Real Estate News

Trump's Tax Plan - Maybe

Donald Trump and his Republican colleagues are still working on their tax plan. It’s expected to bring yuge changes to the housing industry. The details haven’t been released just yet, but lobbyists are expecting what is to come. 

One of the biggest changes to come is expecting the corporate tax rate to drop to 20% from 35%. 

During his campaign Trump promised tax relief for the middle class. In his plan he would be doubling the standard deduction that benefits this class. It would also attempt to pay for some of the tax cuts by eliminating the state and local tax deduction, most commonly used by the middle-to-upper-middle classes of the wealthier states like New York, California, etc. The tax break is worth $1 trillion over 10 years, and it’s supported by some representing the real estate market. 

They are still working on this, as the right wing has not quite figured out which tax deductions to cut in order to simplify the tax code. 

Groups are in the mortgage and housing industries are standing against increasing the standard deduction. They say is a huge threat to the mortgage interest deduction, and would decrease home ownership. 

Steven Mnunchin, the US Secretary of the Department of Treasury said the mortgage interest tax deduction won’t be touched during Trump’s time in office. Even though his administration isn’t eliminating it, doesn’t mean it cannot be altered. 

There’s fears among the professionals in the mortgage industry that changing the mortgage deduction could seriously hurt the ownership rate in America. 

Despite Republicans controlling the House and the Senate, changing these laws can be quite daunting and difficult to accomplish. A bunch of the housing organizations are responding to these proposed law changes. They are all writing letters to lobbyists exposing the detriments that will follow. We will see what is to...

20% of Millennials are Homeowners

The national Association of realtors combine with the nonprofit American student assistance program surveyed a group of 2,203 millennials ages 22-35 and found that 20% of them own a home while also having student debt. Their debt was more than their income! They averaged a debt of $41,200, and an average income of about $38,800.

The other 80% who do not own a home, 83% of them included their debt has stopped him from buying a home. Another 84% said they are waiting at least three years to buy because of their student loans. They are of the belief that their debt is also hindering their ability to save for retirement. 

A shocking 61% of respondents said they haven't saved a single penny for retirement, and 32% say they save occasionally for their retirement.

The fact that millennials and younger generations are having to borrow thousands, and sometimes hundreds of thousands of dollars just to get an education is severely limiting their housing situations. Not only are their housing situations in jeopardy, but future life decisions too. 

First-time home buying sales have been at record lows and this is partially to blame for the debt. Even the older millennial who do make a decent living are putting off buying a home because the down payments are still too large.

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Homeownership is Still the American Dream

The American dream has long been about a big loving family, retirement, and most importantly homeownership. Homeownership is still a top five priority in Americans mines at cording to ReportLinker. 

They conducted a survey in which priorities Americans value most, and homeownership dropped one spot from last year. Above them are academic goals, marriage, and obtaining your career goals.

On the flip-side, when they looked at long-term financial goals homeownership was at the top of the list, with 54% of responders believing that owning a home is of the utmost important financial goals, and 81% of them also said homeownership is the best long-term investment.

As bad as American’s want to become homeowners, they are still hurdling obstacles from 2008. The recession in 2008, higher home prices, lack of supply, and student loans. 

With all these obstacles in the way, 31 percent of homeowners have a mortgage, and 15 percent own their home without a mortgage. 28 percent of respondents rent from a private landlord, and 15 percent live with family or friends for free. 

When they do finally achieve the American dream, what will they spend their money on? 41 percent said maintenance and repairs are the biggest priority. A slick remodel for comfort came in around 21 percent, and a remodel for better style was at 19 percent, and energy conservation was at 16 percent. 

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Millennials and Gen Xers

Millennials aren’t taking everything over as we originally thought. They are not leading the industry in market share as believed prior. The Association of Mortgage Professionals did a recent survey that questions its members monthly collecting data trends. There were groups of all ages in the survey, millennials (< 35), Gen Xers (36-52), Baby Boomers (53-71), and the Greatest Generation (72+). 

It was discovered that Gen Xers make up most of the marketshare, at 36 to 75%. More than a quarter respondents comprised anywhere from 50 to 75%, in opposition to millennials, who were less than 25% in over half of the businesses surveyed. 

One thing that sets millennials apart form Gen Xers, are the willingness to throw down a fat down payment. Millennials were more partial to the 3% and under down payment, while Gen Xers were willing to throw down anywhere from 10%-20%. 

A piece of common ground all the groups could agree on was the need for the mortgage process to be streamlined. They all wished their was less paperwork, except for about 15% of them. They also felt the smaller mortgage companies weren’t in competition among themselves, but the big five banks.

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Amazon and Real Estate

Something big happened last Tuesday while we were all shopping on Amazon for it’s day of deals. It very quietly disclosed part of its future, and what new service they will offer their customers. They are about to set out into the real estate world, becoming a competitor of Zillow and Redfin. 

On the website’s section under Home & Business Service, they now list “Hire A Realtor”, and when clicked on takes you to a page that isn’t fully set up yet, but it’s under construction. This is the area where you can hire someone to assemble something you use bought. So hiring a realtor will be another premium service being offered. 

The only information available about this service is the blank webpage you are taken to after clicking the link. 

What is interesting to note is that when Amazon’s “Hire a Realtor” page became knowledge, Zillow’s stock priced took a hit from $46.15 to $44.54, according to an article in Geekwire.com 

If they continue building that webpage by deciding to enter the market, it’s not the first new market they will have encroached on this summer. Earlier this summer they launched their own version of Best Buy’s Geek Squad, which is an in-home service for product installation, and electronic repairs. It’s also a service where consumers can find local electricians, plumbers, house cleaners, etc. 

Amazon’s new Smart Home Services Store on its website allows users to schedule appointments for installations, maintenance, and free consultations. Amazon product experts will answer calls and walk a user through things like smart lights, smart thermostats, etc. 

According to the National Association of Realtors, Amazon has not yet received permission to coordinate with them to use the world “Realtor”, given it is trademarked by the Association. Realtor is often...

How Do Millennials Enter the Housing Market?

Bankrate recently published a report that held some astonishing finishings. It was centered around how Millennials find their way into the housing market despite all the obstacles they face. It found that millennials between the ages of 18-26 spend way more daily on habitual expenses than any other generation. These expenses are things like going out with friends for a beer, getting coffee multiples times a week, buying things online, eating out etc. With all this spending it’s a wonder how they manage to save any money for a down payment. 

From the report, 54% of the surveyors say they eat out at least three times a week; the Gen-Xers who tallied at 33%. 30% of them say they buy coffee at least three times a week. And the millennials of drinking age to 26 say they go out drinking with friends at least once a week. 

The other problem facing millennials that no other generation had, is crippling student debt. The total amount of student debt in our country is a whopping 1.3 Trillion dollars, all while college tuition keeps rising every year. How in the world do the find the money to stash away for a downpayment. 

One method that seems to be working pretty well is the low-downpayment mortgages offered by some big name banks. Another method is utilizing the Veteran and active-duty service member private loan, which is issued by the Department of Veteran’s Affairs, and the Navy Federal Credit Union is an option where they can get a zero-down mortgage. Who needs to tighten their belt when they have the options before them?

You don’t need to be in the military to qualify for a low-downpayment loan. All you need is nearly perfect credit. Now they will be required to have mortgage insurance, either through FHA or a private company. 

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Pros & Cons of Owning A Home

The generation of baby boomers had a vision for successful homeownership. It began with buying a starter home, which was a small household for a small family.

As their careers and families grew they would move into bigger and better homes. Nowadays, plenty of Americans struggle with coming up with a down payment for their first home. They are torn between buying something now, or waiting and saving more money to buy a more long-term house. They may also buy a starter home and stay in it for quite a while.

At any level, it's a personal and financial choice we must make but let's take a look at the pros and cons before coming to a decision.

Pro: build stability faster

Homeownership teaches a person a lot of new things about life. You're exposed to making decisions you've never seen before. First time homeowners experience wave of accomplishment when they buy their first home they may feel a real sense of community and become more grounded. 

After changing a few things that make a new home their's, they will enjoy it by having friends over, and enjoying their own space.

Con: buying twice is moving twice

If you are planning on upgrading in a few years, you may be better served by saving your money for the larger house, so you can stay longer. 

Despite mortgage rates being historically low, there are still several hefty costs with buying and selling a home. There is title insurance brokerage commissions, loan fees, and inspections etc.

Moving is also quite expensive and exhausting; nobody likes to move. Some people are happy with one home for the rest of their lives, but it's not a bad model to follow if you plan on staying for the foreseeable future.

Pro: building equity

Getting in your first...

Home Prices & Immigration

Have we ever seen a time in our country’s recent history where we are all so divided? Some would argue yes, others argue no. Right now a great amount of the divide is due to immigration and the economy. It’s not as simple as it sounds because it’s a complex issue with many factors attached. One aspect of immigration to think about would be national security. Immigrants from some parts of the world are more of a concern to national security than the immigrants who move for economic purposes.

2016 wasn’t the best year America has seen. Wages didn’t move, jobs were lost to globalization and new age technology, all while we bickered with one another about how many immigrants we should be letting in.

It’s often discussed that there’s a tradeoff among our wallets, all inclusive ideal society, and the actual affect on the economy throughout the years. 353 cities with immigrant populations across the country from Hunting, WV, to Miami, FL can shine a little light on how the immigration has been.  

The correlation between the immigrant population and the home price appreciation was shocking. The more of an immigrant population a city has the higher the home prices. The U.S. Census Bureau data on immigration and home prices show that in 20 metropolitan areas with the highest amount of appreciation also had an immigration population of at least 20%. Surprisingly, the cities with the lowest appreciation also had immigration population of less than 5%.

Obviously home prices aren’t the only factor in determining economic wealth considering most of America couldn’t buy a house during the past 8 years.

It’s nearly impossible for cities to grow and thrive if they don’t see home price appreciation. Any economist who studies the relationships between government policy, home affordability, and local economies will tell you there is always prosperity when home prices rise, and it’s...

Tax Breaks That Dissapear at Year's End

2016 could be the end of the tax breaks that homeowners once used to save some bucks. Before year’s end, let’s look at the tax breaks that you could use for the last time.

Many buyers and sellers use tax breaks that are likely to expire this year. What will keep them rolling is if Congress passes extensions for specific credits to extend for the next several years. At the rate Congress is working, it’s likely they won’t pass the extensions, leaving the taxes to expire.

If owning a home is a goal of yours by year’s end, you better act fast.  It’s within reach to claim the years end deductions and write-offs. Here’s what is likely to disappear by year’s end.

End of mortgage debt forgiveness

Usually, when a mortgage lender writes off part, or all, of a forgiven debt, the sum is sent back to the borrower as taxable for federal income tax purposes. This is typical for all debt including mortgages. Congress passed the Mortgage Debt Relief Act during the Great Recession to help struggling homeowners. This rule allowed for homeowners who lost their home, or qualified for repayment adjustments didn’t have forgiven debt taxed as income. Congress renewed this several times, but it’s almost certain they will let this expire this year.

If you happen to be in the middle of discharging debt, there is good news! You can still qualify for the exception and won’t be taxed on the debt if your agreement to discharge the debt with the lender was written this year.

Write off mortgage insurance premiums while it’s still here

Lenders tend to be hesitant when the market is rough. Since the recession, lenders have been requiring private mortgage insurance (PMI) for buyers to protect themselves if the buyer defaults. Writing off PMI in past years wasn’t much of...

Equity Rich Trend

When a homeowner stays in their home for a long period of time, they become equity rich. They build their loan-to-value ratio of at least 50%.  This happens to be the trend that is happening lately as reported by the ATTOM Data Solutions.

Their report was taken in Q3 2016, labeled the U.S. Home Equity and Underwater Report. It found that 23.4% of the nation’s homeowners are considered equity rich, which is an increase of 2.6 million from Q3 of 2015.

The homeowners who are basically drowning have an LTV of 125 or higher, saw a decrease from last year by 854,000, settling at about 6 million. This segment is roughly 10% of all homeowners.

The second quarter reported that 6.6 million homes were underwater, nearing 12% of the total properties.

Luckily, today’s market sees that around one in every five homeowners is now equity rich. This is in thanks to property prices rising, and people staying in their homes longer.

Median home prices are rising every year, and this month is the 18th straight month homes have increased in price. The homeowners who sold their home this third quarter have owned their homes on average for almost 8 years. Since they are staying in their homes longer, they are building their equity wealth. They own more and more of their homes, while the banks own less and less.

Some fun facts: Out of 88 cities with at least 500,000 residents or more, San Jose had the highest amount of equity rich homeowners, with a whopping 55.7%. Honolulu was second with 39.3% and Los Angeles just behind them at 38.2%.

 Out of the 88 cities, a lot of homes still showed being underwater, like Las Vegas with 25%, Akron with 24.2%. Cleveland wasn’t far behind with 22.8%, and several other Ohio cities were just behind them. Detroit came in at 20%, and Lakeland-Winter Haven, Florida also saw 20%.

 

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2018: Surge of Home Buyers!

Being a rebound isn’t the best thing to be when dating someone, but it’s never a bad thing when put into the real estate context.

There are plenty of people on the rebound that mortgage officers and realtor partners should be fancying.

Online information by RealtyTrac estimates that seven million people lost their homes across the country during the recession. Considering their circumstances and remembering that it takes several years to repair credit history and be eligible for a loan again. The home buying pool is about to get a bit more crowded now that enough time has passed.

People have come back from the dead and ready to buy homes again, and the peak is supposed to be in 2018 when a giant wave of 1.5 million people will be eligible for loans. Loan officers and realtors will be working overtime with this many new people in the market.

This influx of buyers will keep MLO’s and agents on their toes, so here are a few things for them to remember.

Reaching out to renters

The amount of inventory available for first time home buyers will be quite minimal. They simply won’t be able to afford bigger homes. Increased competition among home buyers has created bidding wars and drawn out the time it takes to close a deal with so many options for the seller to consider. Adding a giant number of people to the equation could intensify this already gritty process.  So the professionals need to make a plan, implement it the best way possible, and actually hold their feet to the fire.

Hailing homeowners

Taking a close look at equity position means they will have to contact current home owners and past clients. They should take a look at area appreciation and goals for the next decade. Reach out to the homeowners should spark them to start buying more real estate, so they should be ready...

The Most Unaffordable Places to Live in the U.S.

Believe it or not, the most unaffordable places to live in the U.S. are not San Francisco or Manhattan; it’s actually Brooklyn.

Someone who ears the average salary in Brooklyn simply cannot afford the average home there. If they spent their complete and entire salary (with a little extra) on housing they still would fall short on the scale of affordability.

A real estate firm known as RealtyTrac, took a survey last week of 417 of the most populated cities across the country, and combined the average wage data from the Bureau of Labor Statistics. The second and third place cities go to Marin County, California, and Santa Cruz California. Living in both of those places requires the complete salary devoted to their median home, and you still can’t technically afford to live there.

A lot of the times people are priced out of cities like San Francisco,  Manhattan, and San Jose, so they choose to move to Brooklyn, Marin, etc. which is making the prices of homes there sky rocket. While people continue to move into these emerging cities, wages aren’t rising nearly as fast, creating the unaffordability problem. Keep in mind that home prices are still more expensive in cities like San Francisco, Manhattan, but so are the wages.

About one in five markets are unaffordable, which means that a median priced home was less affordable in those cities than the historically normal level for that city as far back as 2005.

Across the country the average person owning the average home would need to spend about 35 percent of their income to afford the home. Clearly this number is higher than what Uncle Sam says it should be, but it’s still way less than places like Marin and Santa Cruz.

Uncle Sam says a maximum of 30 percent of your take home pay should be spent on housing, or your risk having a difficult time affording your home, and other necessities like food and clothing etc. But when was the last time the government knew how...

Fannie Mae's Report Shows Little Confidence

Sweet old Fannie Mae released a new survey that says consumers haven’t felt this bad about the housing market in a year and a half. The current interest rate fell to its lowest point since February of 2015, and it’s bothering consumers.

Fannie Mae has a Home Purchase Sentiment Index (HPSI), which measures consumers’ moods and views and expectations of the housing market, and when it fell by 2.5 points in March, it was the lowest reading in the past 18 months.

According to the HPSI report, 2/3’s of the components fell when consumers’ outlooks fell on the economy. The largest component of the net share that fell was the sector of consumers who believe now is a good time to sell a home. This group fell by 8 percentage points, which is currently at negative one percent.  Overall they believe now is a bad time to sell a home.

Another dropping sector of the report showed that consumers felt less confident about their job security, which fell from an all-time high. HPSI also reported that household income fell by four percentage points and fewer consumers claimed their income rose.

Doubt has been growing in the past three months about the direction of our economy, and it’s transitioning over into the housing market. People who believe the economy is headed the right way are standing farther across the alley than those who believe it is headed the wrong way more so than ever before.

The report saw dips in income growth perceptions, attitudes regarding home selling, and job confidence, all which created the lowest HPSO reading in the last year and a half. As a whole, the report showed mix signs despite the biggest declines in the most important areas. Here’s what Fannie Mae’s report concluded:

  • The net share of consumers say it’s a good time to buy a house fell by 2 points, leaving it at a 33%, with more claiming it is a bad time to buy a house.
  • The net share of consumers saying...

5 Common Misconceptions of Real Estate

The words Real Estate can be an intimidating word for some, but if you are inherently interested in buying or selling real estate, don’t let the word alone scare you. You may be surprised how easy it can be. Here are the most common misconceptions about real estate.

You don’t need a real estate agent with all the information on line

Having a professional real estate agent in your corner is the best thing you can do for yourself. You can read all you want about the process of home buying/selling, but the professional offers their knowledge of the market, which comes through experience. They can also be there to help you make sense of the data that slips between the lines, which you may not understand. Lastly they help you through the emotional part of purchasing/letting go of a home.

You need 20% down to buy a home

This is the biggest misconception for people. Millennials often believe this because they’ve got crippling student debt with no end in sight. Once the market crash in 2008, lending became difficult, and the finances of a deal could kill it instantly. Today you can get a loan with 3% down, but you will be required to buy Private Mortgage Insurance PMI. It also helps to have great credit, some hefty assets, and a healthy income.

My homes value is what the appraiser says it is

The true value of a home is determined by what a buyer is willing to buy it for, and what a seller is willing to sell it for. The appraiser gives the ballpark range in which you should consider. Keep in mind finishes, views, fixtures, and neighbors can affect your homes appraisal.

Spring is the best time to sell a house

Typically, buyers enter the market in the spring to get ready for the new school year. This has...

Rent Control - Causing More Problems Than it Solves

Rent control is becoming more popular as rent continues to rise across the country. The economists, real estate analysts, and other housing experts are not for rent control. They are of the belief it is doing more harm than good.

                Zillow conducted a study group and found the following numbers. A good 63% of housing experts say rent control is the government’s way of intervening in the market. No matter how well-intentioned this idea is, the government always finds a way to mess it up.

For residents against anti-rent control, they view it as the government violating the principles of a free market, which in turn hurt more lower-income residents for the future than it does help them in the short-term. 33% in favor also believe rent control should only be used in a crisis.

                Only 2% of the entire group claimed that rent control would be helpful in the short-term during a crisis. As housing prices counted to level off during 2015, rent was still rising, which quickly outpaced incomes. Most U.S. households now pay over 30% of their income on rent.

                Most economists believe rent control is a bad plan for long-term tenants. It unknowingly kills incentive for new rental homes to be built, which in time will lead to too little inventory. Rent control can also hinder landlords from making upgrades to their buildings. They wouldn’t do this if there isn’t going to be any reward for it.

                The biggest outcry for rent control is in the bigger cities. Cities like New York, San Francisco, Chicago, have rent control blanketed in sections of the city, or across the entire city. However, no government representative...

Update - Mortgage Rates

We have an update for the mortgage rates! 30-year fixed rate mortgage rates rose last week to 3.79 percent. This is up 2 basis points from last week. In the middle of the week last week the rate fell on Thursday and gently moved around 3.78 percent.

Erin Lantz, Vice President of mortgages at Zillow, had this to say about the increase, “Despite some volatility early on as markets parsed typically unimportant data for signals of the Fed’s first rate hike, mortgage rates remained flat with lenders focused on the Memorial Day holiday.”

For the 15-yaer fixed mortgage rate was 2.96 percent, and for 5/1 ARMs, their rate was 2.91 percent.

Stayed tune for the next update.

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Housing for Military Families Less Affordable than for Civilians

In San Diego, military families who choose to move off base pay up to 65 percent of their salary on their mortgage, and up to 60 percent for rent. It always costs more to live off base, even after their, “Basic Allowance for Housing.” It isn’t uncommon for landlords to be other military families, who know how much the basic BAH is for various ranks.

These families don’t have the choice of settling down in one spot for a long period of time because they know they’ll only be there a couple years. Because of this they do not get to redecorate, or make any major improvements. It just isn’t a smart move financially.

Nationally, service members generally pay up to 32 percent of their income on their housing, which is double what civilians’ pay. This is for all military members combined, and who do not live on base.

Renting is even more expensive for them. Up to 42 percent is paid in rent, compared with the 30 percent for civilians.

US Average – 15.3%

Air Force – 30.4%

Army – 29%

Navy – 34.6%

Coast Guard – 33%

Marines – 36%

 Of course this all depends on where they’re based. While soldiers in San Diego expect to pay 65.5 percent, soldiers in Fort Hood, Texas pay just 15.1 percent on a mortgage and 29.1 percent for rent. This stands more in line with the national for civilians.  

 Think about these statistics during the week and remember what all these homeland heroes give up for you. Not only on the battlefield do they sacrifice, but their personal lives do as well. Thank a hero in uniform next time you see one.

 God Bless America!

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The Hopeful Return of First Time Home Buyers in 2015

2015 could be the year that the housing market sees first-time home buyers making a comeback. Rents are rising faster than incomes which makes buying a home a better option than just throwing away money to never be seen again.

First-time home buyers will see some of the best conditions in history, incredibly low down payment mortgages, looser lending standards, and a bigger selection of homes to choose from. Here are four market trends economists expect these first-time home buyers to see this year.

  1. Looser Lending Standards: First-time Home buyers haven’t made much of an appearance in the housing market in the past five years. However, last December Fannie and Freddie established some new lending guidelines to start offering 3% down payment mortgages. With 3% down this makes it much easier for first-time home buyers to afford a down payment. Adding that to a growing job market, this down payment is surely a good choice.

An economist for Moody Analytics Mark Zandi has predicted the sale of new homes by more than 13%, while existing homes are supposed to increase by 5%. He also believes that if the first-time home buyers can make enough of a wave in the market it will create a chain reaction allowing existing home owners to sell their homes and buy bigger ones.

  1. There will be more homes to choose from: Builders are building smaller houses to accommodate these beginning buyers. Most home builders are building homes in the price range of $120,000 to $150,000 which is about the right range for these novice home buyers.
  2. Home Prices will become more affordable: With all the new homes waiting to go on the market the supply is expected to loosen and home prices won’t feel so much pressure. This should improve the affordability in the more out of reach metro areas of the country like Washington D.C., San Jose, and Seattle.
  3. Mortgage rates will move higher, eventually: The only wrong trend real estate professionals have gotten consistently...

Homebuilding Index Slips for December, but No Worries

For the month of December, homebuilder’s confidence has slipped. The market for new single-family homes has fallen by a point after a four-point jump in November. Do not worry though; the market is still on a slow walk back to normal.

Even though the Housing Market Index has slipped to 57, that is still a strong enough number to show the market is on the upward trend. As 2015 approaches, the housing market is expected to continually recover at a steady pace.

If you are a builder, do not worry just yet. If you are a buyer, this is your market.
Happy Holidays everyone!

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Tax Breaks of 2014

Whether you are buying a house or currently own a home, let us take a look at how your taxes will stack up. No one wants to pay more in taxes than they had anticipated. Trust me; it’s worth it to look at this now than in April.

                After a year of debate, the incompetent congress has finally approved the tax extenders bill. But what exactly is this bill? The tax extension bill is a collection of more than 48 deductions and credits that had expired, which gives us taxpayers a break through the end of 2014.

                It’s not easy to know all the current tax laws when our congress procrastinates on every issue and slides the laws by at the last moment. This bill is targeted for special interests, for example, the research and development credit, which you may think doesn’t apply to you.

                However, they do apply to you if you own a home or are looking to buy one.  Let’s have a look at the tax breaks in this bill that apply to you.

                Mortgage Debt Forgiveness: when a mortgage lender writes off all or any part of a debt, the amount that is forgiven is then passed back to the borrower as taxable for income tax purposes. This rule applies to all debts, even home mortgages. In 2007, congress passes the mortgage Forgiveness Debt Relief Act, which allowed for an exemption.

                Under this rule most homeowners who have either lost their home to foreclosure, or qualified for other repayment adjustments do not have to pick up the forgiven debt as income on their tax returns....