March 23, 2020

Real Estate Market News

With all of the volatility in the stock market and uncertainty about the Coronavirus (COVID-19), some are concerned we may be headed for another housing crash like the one we experienced from 2006-2008. The feeling is understandable. 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.”

There are many reasons, however, indicating this real estate market is nothing like 2008. Here are five visuals to show the dramatic differences.

1. Mortgage standards are nothing like they were back then.

During the housing bubble, it was difficult NOT to get a mortgage. Today, it is tough to qualify. The Mortgage Bankers’ Association releases a Mortgage Credit Availability Index which is “a summary measure which indicates the availability of mortgage credit at a point in time.” The higher the index, the easier it is to get a mortgage. As shown below, during the housing bubble, the index skyrocketed. Currently, the index shows how getting a mortgage is even more difficult than it was before the bubble.

2. Prices are not soaring out of control.

Below is a graph showing annual house appreciation over the past six years, compared to the six years leading up to the height of the housing bubble. Though price appreciation has been quite strong recently, it is nowhere near the rise in prices that preceded the crash.

There’s a stark difference between these two periods of time. Normal appreciation is 3.6%, so while current appreciation is higher than the historic norm, it’s certainly not accelerating beyond control as it did in the early 2000s.

3. We don’t have a surplus of homes on the market. We have a shortage.

The months’ supply of inventory needed to sustain a normal real estate market is approximately six months. Anything more than that is an overabundance and will causes prices to depreciate. Anything less than that is a shortage and will lead to continued appreciation. As the next graph shows, there were too many homes for sale in 2007, and that caused prices to tumble. Today, there’s a shortage of inventory which is causing an acceleration in home values.

4. Houses became too expensive to buy.

The affordability formula has three components: the price of the home, the wages earned by the purchaser, and the mortgage rate available at the time. Fourteen years ago, prices were high, wages were low, and mortgage rates were over 6%. Today, prices are still high. Wages, however, have increased and the mortgage rate is about 3.5%. That means the average family pays less of their monthly income toward their mortgage payment than they did back then. Here’s a graph showing that difference:

5. People are equity rich, not tapped out.

In the run-up to the housing bubble, homeowners were using their homes as a personal ATM machine. Many immediately withdrew their equity once it built up, and they learned their lesson in the process. Prices have risen nicely over the last few years, leading to over fifty percent of homes in the country having greater than 50% equity. But owners have not been tapping into it like the last time. Here is a table comparing the equity withdrawal over the last three years compared to 2005, 2006, and 2007. Homeowners have cashed out over $500 billion dollars less than before:

During the crash, home values began to fall, and sellers found themselves in a negative equity situation (where the amount of the mortgage they owned was greater than the value of their home). Some decided to walk away from their homes, and that led to a rash of distressed property listings (foreclosures and short sales), which sold at huge discounts, thus lowering the value of other homes in the area. That can’t happen today.

Bottom Line

If you’re concerned we’re making the same mistakes that led to the housing crash, the above graphs are to help alleviate your fears. The entire True Realty Team is here to assist you with answering any questions. We are telecommuting daily and conducting video conferences to still have that personal face-to-face conversation. Reach out at any time, (720) 305-0757. 

 

Posted in Market Updates
March 17, 2020

Virtual Home Buying And Selling

True Realty Of Colorado _ Virtual Tours _ Home Buying and Selling

True Realty is happy to offer distance shopping for your house hunting needs!

We offer virtual tours by seasoned Realtors and staff that walk through the beautiful homes in your price range, assisting you in helping with getting pre-approved, inspections, repairs, appraisal ... all the way to closing!!!

Purchase contracts with electronic signatures and communication through the entire process that are non-invasive and a offer a smooth experience. Call True Realty today to discuss your real estate transactions needs @ (720) 305-0757!

March 9, 2020

How much "Housing Wealth" Can You Build In A Decade"

The National Realtor Association (NAR) released a special study titled Single-Family Home Price Gains by Year Of Tenure. The study estimates median home price appreciation over the last 30 years based on the length of homeownership. Below are 3 graphs depicting the most important data revealed in the study.

How much have home prices increased?

One of the first measures of the financial benefits of homeownership is the net worth (in the form of equity) an owner can build over time. The study showed the average increase in home values based on how long homeowners stayed in a home.

What was the percentage of appreciation?

Another way to look at this by the percentage increase in value over time, called appreciation:

Was this appreciation consistent throughout the country?

Today, when we think of markets that have done well over the last decade, we have a tendency to think about San Francisco, San Diego, Seattle, and other West Coast cities. Through it is true the West Region showed the highest price growth over the last three decades, we can see how every region of the country did quite well in ten-year increments:

This data validates the claim that homeownership is great for building wealth. The importance of this information was highlighted in the study's first sentence:

"Homeownership is an important source of wealth creation,enabling current homeowners and succeeding generations to move up the economic ladder."

Bottom line - homeownership has many financial and non-financial benefits. The accumulation of "housing wealth" through increase equity is a major one. If you're thinking of buying a home for the first time or moving up in your dream home, the sooner you make the move, the sooner your net worth will begin to grow. Give True Realty a call today for a free / no hassle consultation @ (720)305-0757 to assist you in the best options for your current situation.

 

 

March 3, 2020

Your Tax Refund Can Help Buy A Home

If you are considering buying a home this year, have you thought about putting your tax refund toward a down payment?

Based on date released by the IRS, Colorado residents can expect an estimated average refund of $2,755 when filing their taxes this year.

According to programs from the Federal Housing Authority, Freddie Mac, and Fannie Mae, many first-time buyers can purchase a home with as little as 3% down. Truth be told, a 20% down payment is now always required to buy a home, even though that's a common misconception about homebuying. Veterans Affairs Loans allow many veterans to purchase a home with 0% down.

How can your tax refund help?

If you're a first-time buyer, your tax refund may cover more of a down payment than you ever thought possible. Saving for a down payment can seem like a daunting task, but the more you know about what's required, the more prepared you'll be to make the best decision possible in the home buying process. We offer a free consultation and can answer any questions that you have about down payments, financing, anything you would like to know about buying a home ... no matter if this is your first home or if you are a seasoned buyer. Just give us a call @ (720) 305-0757.

 

 

Feb. 26, 2020

Home Interest Rates Over Time

 

With interest rates hovering at near historic lows, not is a great time to look back at where they've been and how much the rates have changed over time.

 

According to Freddie Mac, mortgage interest rates are currently hovering near a five-decade low. Now is a great time to buy a house!

 

The impact on your interest rate has on your monthly mortgage payment is significant. An increase of just $20 in your monthly payment can add up to $240 / year or $7,200 over the life of your loan

Now is a great time to purchase a home while the rates are still low. Give True Realty a call today @ (720) 305-0757 for a free consultation and let's get started on your journey of finding that perfect home!

 

 

Feb. 20, 2020

How Trusted Professionals Make Homebuying Easier To Understand

Spring is a time when many excited buyers enter the housing market. Others continue dreaming about the home they'd like to buy. The truth is, many potential buyers continue to dream longer than they need to. Working with a trusted real estate professional can help ease concerns and make the process of home-ownership attainable and easy to understand. 

A recent survey conducted by Ipson and Freddie Mac reveals the confidence level of Gen Z and Millennial buyers regarding the home-burying process. The graph below shows the breakdown of top results, clearly indicating there's a significant portion of younger buyers who are not yet confident with some of the steps in the home-buying process.

Between the home-buying process and mortgage process, there are 230 possible steps in a transaction. With trusted professionals on your side, you certainly don't have to know the 230 steps to have a successful experience.

There are many reasons why these steps can change as you move through each one. Depending on your personal circumstances, the terms or your mortgage, and the type of loan you use, the pat you take may need to vary. That's why guidance and support from the experts is key.

In addition to the process itself, respondents in the survey definitely expressed concerns about understanding the types of loans available. Here are just a few of the basic loans to consider. Be sure to speak with your lender about the specifics of what will work best for you. 

FHA LOANS guaranteed by the Federal Housing Administration for first-time buyers. They generally enable qualified borrowers to enter the housing market with a lower down payment. 

CONVENTIONAL LOANS usually require a larger down payment. Repeat buyers usually use these types of loans since they have an established credit history as well as more money from the sale of the previous home (called equity) for a bigger down payment.

VA LOANS available for Veterans of the U.S. Armed Forces and their spouses. They are guaranteed by the Department of Veteran Affairs

USDA LOANS are for those living in a rural and suburban area. A qualified lender can issue a USDA home loan, and they are guaranteed by the United States Department of Agriculture (USDA)

Interests rates also popped up as a common area of confusion among Gen Z and Millennial respondents in the survey. With today's rates hovering at near historic lows, it's a fantastic time for buyers to get more house for their money int the current market. Why? When mortgage rates are this low and wages are increasing as they are today, overall affordability increases, enabling home buyers to stretch their mortgage dollars further. It's just another area where a trusted professional can help simplify the process and give guidance along the way.

Bottom Line

There are many possible steps in a real estate transaction, but they don't have to be confusing and overwhelming. To understand your best course of action, let's get together today to ensure you have a trusted adviser who will help you feel confident and informed at every turn. You can schedule your free / non-obligatory consult by calling (720) 305-0757.

 

 

Feb. 16, 2020

Pricing your home right is key

Pricing Strategy When It Is Time To Sell Your Home _ True Realty Of Colorado

 

Even though the Denver Metro Housing Market is experiencing a big buyer's demand in a low inventory market, it doesn't mean that this is a time for you to price your home sky high to sell. When it comes to pricing your home, setting it at or slightly below market value will increase the visibility of your listing and drive more buyers your way. This strategy actually increases the number of buyers who will see your home in their search process. Why? When potential buyers look at your listing and see a great price for a fantastic home, they're are going to want to take a closer look and more apt to make an offer. When this happens, you are more than likely setting up a scenario with multiple offers, potential bidding wars. This has been happening in our area and offers are being accepted that are higher than the original listing price. At the end of the day, even when inventory is tight pricing it right - or pricing to sell immediately - makes a BIG difference.

Here's the other thing --- homeowners who make the mistake of overpricing their homes will eventually have to lower the price after it has been sitting for an extended period of time. This leaves the potential buyer to wonder it the price adjustments were due to something being wrong with the home when in reality nothing was wrong ... other than the initial price was too high.

Now, let's answer, "when is a good time to sell my home?" Many think that spring is the best time to place their home on the market. What they don't realize is if every homeowner believes the same thing, then that's when they'll have the most competition. The housing supply has shrank and tends to this time of year, the choices are limited creating a prime opportunity for you as a seller. 

A Q4 2019 survey conducted by the National Association of Realtors indicated that 75% of people surveyed indicated that they believe now is a good time to sell their home. In the case of those with a yearly salary of $100K and higher, the results jumped even higher coming in at 82%. The survey also divided the results by generation as shown in the graph below:

good time to sell my homeAs you can see, many believe that now is  a great time to sell a home. The current inventory is half of what we need for a normal or neutral housing market. Essentially, where there is less than a 6-month supply of inventory, we're in a seller's market and will see greater appreciation. Between a 6-7 month supply is a neutral market, where prices will increase at the rate of inflation. More than a 7-month supply means that we are in a buyer's market and can expect depreciation in home values. 

is it a buyer's or seller's market

The takeaway: Inventory of homes for sale is sill well below the 6-month supply needed for a normal market. If you are going to sell, now may be a time to take advantage of the ready, willing and able buyers who are searching for your house to be their dream home. 

If you are thinking about selling your home now or later this year, let's get together so we can outline the price of what your home would sell for and maximize demand from the start. Give us a call for your free, non-obligatory consultation @ (720) 305-0757. 

 

 

Feb. 11, 2020

January '20, Record Month For Real Estate

 

2020 starts off super strong for the real estate market, especially for True Realty!

According to the Denver Metro Association of Realtors, the number of new listings surged 89.3% in January! 

The number of pending sales / homes under contract surged 43% from December and is up 24.2% from YOY. There is no end in sight, and the surge is expected to continue.

True Realty represented the following Home Buyers and Home sellers so far this year:

 

 

We have been experiencing bidding wars with our listings and the median price of a single-family home sold in the last month rose 2.45% from December and is up 8.24% YOY. 

If you are ready to take a look at the benefits of selling your home now while the market is solid, give us a call for a free, non-obligatory consultation. 

If you are buying your first home, investing, building your dream home, downsizing or simply moving in / out of the area, our team stands ready to assist, and offer the advice that we would give to our own family members. 

We know that you have options when choosing a realtor and True Realty will work diligently and with a superior level of professionalism so that you will be eager to share your experience with your family and friends. 

We look forward to hearing from you - (720) 305-0757. 

 

Feb. 5, 2020

Why Pre-Approval Is Step #1

 

Why is pre-approval in a mortgage important

When the number of home buyers in the housing market outnumber the number of homes for sale, it is called a "seller's market". The advantage is in the seller's favor as low inventory heats up the competition. This situation could create a scenario of multiple offers and a bidding war. Yes, this is happening. So what can you do and stand out from the competition to land the home of your dreams? It is key for you to be pre-approved. Why?

1. Pre-approval is a competitive advantage

Low inventory means that home buyers need every advantage they can get to make an impression, submit their offer and have it accepted. One of the best ways to get ahead of the competition of other buyers is to get pre-approved before you make the offer. This shows the seller that you are serious about buying the home and that you have your finances in check, the home you are looking at is within your budget and you won't be denied a mortgage. 

2. Pre-approval accelerates the home buying process

Yes, pre-approval can indeed speed up the the home buying process so that you can move quickly when you are ready to make the offer. In a competitive market like we have today, being ready to place your best foot forward when the time comes will help you across the finish line. Because most of your information is already in a lender's system, the pre-approval process accelerates the loan process once you make an offer. 

3. Pre-approval establishes confidence in your search

Once you have been pre-approved, you have a greater sense and confidence in what you can afford and how much you are able to borrow for your home mortgage. This will avoid the heartbreak of falling in love with a home that you cannot afford. 

What are the "4 C's" that help determine the amount you will be qualified to borrow:

4C's of the mortgage process

While there are many steps you will need to take in the home buying process, it is clear why pre-approval is always the best place to start and step #1. It is your chance to gain a competitive edge that you may need if you are serious about buying a home.

Let's get together today to talk about your options and make sure that you are on the fastest path to the home buying journey. Give True Realty a call today for a free / non-obligatory consult @ (720) 305-0757.

 

 

Jan. 31, 2020

Strong Economy?

The State Of The U.S. Economy

Two years ago, 67% of economists surveyed by Wall Street Journal for the Economic Forecasting Survey predicted that we would experience a recession no later than the end of 2020. The same study conducted 3 months ago revealed that more than one third of the economists still saw an economic slowdown right around the corner.

The news created some concern among consumers whereas 53% of home purchasers (first-time and repeat) currently believe that a recession will occur by the end of the year while 57% believed that the next recession will be as bad or worse than 2008. 

Wait!! Experts are changing their minds.

The Wall Street Journal revealed earlier this month (January 2020) that only 14.3% of those economists now believe we're in danger of a recession to occur this year. The article strongly stated, "The U.S. expansion, now in its 11th year, will continue through the 2020 presidential election with a healthy labor market backing it up."

Recession timetable

Since we are experiencing 11 years of economic expansion, the longest stretch ever in American History, there is reason to believe that a recession could occur in the-not-too distant future. And it makes sense that the buyers / sellers remember the travesty of 2008 when they hear the word "recession". Ali Wolf, Director of Economic Research said in a recent interview: "With people having PTSD from the last time, they're still afraid of buying at the wrong time." 

What is different about the housing market today than in 2008. First, we have a shortage of homes rather than an abundance. Secondly, rather than choosing risky, adjustable-rate mortgages, homebuyers are taking out 30-year fixed-rate and predictable mortgages. The housing market is simply in a much better position today then a decade ago.

Optimism regarding the Wall Street Journal's article was repeated by others as well. CNBC, quoting Goldman Sachs economists:

"Just months after almost everyone on Wall  Street worried that a recession was just around the corner, Goldman Sachs said a downturn is unlikely over the next several years. In fact, the firm's economists stopped just shot of saying that the U.S. Economy is recession-proof."

The Washington Post stated: "The U.S. economy is heading into 2020 at a pace of steady, sustained growth after a series of interest rate cuts and the apparent resolution of two trade-related threats mostly eliminated the risk of recession."

Robert A Dye, Chief Economist At Comerica Bank stated: "I expect that the U.S. economy will avoid a recession in 2020."

So there you have it and it is our hope that we've been able to provide some clarity on the "expert's" economic outlook.