Archives for July 2016

Are You Sitting on the Bench?

Are you ready to buy?

There are many people sitting on the sidelines trying to decide if they should purchase a home or sign a rental lease. Some might wonder if it makes sense to purchase a house before they are married and have a family. Others may think they are too young. And still others might think their current income would never enable them to qualify for a mortgage.

We want to share what the typical first-time homebuyer actually looks like based on the National Association of REALTORS most recent Profile of Home Buyers & Sellers. Here are some interesting revelations on the first time buyer:Homebuyer stats

Bottom Line

You may not be much different than many people who have already purchased their first home. Let’s get together to see if your dream of homeownership can become a reality!

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When Is It A Good Time To Rent? Definitely NOT NOW!

Young couple sitting in new house with packing boxes.

People often ask whether or not now is a good time to buy a home. No one ever asks when a good time to rent is. However, we want to make certain that everyone understands that today is NOT a good time to rent.

The Census Bureau recently released their first quarter median rent numbers. Here is a graph showing rent increases from 1988 until today:

medium rents

A recent Wall Street Journal article reports that rents rose “faster last year than at any time since 2007, a boon for landlords but one that has stoked concerns about housing affordability for renters.”

The article also cited results from a recent Reis Inc. report which revealed that average effective rents rose 4.6% in 2015, the biggest gain since before the recession. Over the past 15 years, rents have risen at a rate of 2.7% annually. 

Where are rents headed?

Jonathan Smoke, Chief Economist at realtor.com recently warned that:

“Low rental vacancies and a lack of new rental construction are pushing up rents, and we expect that they’ll outpace home price appreciation in the year ahead.”  

Bottom Line

NAR’s Chief Economist, Lawrence Yun had this to say in the latest Existing Home Sales Report:

 “With rents steadily rising and average fixed rates well below 4 percent, qualified first-time buyers should be more active participants than what they are right now.”

One way to protect yourself from rising rents is to lock in your housing expense by buying a home. If you are ready and willing to buy, let’s meet up to determine if you are able to today!

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Housing Help Build Family Wealth?

Wealth from home-

As the economy continues to improve, more and more Americans are seeing their personal financial situations also improving. Instead of just getting by, many are now beginning to save and find other ways to build their net worth. One way to dramatically increase their family wealth is through the acquisition of real estate.

For example, let’s assume a young couple purchased and closed on a $250,000 home in January. What will that home be worth five years down the road? 

Pulsenomics surveys a nationwide panel of over one hundred economists, real estate experts and investment & market strategists every quarter. They ask them to project how residential prices will appreciate over the next five years. According to their latest survey, here is how much value that $250,000 house will gain in the coming years.

homes values

Over a five-year period, that homeowner can build their home equity to over $40,000. And, in many cases, home equity is large portion of a family’s overall net worth.

Bottom Line

If you are looking to better your family’s long-term financial situation, buying your dream home might be a great option.

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Where Are Home Values Headed Over the Next 5 Years?

Where are home values moving towards by karen jones

Today, many real estate conversations center on housing prices and where they may be headed. That is why we like the Home Price Expectation Survey.

Every quarter, Pulsenomics surveys a nationwide panel of over one hundred economists, real estate experts and investment & market strategists about where they believe prices are headed over the next five years. They then average the projections of all 100+ experts into a single number.

The results of their latest survey:

Home values will appreciate by 4.0% over the course of 2016, 3.4% in 2017 and 3.0% in the next two years, and finally 2.8% in 2020 (as shown below). That means the average annual appreciation will be 3.2% over the next 5 years.

Project home values by karen jones

The prediction for cumulative appreciation slowed slightly from 25.0% to 24.7% by 2020. The experts making up the most bearish quartile of the survey are still projecting a cumulative appreciation of 9.9%.

culmative home values

Bottom Line

Individual opinions make headlines. We believe the survey is a fairer depiction of future values.

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Why Do Credit Scores Vary Amongst Credit Bureaus?

Grow Credit Score Pic

One of the main criticisms of credit scoring is the extreme variation between credit scores. Studies have shown scores to vary as much as 100 points between credit bureaus.

 There are several reasons for this:

  1.  The first reason is not all creditors report their information to all three credit bureaus, and if they do, they may not report the same information at the same time to each agency. For instance, let’s say you have a credit card that you have had for the past 10 years and never missed one payment (a positive account). If the credit card company only reports the account to Equifax and Experian, your TransUnion credit score could be disparately low.
  2. The second reason is each credit bureau or reseller uses its own customized version of the FICO credit scoring model. Because each credit reporting agency uses a FICO model developed specifically for that agency and its data, the credit scores it generates will differ.
  3.  The third reason is each credit bureau has its own way of assigning reported information to a given person. This is necessary because lenders are not always able to provide full social security numbers or complete account details. Also, people may have accounts under different names because of marriage or variations in their name or different addresses. The proper information does not always completely follow the individual.

Yet another great reason to check your credit report each year.  If you have a positive account that is not reporting on all 3 agencies, then you can contact them and request that they add.

 Courtesy of:

Sal Bonanno
Prime National, Inc.
Main: 855.278.3578
Direct: 646.283.2783
Fax: 877.232.3069
www.PrimeNational.com

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The Presidential Election and Its Impact on Housing

Karen Jones HOme Loan Specialist

Every four years people question what effect the Presidential election might have on the national housing market. Let’s take a look at what is currently taking place. The New York Times ran
an article earlier this week where they explained:

“A growing body of research shows that during presidential election years — particularly ones like this when there is such uncertainty about the nation’s future — industry becomes almost paralyzed. A look at the last several dozen election cycles shows that during the final year of a presidential term, big corporate investments are routinely postponed, and big deals are put on the back burner.

The research is even more persuasive on the final year of an eight-year presidential term, when a new candidate inevitably will become president.”

We are seeing this take form in the latest economic numbers. However, will this lead to a slowdown in the housing market? Not according to Fannie Mae,Freddie Mac or the National Association of Realtors.

The Impact on Housing Throughout 2016

Let’s look at what has happened and what is projected to happen by these three major entities.

National Association of Realtors

“In spite of deficient supply levels, stock market volatility and the paltry economic growth seen so far this year, the housing market did show resilience and had its best first quarter of existing-sales since 2007.”

Freddie Mac

“Recent data darkened the growth outlook for the first quarter of 2016. However, despite the disappointing economic reports, we still forecast housing to maintain its momentum in 2016.”

Fannie Mae

“Consumers and businesses showed caution at the end of the first quarter…(but) Home sales are expected to pick up heading into the spring season amid the backdrop of declining mortgage rates, rising pending home sales and purchase mortgage applications, and continued easing of lending standards on residential mortgage loans.”

Bottom Line

Even during this election year, the desire to achieve the American Dream is greater than the fear of uncertainty of the next presidency.

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