Housing Market Trends: Or, Why I Stopped Renting and Bought a Home

Write the check, put it in the envelope, lick it, stamp it, and send your hard earned money away…month after month. This is the relentless cycle of renting: never ending; always draining. Sure there are some upsides to renting. There are fewer responsibilities, for instance. It’s good at a certain point in your life when you want to get up and leave and you aren’t sure where your life is headed. However, a recent poll shows that around 74% of Americans believe that home ownership is an integral part of achieving their dreams—and even among the younger crowd home ownership dreams are high. In fact, 42% of millennials say that they hope to buy a home in the next 1 to 5 years.

Given the excitement surrounding home buying, 2015 might just be the right year for you to achieve your home owning dream. Looking at the housing forecast as we move into the heightened spring buying season might help you put into perspective why purchasing a home right now makes a lot of sense. [Read more…]

What Does Inflation Mean for Your Interest Rate?

You know how that gallon of milk your spouse chugs out of the jug every morning costs more this year than it did last? That rise in the price of goods is called inflation. You’ve heard the term. You know it happens. You might think that it is a horrible thing. The truth is that inflation is a natural part of a healthy, growing economy, as long as it’s not out of control. But what does inflation mean for interest rates?

The relationship between inflation and interest rates can be tricky, but it’s important for you to understand to make sound investment decisions as well as to comprehend how the market works. Read on to see what inflation means for your interest rates. [Read more…]

Don’t be Schooled: How Home Prices are Affected by Public School Districts

Fall is in the air and with everyone back into a school-day routine, it’s worth assessing how public schools affect more than just your kids’ educational future. In fact, whether you have children or not, school districts should be on your radar when considering the housing market.

The school district in which a home is located has at least some bearing on that home’s value. Homes in top tier districts tend to be more expensive, while those in less competitive districts are cheaper. Following are a few ways home prices are affected by schools, and why it matters to you.

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Housing Stats for the Nerds

It’s actually been a little while since we’ve given you numbers nerds some real estate statistics. There are some blogs that post constantly about statistics pertaining to the real estate and mortgage industry. We understand why—there are a lot of them. Then, there are lots of spins on those statistics to create even more statistics! What fun!

That being said, a healthy dose of stats every once in a while is good to keep things in perspective. Since the spring quarter of 2014 was actually pretty great, we figured it was time to share some. Let’s have a look at how the housing market faired during the spring quarter (Q2) of 2014.

We’re going to be using this great Monthly Housing Summary chart put out by the National Association of Realtors. It shows the Median List Prices, Total Listings, and Median Age of Inventory for July 2014. It then compares month over month (July vs. June) and year over year (July 2014 vs. July 2013).

Link: Monthly Housing Summary

Median List Prices

The median list price for the US was $214,900, up 7.5 percent from last year and down 0.1 percent from June. What does this mean? It means that sellers perceive higher values for their homes as buyers are in a frenzy to snatch them up (a trend we’ve been seeing in the last year for sure).

Total Listings

The number of total listings on the market for the US was 1,979,475, which is down 2.3 percent from last year and up 4.5 percent from last month. What does this mean? It means that there are fewer homes being listed on the market. This only adds to buyer frenzy as buyers are fighting over fewer homes on the market. It’s not surprising there were more listed in July than June—month-by-month numbers fluctuate a lot.

Median Age of Inventory

This represents how long homes are actively listed on the market. The US numbers show average days on market of 82, down 3.5 percent from last year and up 7.9 percent over June. There’s not a huge difference in the numbers here, though it is nice to see this number not going up any since last year. Again, month-by-month numbers fluctuate a lot so I wouldn’t worry terribly about them.

So there you go, overall the market is still returning to a healthier state, competition for homes remains fierce, and pricing continues to increase. Overall not to shabby, Spring.

Ever Wondered What it Costs to Buy a House? Find Out in These 27 US Cities

There are lots of things to consider when you’re thinking about making your dreams of homeownership a reality. Of course, what tops that list is whether or not you can actually afford to do it.

But, HSH.com, which is touted as the nation’s largest publisher of mortgage and consumer loan information, has made that question a bit easier to answer—at least in the 27 cities that it calculated the base salary needed to make the mortgage payments on average homes in the area. [Read more…]

Mortgage Applications Down, Home Sales Up… What’s Going on Here?

There’s a bit of strangeness afoot in all of the news that’s making its way to our feeds. On one hand, we’re told increasing mortgage rates are pushing mortgage applications down, and on the other we’re told the housing market is improving. So what’s going on?

As with most things, we’re going to have to take a look at the bigger picture to get a good idea of where the current market really is. [Read more…]

2014 Housing Market Predictions

With each new year come new predictions and analyses about the economy. In today’s online world, they have become quite prevalent and varied as well. Yet even though they are but simple predictions, their value to our economy is evident. They change the behaviors of individuals and markets alike and are worth knowing–if only to see how they play out.

Housing, in particular, is full of much tracked data, data which is often forecasted four to six quarters into the future. Things like housing starts–the number of homes that have begun to be built in a certain timeframe, new home sales–the number of never-before-occupied homes that have sold, existing home sales–the number of re-sold homes, and mortgage rates are analyzed and based on past and potential future performance then shown to the world. Here’s a quick roundup of the most popular 2014 housing market predictions.

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New Mortgage Rules for 2014 and What They Mean For You

The news is buzzing with chatter about the new mortgage rules implemented by the Consumer Financial Protection Bureau (CFPB) this past month. Some are good, some bad, and nearly all are filled with jargon that is potentially confusing. The bottom line of these new rules is actually pretty simple – some call it as easy as “Finances 101.” The central point is this: lenders cannot lend to borrowers unless they can prove that the borrower has the ability to pay their loans back.

Seems pretty simple, right? This is the way it was supposed to have worked all along. But in the days leading up to the financial crisis in 2008, things were not always as they seemed. 50% of the loans in default that were issued between 2005 and 2008 would not have been issued under the new mortgage rules. Further, it’s estimated that 12.8% of the mortgages issued in 2012 did not meet the CFPB’s new “qualified mortgage” standard. Critics of the new rules say that the rules will make it a lot harder for borrowers to qualify – which could very well be true. Let’s take a look at exactly what is going on here and what it means for you.

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What’s All This Hubbub About the Federal Reserve and Bonds?

The Federal Reserve is a government body that many of us hear about on the news, yet don’t completely understand. What is it? What does it do? And why does everyone get in a kerfuffle when its leaders make an announcement about buying bonds or some other rate change?

The reason the Federal Reserve is so important is because its leaders’ decisions trickle down through the economy and affect things like mortgage rates. Let’s take a look what the Federal Reserve is, how it controls interest rates, and how that makes a difference for you and me.

What is the Federal Reserve?

First of all, what is the Federal Reserve? Essentially, it is the nation’s central bank; it’s the bank that banks bank at. There is a policy that says each bank is required to keep 10 percent of its money with the Federal Reserve. It can then use the remaining 90 percent to loan out to businesses and to people like you and me.

A primary job of the Federal Reserve is to control the money flow. That is to say that they control how much money banks can lend out. More money flowing in the economy means demand is lower and interest rates are lower. Less money in the economy means demand is higher and interest rates are higher. (We often pay more for things in high demand, right?)

How Do They Affect the Economy?

One way the Fed can change the amount of money in the economy and thus interest rates is by buying and selling bonds. If the Fed wants banks to loan out more money and stimulate the economy, they buy bonds from the bank and give the bank money. This gives the bank more money to loan out to you and me. If the Fed wants banks to loan less money, they buy fewer bonds or even sell bonds. This means banks have less money to loan out. When banks have less money to loan out, the cost of that money increases in the form of increased interest rates.

Why Does the Fed Do This?

Well, when there is a lot of money flowing around the economy more people will use that money to buy more things. This increased demand leads to inflation. Inflation doesn’t change the types of products we buy every day, it just makes them cost more. So, the Fed tries to create a balance between keeping money available and keeping things affordable.

Recent News from the Federal Reserve

Knowing how the Federal Reserve works, it may now make more sense why everyone pays attention when its leaders speak. Most recently, the Fed announced it would be buying $10B less bonds each month, a sign that they are starting to ease economic stimulus. Slowly, over time, they will keep reducing this amount. The result of this will be slowly increasing interest rates on borrowed money.

Talk to me today about what a change in these interest rates means to you, and how it might affect your ability to buy.