monthly payment (cost) is definitely impacted by the price of the home
you purchase. The other major component is the interest rate. Waiting
for prices to bottom out while rates are increasing can wind up costing
you more over the life of the mortgage (see chart here).

Over
the last seven weeks, rates have increased over 1/2 a point going from
4.17 to 4.86. Looking at the attached chart shows this increase. Waiting
for prices to bottom out seems to make perfect sense. Yet, at a time
when rates are increasing, it might NOT make sense. Make sure you have a
mortgage professional help you with this math before making a decision.

In an article last week CNN Money reported:

“You can kiss those record lows goodbye,” said Greg McBride, chief economist for Bankrate.com.

Keith Gumbinger of HSH Associates, a provider of mortgage information said that the market reached a new plateau.

“I don’t think we’re going back to a 50-year low anytime soon
without an economic collapse,” he said. “Rates will probably never
revisit those levels.”

2. When will I begin to see appreciation if I buy now?

This is a great question. Macro Markets, LLC is a company that studies housing prices. They started their Home Price Expectation Survey
in 2010.  They ask 100+ housing industry experts to project housing
prices through 2015. The most current survey shows that the experts are
predicting prices to soften until 2012. The experts then project prices
to rise reaching a cumulative appreciation of over 10% by 2015.

Purchasing a home today makes great sense from a financial
standpoint. Think of the old axiom: You want to buy low and sell high.
We may be at the low point regarding the COST of a home. But, this
decision should not only be a financial one.

That leads us to our third and final question:

3. Why am I buying a home in the first place?

This truly is the most important question to answer. Forget the
finances for a minute. Why did you even begin to consider purchasing a
home? For most, the reason has nothing to do with finances. The Fannie Mae National Housing Survey shows that the four major reasons people buy a home have nothing to do with money:

• A good place to raise children and for them to get a good education
• A place where you and your family feel safe
• More space for you and your family
• Control of the space

What non-financial benefits will you and your family derive from
owning a home? The answer to that question should be the reason whether
you decide to purchase or not.

Bottom Line

The COST of a home will probably remain relatively unchanged even if
prices continue to depreciate. Don’t allow money to get in the way of
you making the right decision for you and your family. In the long run,
the finances will work in your favor anyway.

The great author and speaker Og Mandino once said, “I will act now. I will act now. I will act now.”

If you or anyone you know is looking to purchase or refinance a home, waiting could be costly! Act now…so you can save later!