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First-time Buyers Increase, Home Sales Climb Nationwide

by Joanne Hiller

First-time buyers represented 32 percent of the market in May, a 2 percent increase from April and a 5 percent increase from a year ago. First-time buyers haven't had this much of a presence in the housing market since September 2012. Unemployment is down among young adults, and many lenders are lowering their down payment requirements. These factors combined with more affordable mortgage insurance options are enticing many first-time buyers to leave their rentals and purchase homes. Economists with the National Association of Realtors (NAR) believe that the number of first-time buyers in the market will continue to rise. The percentage of these buyers will depend, however, on how fast mortgage rates and home prices climb.

Fewer Investors
While first-time buyers saw opportunity in the improving housing market, investors saw fewer deals. Individual investors purchased just 14 percent of all homes sold in May, a drop of 2 percent from a year ago. For the third month in a row, all-cash transactions accounted for 24 percent of all homes sold, down from 32 percent a year ago.

Demand Exceeding Supply
In May, housing inventory was up slightly because more homeowners put their houses on the market. Total housing inventory rose 3.2 percent to 2.29 million existing homes for sale. The housing supply is 1.8 percent greater than it was a year ago. At the current sales pace, this level of inventory represents a 5.1 month supply. Despite the modest increase in inventory, demand still far exceeds supply. On average, homes in May stayed on the market for 40 days. This is the third shortest time recorded since NAR began tracking this statistic in May 2011. The inventory shortage led to an increase in home prices. So not only was May the 39th month in a row to record year-over-year price gains, but every region in the country saw home prices increase.

Sales Climb Nationwide
In May, all regions of the country experienced sales increases. The Northeast posted the largest gains with existing-home sales jumping 11.3 percent, for a total increase of 11.3 percent from a year earlier. In the Midwest, sales climbed 4.1 percent month-over-month and an impressive 12.4 percent year-over-year. The South and West both saw an increase of 4.3 percent from April. When compared with May 2014, sales were 6.9 percent higher in the South and 9 percent higher in the West.

3 Methods Appraisers Use to Find Value

by Joanne Hiller

An appraisal is frequently viewed as an inconvenience and a "nuisance" cost, but if you are buying, selling, or refinancing your home, an appraisal will likely be required. Here are three methods appraisers use to find your home's value.

1. Sales Comparison
To develop this analysis, the appraiser will research sales of other houses (known in the industry as "comparables") that have recently sold in the neighborhood. From these sales, the appraiser will find the sale price for your home. When properly developed, this analysis will take into account differences (such as age, condition, location and design features) between your home and the comparables. The sales comparison approach is used in virtually every house appraisal and is usually the most reliable indicator of market value for a single-family residence.

2. Cost Approach
In this analysis, the appraiser estimates the market value of your house by estimating how much it would cost to build a replacement―in other words, how much it would cost to buy a lot and build a similar house. The appraiser's calculations will take into account any depreciation associated with your house. If your house is 20 years old, it will be worth less than a brand new house of similar size with similar features in the same neighborhood. The cost approach is best suited for newer houses that have modern features and design and less reliable when estimating market value of an older house that may have significant depreciation or functional inadequacies.

3. Income Approach
In this analysis, the appraiser develops an opinion of market value by estimating how much income your house would generate if rented out at a typical "market rent." This income is then converted into an estimate of value based on the ratio between value and income. The appropriate ratio is derived from local market transactions. The income approach is most useful when the house being appraised is in a neighborhood where houses are frequently rented and where houses are acquired by investors.

The sales comparison approach is almost always used to appraise single-family homes and is usually the most reliable method. You can expect your appraiser to rely on this technique, which may be supplemented by the cost or income approach.

At the end of February, 1.89 million existing homes were available for sale on the market, a 4.6-month supply at the current sales pace. Inventory was down 0.5 percent below last year. This shortage of housing stock helped to drive price growth to its fastest pace in a year. In February, the median existing-home price reached $202,600, a climb of 7.5 percent from last year. For the 36th month in a row, home prices have increased year-over-year. What's more, every region of the country saw an increase in home prices. Median prices in the Northeast and West were up 3.3 percent and 4.2 percent from last year's prices. In the South, prices climbed 8.5 percent above February 2014. The Midwest saw the biggest gains, with home prices 8.8 percent higher than a year ago.

 

Rising Home Prices Will Affect Renters
A lack of inventory can negatively affect home sales, as can higher home prices. Homeowners benefit from the growth in housing prices, since higher prices lead to more home equity. But the more prices climb, the more difficult it is for new buyers to find a home they can afford. Income growth has not kept pace with typical rent rates; over the past five years, rents climbed 15 percent, but the average income of renters rose only 11 percent. With rents continuing to climb in some areas of the country, the gap is expected to widen to unsustainable levels, which will make it more difficult for renters to transition to homeowners. Fortunately mortgage rates remain near 2015 lows. For the week ending April 16, the 30-year fixed-rate mortgage (FRM) averaged 3.66 percent. Last year, the 30-year FRM averaged 4.27 percent.

National Home Sales Increase
Nationally, existing-home sales increased 1.2 percent in February. Sales climbed 4.7 percent higher than a year ago, marking the fifth consecutive month sales have risen above year-over-year totals. The Northeast was the only region of the country to see existing-home sales drop month-to-month, by 6.5 percent; sales were still 3.6 percent higher than a year earlier. In the Midwest, sales were stagnant from January but 4.9 percent above last year's sales. The South and the West, meanwhile, reported only gains. From January to February, existing-home sales were up 1.9 percent in the South and 5.7 percent in the West. Compared with a year ago, sales in the South and the West climbed 6.0 percent and 2.8 percent, respectively.

Inventory Drops and Home Prices Continue to Increase

by Joanne Hiller

In December, the total housing inventory dropped 11.1 percent. There were 1.85 million existing homes on the market, which is a 4.4 month supply at the current sales pace; in November, there was a 5.1 month supply. With the strengthening economy and sub-4 percent interest rates, the demand for homes from buyers should be increasing, but a tight supply of homes available for sale could cool that demand.

Supply shortage causes home prices to increase. And according to the National Association of Realtors' economists, home prices and rents are outpacing wages, making it difficult for buyers to save for a down payment. The national median existing-home price reached $208,500 in 2014, the highest it’s been since 2007, and a 5.8 percent increase from 2013. What's more, every region of the country saw home prices increase. In the Northeast, prices rose by 3.2 percent from a year earlier, while the Midwest reported a climb of 5.3 percent. Prices in the South increased 6.6 percent from December 2013, while in the West, prices were up 5.6 percent.

Home Sale Numbers
December closed out the year with 5.04 million sales, a 3.5 percent increase from December 2013. December was also the third month in a row where sales climbed above year-over-year levels. However, sales for all of 2014 were still 3.1 percent below 2013. Existing-home sales were up in the West in December; sales climbed 9.8 percent month-over-month and 2.8 percent year-over-year. The South also saw gains in their real estate market, with sales climbing 3.8 percent from November to December and 7.4 percent from a year earlier. Existing-home sales fell in the Northeast by 2.9 percent, but the news wasn't all bad as sales are still 3.1 percent higher than a year ago. In the Midwest, sales declined both month-over-month and year-over-year, falling 3.5 percent and 2.7 percent, respectively.

First-time Buyers Decline
The number of first-time buyers making purchases last year fell to the lowest level in almost three decades, according to a NAR survey. For all of 2014, first-time buyers accounted for 29 percent of the market, tying their percentage for 2013. In December, first-time buyers represented 29 percent of all buyers, down from 31 percent in November but up from 27 percent in December 2013. Economists with NAR are optimistic that first-time buyers will be better represented in the market in the coming year. The Federal Housing Administration recently reduced annual mortgage insurance premiums, which will make buying a home more affordable for new homebuyers.

Positive Signs from the Housing Market

by Joanne Hiller

The national housing market is continuing to stabilize. According to Freddie Mac's Multi-Indicator Market Index (MiMi), half of the markets across the country are showing positive gains. While the national MiMi value of 74.4 indicates a weak housing market overall, the index posted a 0.51 percent improvement from August to September. Year-over-year, the index is up 3.68 percent. Since the market's all-time low of 59.8 in September 2011, the market has rebounded 24.4 percent.

More Construction
The National Association of Home Builders/Wells Fargo Housing Market Index is on the upswing as builder confidence climbed four points on the index to 58. Builders are more confident in today's market because consumers are more confident. Low interest rates, reasonable home prices, and an improving job market make home buying not only an attractive option but a viable one. As a result, builders are seeing more committed buyers walking through their sales centers and signing contracts. The news is welcome after the slow start to 2014. For the past five months, the HMI has stayed north of the 50-point mark. Economists with the NAHB expect builder confidence to continue to climb in the new year.

How Low Can They Go?
At the beginning of December, mortgage rates dropped to the lowest levels of the year. The 30-year fixed-rate mortgage fell to 3.89 percent, the lowest rate posted since May 2013. At the same time last year, mortgage rates were 4.46 percent. Economists have long maintained that mortgage rates will increase, and they predict that rates will climb to five percent by the end of 2015.

Good News for Most
For the second straight month, existing-home sales rose in October. According to the National Association of Realtors, existing-home sales climbed 1.5 percent to a seasonally adjusted annual rate of 5.26 million. For the first time in a year, sales are above year-over-year levels. Most areas of the country experienced gains in sales. In the Northeast, existing-home sales rose 2.9 percent month-over-month and 4.4 percent year-over-year. Sales climbed 5.1 percent in October in the Midwest, a 2.5 percent increase over October 2013 sales. The gains continued in the South, where sales jumped 2.8 percent from a month earlier and 5.3 percent from a year earlier. Only the West posted a drop in existing-home sales. Month-over-month, sales declined 5.0 percent; when compared with October 2013, sales are down 3.4 percent. NAR economists believe existing-home sales will continue to improve. Low interest rates, stabilizing price growth, and an improving housing supply should convince buyers that now is the right time to purchase a new home.

The Island Estates, Clearwater Beach, FL market will be heating up, as not only have sales risen this week to 12 homes sold over the last 30 days, but there is a new upward trend of new listings, with 22 going live in the same time frame. Be the FIRST TO KNOW about new listings for your dream home by clicking this link http://islandestatesrealty.idxbroker.com/idx/search/basic.

Clean Your Indoor Air by Cleaning Your HVAC System

by Joanne Hiller

When the temperature gets cooler, you shut the windows and turn the heat on in an effort to keep your house warm. But what you're also doing is sealing the air inside your house.

While a good tight seal is very important to staying warm and keeping your energy bill in check, it also can really have an impact on indoor air quality.

"When you flip that switch on your heater, there is a lot of dust and debris - collected in the coils over the summer months - that either burns into fumes or gushes into the house through your vents," says Aaron Marshbanks, board member of the National Air Duct Cleaners Association (NADCA).

In addition, your heating system blends warm temperatures with air that can be moist, and which can be a haven for mold and mildew. Throw a fan on top of that, and the air quality inside your home can quickly plummet.

Heating, ventilation and air conditioning (HVAC) systems have been shown to act as a collection source for a variety of contaminants that have the potential to affect health, such as mold, fungi, bacteria and very small particles of dust. According to the U.S. Environmental Protection Agency, indoor air can be two to five times more polluted than outdoor air. The removal of such contaminants from your HVAC system is crucial to improve indoor air quality. Plus, a clean system can save you money on your energy bill.

Further research from the EPA found that HVAC system cleaning may allow systems to run more efficiently by removing debris from sensitive mechanical components. Clean, efficient systems are less likely to break down, have a longer life span, and generally operate more effectively than dirty systems.

"Heating and cooling uses up about half of the energy in your home," says Marshbanks. "But having a clean HVAC system can save you up to 30 percent in energy costs. Which means you have better air inside the house, and are helping the environment with an extra bit of cash in your pocket at the same time."

The top issues that affect a home's HVAC system, its efficiency and air quality are:

1. Filtration - Low-efficiency filters, lack of a filter replacement program and improperly sized filters can allow particles and debris to flow into a home or building.

2. Duct work contamination - It is estimated that about 90 percent of HVAC systems more than 10 years old will have some level of insulation deterioration. Over time, the insulation fibers are distributed and blown into occupied spaces every time the blower turns on.

3. Dirty evaporator coil - Over time, evaporator coils become matted with dust and dirt. During cold months, the heated air can flow over the dirty coils and be distributed into your home's interior space.

The best way to determine if your HVAC system is clean is to perform a visual inspection. If any dust or debris can be seen, the system needs to be serviced. Some of the things that may lead a home owner to consider more frequent cleaning include:

* Smokers in the household.
* Pets that shed high amounts of hair and dander.
* Water contamination or damage to the home or HVAC system.
* Residents with allergies or asthma.
* Home renovations or remodeling.

The most effective way to clean air ducts and ventilation systems is to employ source removal methods of cleaning. This requires a contractor to place the system under negative pressure through the use of a specialized, powerful vacuum.

NADCA has published an internationally recognized standard that specifies requirements for proper cleaning. NADCA is a widely recognized nonprofit trade organization representing certified contractors worldwide that sets standards and provides certification and training for the industry. For more information about HVAC cleaning and to find a certified and knowledgeable contractor, visit www.NADCA.com.

A Homeowner's Net Worth is 36x Greater than a Renter!

by Joanne Hiller

Homeowner's Net Worth is 36x Greater Than a Renter | Keeping Current Matters

Over the last six years, homeownership has lost some of its allure as a financial investment. As homeowners suffered through the housing bust, more and more began to question whether owning a home was truly a good way to build wealth.

The Federal Reserve conducts a Survey of Consumer Finances, every three years, and just released their latest edition this past week.

Some of the findings revealed in their report:

  • The average American family has a net worth of $81,200
  • Of that net worth, 61.4% ($49,856) of it is in home equity
  • A homeowner’s net worth is over 36 times greater than that of a renter
  • The average homeowner has a net worth of $194,500 while the average net worth of a renter is $5,400

Bottom Line

The Fed study found that homeownership is still a great way for a family to build wealth in America.

5 Questions you Should Ask your Real Estate Agent

by Joanne Hiller

5 Questions You Should Ask Your Real Estate Agent | Keeping Current MattersWhether you are buying or selling a home, the process can be challenging. That is why we always suggest that you take on the services of a real estate professional when embarking on a potential home move. However, not all real estate agents are the same. A family must make sure they hire someone who truly understands the current housing market and, not only that, knows how to connect the dots to explain how market conditions may impact your decision.

How can you make sure you have an agent who meets these requirements?

Here are just a few questions every real estate professional should be able to answer for their clients and customers:

  • Are home values approaching a new bubble or will prices continue to appreciate?
  • Is it better for a first time buyer or a move-up buyer to wait until they save a bigger down payment before they purchase a home?
  • Where will 30-year mortgage rates likely be in 12 months?
  • Why do I need an agent when I can just as easily find the house online myself?
  • Is buying a home still a good investment for my family?

Make sure you hire an agent that can answer questions like those above. That will guarantee the home buying or selling process will be much easier for you and your family.

Thinking of Buying a Vacation/Retirement Home? Why Wait?

by Joanne Hiller

The sales of vacation homes skyrocketed last year. A recent study also revealed that 25% of those surveyed said they’d likely buy a second home, such as a vacation or beach house, to use during retirement. For many Baby Boomers, the idea of finally purchasing that vacation home (that they may eventually use in retirement) makes more and more sense as the economy improves and the housing market recovers.

If your family is thinking about purchasing that second home, now may be the perfect time. Prices are still great. If you decide to lease the property until you’re ready to occupy it full time, the rental market in most areas is very strong. And you can still get a great mortgage interest rate.

But current mortgage rates won't last forever.

According to FreddieMac, the interest rate for a 30 year fixed rate mortgage at the beginning of April was 4.4%. However, FreddieMac predicts that mortgage rates will steadily climb over the next six quarters.

Let’s assume you want to purchase a home for $500,000 with a 20% down payment ($100,000). That would leave you with a $400,000 mortgage. What happens if you wait to buy this dream house?

Prices are projected to increase over the next year and a half. However, for this example, let’s assume prices remain the same. Your mortgage payment will still increase as mortgage rates climb to more historically normal levels.

This table shows how a principal and interest payment is impacted by a rise in interest rates:

Cost of Waiting $400K

Displaying blog entries 1-10 of 18

Contact Information

Joanne Hiller
Coldwell Banker Residential Real Estate
110 Island Way
Clearwater FL 33767
(727)460-5721
Fax: (727)446-2691