The RE/MAX Associates Louisville Real Estate Blog

Underwater Homeowners Sink Even Deeper

 Despite homes rising 6.6 percent in 2014, lower-tier homes have dropped 3.2 percent in value. Even though the water is rising in real estate, some homes have not risen with the water. The homes that are experiencing the struggle are the lower-end homes. They have actually seen their values drop, keeping their mortgages underwater.

During the recovery, the housing market was seeing improvement, but there has been a reversal for these lower-end homes. At its worst, the housing market saw 15 million homeowners owing more on their mortgages than what their home was worth. This put them in negative equity, commonly known as underwater. Their answer was foreclosures and short sales.

Lower-tier homes have been left behind during the recovery because the demand for them is not what it once was. Homes rose 6.6 percent nationwide last year, but the bottom 10% of homes dropped 3.2 percent. During any recovery there will be someone left behind. Negative equity is 16.9 percent nationally and rising in 21 of the top 50 housing markets. More than a quarter of mortgages homes are underwater in many parts of the Southeast and Midwest.

Atlanta saw homes rise 12.2 percent and almost half of the borrowers with homes valued I the bottom tier are underwater. This compares with 10p percent of borrowers with the highest-valued homes.

 

The major markets with the worst negative equity are:

 

1. Las Vegas, NV – 26.4%

2. Atlanta, GA – 26.1%

3. Chicago, IL – 25.1%

4. St. Louis, MO – 22.8%

5. Cleveland, OH – 21.4%

6. Detroit, MI – 21.3%

7. Tampa, FL – 21.2%

8. Orlando, FL – 20.9%

9. Kansas City, MO – 20.9%

10. Phoenix, AZ – 20.6%

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How to Supercharge Your House Hunt

How many full weekends have you and your partner spent house hunting? Full blown weekends shouldn’t be spent house hunting. Get your Sundays back and speed up the process.

 

Every potential buyer approaches an open house differently.  Some offer a rich look-loo experience at the beginning of the hunt. This will allow you learn just what sort of place you are looking for, and at what price. It also is good for the first-time-homebuyer. They start to see what online photos actually turn into.

On the other hand, experienced buyers use open houses to meet with their agent. It’s way easier to tour a large number of homes with your agent over a weekend instead of making appointments for every single listing agent. Whether you are a first-time-homebuyer, or an experienced veteran, here’s how to expedite the open-house tours.

 

  1. 1.       Do your homework:  the first idea you will probably have is to just get in your car and drive around looking for signs. This is just down-right a waste of time and energy. It’s time to make a power-packed open house tour.

Trulia has an app that you can see a bird’s-eye view of properties for sale, their listed price, and the open-house schedule. Tap on the flag to see photos of the house and the details. Tap on the house image again and you’ll see relevant states and even more pictures.

If a home isn’t meeting all the criteria, cross it off your list and congratulate yourself for saving some serious time. If a house is in the running for a purchase, add it to your calendar right from the app.

Are you tired of driving around a neighborhood wondering if it’s the right one for you? Always wondering where the post office is, where’s the grocery store?  Once again the Trulia app can do all that for you. A simple iPhone map can do it as well.

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Newcomers Outpace New Housing in Least Affordable Rental Markets

A big wave of new homebuyers is outpacing new housing stocks in the country’s most expensive rental markets. Los Angeles, where renters spend roughly 50% of their income on rent, is among one of the highest. When 1,000 new arrivals came in, only 187 housing units were built. New York was 383 for every new 1,000 residents, and San Francisco was 193.

 

The middle class is who is feeling the squeeze. They are the ones fighting tooth and nail for affordable living spaces, not to mention the competition is as high as its ever been. The rent is going up, and incomes aren’t rising tick for tack with it.

 

Where you can find the best rent is in a place with a slow population growth like Pittsburgh, St. Louis, and areas where population growth and housing units are rising the same amount. In 2012, Chicago added 906 new housing units for every 1,000 newcomers. Renters there spend only 31% of their income on rent.

 

Most cities are trying to find a suitable remedy for this problem, like the mayor of San Francisco is pledging to add 30,000 units by 2020. Boston says they will add 53,000 by 2030. New York mayor, Comrade Bill de Blasio says he will add 200,000 units in 10 years. But he’s a communist so who knows when that will get done and where the money will come from.

 

Building new units will help this problem, but in these expensive cities, building at a price that middle income citizens can afford is a difficult task. Some cities make this a bit easier by letting homeowners add accessory units. People can turn their garages, attics, storage rooms into living spaces and rent them out.

 

The middle class is facing challenges they haven’t had in the past and it is creating problems. Some people want the government to subsidize middle-income households, but it is important to have a middle class. Who knows what will happen in the near future?

 

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Break Out of Debt and Settle Your Finances

This article is to help you find a way to simplify your system to pay down your debt and let your money do its thing.

Winter is a season in which things begin to build, whether its dust, grime, or your monthly budget expenses. It may appear that repainting your kitchen is more entertaining than looking at your finances, you will be happier in the end you chose to look at your finances. Here’s how to get started.

 

  • Take advantage of a free credit report

It’s never a bad time to take your free credit report to learn where you stand. Whether you know you have a few marks, or whether you know it is perfect.

Under the Fair Credit Reporting Act, all three major credit reporting companies (Experian, TransUnion, and Equifax) have to give you one free credit report each year, but only when requested. This will not state your credit score, but will show you a glimpse of what a lender will see when they look at your profile. They can see delinquent accounts, bankruptcy filings, lines of credit, and your payment history. 

These credit agencies get their reports on you from different places, so not all reports will be the same. Review each one thoroughly so all the information is correct. If there is a problem, follow the guidelines for a proper appeal.

  • Eliminate unnecessary expenses

Did you sign up for a magazine subscription a few years ago and put the magazines out for decoration only? Do you pay for cable but only watch it once a month?

Budgets can become inflated through time when we become accustomed to spending in unnecessary places. Check your monthly spending report for these invisible money pits, and start cutting accordingly.

When was the last time you looked at your car insurance rates? If you sniff around a bit, you could maybe find a comparative rate and drop $50 a month, which is $600 a year!

Look at your cell phone bills, cable,...

8 Ways to Fix Up Your Bathroom without Renovating

Are you excited about revamping your bathroom, but don’t want a huge project to last weeks or even months? This simple updates will make this seemingly daunting task not so intimidating.

Bathrooms are perfect rooms for mini-makeovers. These can be refurbished quickly, inexpensively, and professionally without a whole lot of effort. Before you begin, think about what vision you have in mind for this bathroom. Is it to be a peaceful, relaxing, place, or a dramatic tone styled spa-like room? Once you have an idea, start looking at these simple tips and you can be on your way.

 

Paint: Painting is always the ground zero for any revamping project. For a simple and serene look, try going for a soft and soothing tone for a better sense of space and light. If you want a rich, dark hideaway rom, go for a warmer saturated tone to strike the right mood.

Hardware: You will want to choose your drawers that are more modern, and will last years into the future. One thing that is nice to have, try checking out the softly closing drawers. These are great because they are stylish, and don’t make any noise. The spa look requires a nickel, or stainless steel drawers. For sophisticated and elegant looks, go for oil-rubbed bronze tones.

Storage: Keeping a bathroom void of clutter is key when your guests come over. Having a bunch of clutter creates mental stress and isn’t a positive feeling when walking into the bathroom. A good way to fix the clutter issue is to keep a couple storage cubbies. Keep these either under the sink, or in a closet, or mount them to the wall. Keep your toiletries and beauty equipment in here for easy access.

Lighting: In order to groom yourself properly, good quality light is mandatory. When you’re waking up in the morning, and getting ready for bed, a softer light is what you need. All you need is a dimmer switch. If you are looking to replace the vanity lighting fixture,...

6 Factors You Don't Notice That Are Hurting Your Home Sale

Having a difficult time selling your home? It could be what is on the outside versus the inside that is delaying this process. It isn’t always what’s on the inside that counts.

You know you have one of the best homes on the block, and your agent knows it too; but it has been sitting on the market far longer than either of you expected. In order to sell your home, you have done everything you agent said, and even went above and beyond by reading forums online for all the “how-to’s”, but the problem still lingers.

Sometimes it isn’t what’s on the inside, but the outside. Look around the yard, driveway, exterior of the house, and figure out what it needs. Here’s some of the often things that are overlooked:

  1. Electrical Substations: Real estate forums teem with people who worry as if it was their job about potential electrocution from nearby substations. The only way these electrical substations can be dangerous, is if they blow up. They also fear that this box will electrocute a trespasser. You just need to know how to defuse this fear. Things you’ll want to know, when was this built? Where are the underground cables, what level is the electric charge? And even show someone how to take electric readings to show the magnetic field is of no danger.
  2. Parking Problems: Parking your car could be a problem. Maybe there isn’t enough space for a second car in the driveway, which leads to parallel parking, and then mass tickets come street cleaning day. There isn’t really anything that can be done to fix the parking problem. My advice for you is to try to make it a sweet deal. One thing you can do is offer a month’s fee to a nearby garage, or buy a parking sticker for them.
  3. Lawsuits: It’s no secret neighbors can be a terror whether you are living in a condo or a house. Sometimes people argue and get in tiffs. Occasionally these tiffs lead to lawsuits....

Expect Apartment Rent to Go Up Again

Are you living in an apartment? If so, you should expect your rent to be going up again in the near future. Rent has skyrocketed in the last five years. The average renter in the U.S. has had their rent raised by 14% since 2010, and the average monthly rent is $1,124. This is four percentage points faster than inflation and more than doubles the rise in home prices for that same period!

 Even though apartments have been popping up rapidly, rent is still expected to rise another 3.3 percent for an average of $1,161. This isn’t as drastic of an increase as it has been, but it’s still an increase nonetheless.

 The reason

 Now more than ever people are searching for apartments. They do not want to buy houses because they simply cannot afford it. Prices of homes are rising (not at the rate of apartments) which makes renters stay put.

 Another reason is that most apartments that are being built today are aimed at the affluent tenants. They are built for luxury and want top dollar for their living quarters. This is undeniably true in big cities where these buildings are being built in urban core areas, and builders need to regain their costs.

 A good example is Denver, their rent has gone up 5% in the past five years, and 9.2% in 2014. Out of the total 9,400 new apartments built last year, 23% were built in these urban core areas.

 Because competition is so high right now among apartments, renters do not have the wiggle room to negotiate with the landlord for concessions, or a free month of rent for whatever reason.

 Here is why renters should expect rent to go up for a sixth straight year:              

 More jobs means more competition: during the last recession, many of the works who were laid off had to move in with their relatives, or take on roommates. 32% of the U.S. adults were living...

Too Much Property Tax? This Should Fix it

Property taxes are the worst. Not only does greedy Uncle Sam want you to pay income tax, but also taxes on your property. Even though real estate prices have remained relatively flat in most markets, local tax bills are trying to shoot up. So let’s take a look at how to save some money on those taxes.

  1. Look closely at your bill: The first number you will probably look at is the total amount due. This is an important number, but probably not the most important. You really need to look at the rate of taxation, and the assessed value (formulas). These numbers determine your total tax bill.
  2. Confirm that your assessment is current: tax assessments don’t always stay up-to-date. Sometimes they are only updated every few years. If property values have dropped sharply in your neighborhood, and the assessments haven’t changed, you may want to request it be reassessed.
  3. Check for errors: Criteria for assessments vary in location, but are generally based from the fair market value. The fair market value is calculated by a list of traits your home might possess. Make sure the assessment covers everything your home has to offer. Ask your local assessor’s office for a checklist if one is not available. The list will be something close to total square footage, number of rooms, number of outbuildings, etc.
  4. Research how your local government assesses property: To know how these assessments work in your area is gaining a step up in that world. Knowledge is power, so the more you know, the better off you will be. You should know how often these are performed, and how the values are determined. Some properties are assessed on recent sales; with others could be solely replacement value. Knowing how it’s assessed will give you the argument you need to have it assessed the way you’d like.
  5. Compare similar properties: Check your local records and sales on the internet to find the values of similar properties. Talk to your neighbors,...

Thinking about Flipping a House? Here's What You Need to Know

Buying a house, condo, apartment and flipping it is a proven method for getting more for your money. Each “fixer” is unique in its own way though. Not everyone is the same, and there will be some that just aren’t for you.
 
Flipping a piece of real estate property requires some sweat-equity for a great deal that just needs some attention. Because not all flippers will be the one for you, you must consider each ones value proposition and decide which ones are the money-makers, and which are the money pits. Most of the flippers fall into one of three categories, so here we go.
 
1.       The Cosmetic Fixer
 
This is a house that needs just a little cleanup, some repairs here and there, but nothing major. The sellers here didn’t want to invest much more time or money into the house and have dropped the price a bit in order to sell. The standard fix is all this house requires: new paint, countertops, lighting, landscaping, new carpet, and some new appliances will give this place the face-lift it needs. A couple dozen runs to Lowe’s or Home Depot should do the trick.
 
2.       The Ugly Fixer
This house is considered the ugly duckling. It may be ugly to everyone else, but you can see the real beauty inside. These houses need more extensive repairs and remodeling than the cosmetic fixer. If you are willing to put in the work, you will get the deal others have missed out on. Here are some traits of an ugly fixer.
a.       No curb appeal: fresh landscaping will fix this problem quickly. A newly painted door, new mailbox, and new house numbers will be the finishing touch.
b.      Great bones in bad shape: quality construction and architectural lines have been underutilized.
c.       Dark interiors masked with ugly décor: ugly décor is...

4 Headache Remedies for Renters

No aspiring home owner likes renting. They feel its wasting money, and there can be demanding landlords, and strange neighbors. A number of issues can arise from the moment you sign the lease until the moment you are packed up and moving into the next space.

 There isn’t a solution to every problem for renters. However, there is an action to help with the pains of renting. If any of these problems arise during your stay, use these tips to help alleviate them.

  1. Begin with the basics and insure your belongings: Robberies are not uncommon these days. It isn’t unheard of to come home to a broken window, or the back door wide open. Your safest bet to secure your things is to insure your stuff. Renters insurance is cheap, costing anywhere from $10-$30 per month. This insurance protects your stuff from “out of your control” situations.
  2. Speak up: If a particular apartment is calling your name, but it’s a bit too pricy, try simply asking for a price reduction somehow. Maybe the landlord could take down the price, or wave a fee here and there. Try making some sort of deal with him. Maybe you cut the grass for an additional $30 off per month. The worst they can say is no. Know what’s in the lease before you sign it, this will insure no future headache.
  3.  Find more space and don’t pay for it: Every property only has so much storage space, and sometimes there’s just not enough room for all your belongings. Your best bet is to start getting creative with the way you store things. Don’t go blow an extra $100+ a month on a garage unit. Take a look at Pinterest and see some good ideas for storage on there. Another good plan is to organize all you have, and de-clutter. Once you have only what you need, you’;; stop going out to buy more of it because you know how much of it you have, and where it is.
  4. Stop throwing money down the drain: Most people rent because they cannot afford a home just yet, and...

6 Reasons to Make a Larger Down Payment

               

When you are about to purchase a house it is no secret you must have a down payment. The more you put down, the more than bank likes you. This tells them, this person has some cash, and is less likely of a risk for defaulting. For you, the more cash you hand over in advance the quicker you can pay off your house, and how much your mortgage payment is. So if it is in your budget to make a down payment that is larger than the average, is it a smart move to do it?

  1. Easier Approval: Having more of a down payment shows a good sign of borrower strength, and shows lenders you know what it takes to save. The chances approval rise dramatically with a large down payment. Also, if you are in a situation where there are multiple offers, offering the seller more upfront can be the X-factor in outbidding everyone else.
  2. A Lower Interest Rate: Mortgage companies, banks, lenders of all kind typically give better interest rates when your loan-to-value ratio is lower. The increase in your down payment lowers this ratio, which in turn lowers risk. Since having a low interest rate will save you a ton in the long run, you win also. Another factor that lowers your interest rate is your credit score. Be sure to know where you stand before you apply for a loan.
  3. Lower Monthly Payments: More down payment up front means less of a mortgage payment down the road. Save up now to pay less later.
  4. Mortgage Free Sooner Than Later: Since you are paying more of the cost now, you can pay the entire mortgage sooner. You will undoubtedly have lower monthly payments, and could even use those savings to pay off an extra principal payment. There are tons of advantages for this.
  5. No Need for Mortgage Insurance: When you have small down payments, lenders will recommend you get mortgage insurance. This protects the lender if you default on your mortgage. The premiums are a cost that you avoid by making...

Cities Where Homes are Undervalued, and Overvalued

Homes across the U.S. are undervalued by a mere 2% on average, but at the same time still overvalued by double-digit percentages in some places.  Most home prices were nearly back to normal for the fourth quarter of 2014 after being down 5% this time last year.

The extent as to which areas are undervalued, and overvalued, varies across the 100 largest cities in the country. At the beginning of 2006’s housing bubble, homes were overvalued by a giant 34%, but fell to 14% at the start of 2012.

The more homes are overvalued shows that a bubble might be forming. When a home is overvalued it doesn’t always mean they are unaffordable. Even though Cities like Boston and New York are statistically undervalued, they are still way more expensive than cities like Houston and Austin. It also is all relative towards the cities fundamental like jobs, income growth, and rent.

70 out of the 100 homes surveyed by Trulia are less than 10% overvalued. This is the highest number since the beginning of the recovery. Most homebuyers spend 15% of their income on their housing payments (excluding taxes), which is down from the 22% of the last 25 years.

In that survey Trulia found Austin, Texas as the most overvalued city. Overvalued by 16%! The second city was Orange County by 15%. The following in descending order were Los Angeles, Honolulu, and San Francisco. The median single family home price was $245,000 in2014, and in 2011 it was $189,000. The mean numbers respectively of both years were $251,838, and $311,222.

Austin was more overvalued in 2014 than it was in 2006. This is somewhat due to a property market that hasn’t kept up with the demand, which is helped by a growing jobs market. Other overvalued markets have relaxed a bit on their jobs market the past few years.

Fun fact- most of the undervalued cities were found it be in New England, Ohio, and Connecticut. Most of these cities were undervalued by at least 14%, ranging up to 20%.

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Mortgage News Rate Update

Here’s some good news, mortgage rates for the 30-year fixed mortgages rose this week. The current rate borrowers were quoted at 3.62 percent, which is up 6 basis points from last week. The 30-year fixed mortgage rate rose early last week, and hovered around 3.65 percent, and fell to 3.62 percent.

Experts believe the rate increase was due to strong economic activity in the U.S. and Europe. They are also expecting some volatility since the monthly job report will come out on Friday.

For the 15-year fixed mortgage rate, it was 2.87 percent, and for the 5/1 ARMs, the rate was 2.75 percent.

Just a quick update on the mortgage rates.

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