The RE/MAX Associates Louisville Real Estate Blog

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...

5 Questions to Ask Yourself about Real Estate and Brexit

Another article about Brexit! As the U.K. has decided to leave the European Union they have shaken markets globally, and lowering the outlook for economic growth in the United States. It will take years to see the repercussions, but for right now markets and governments are scrambling to react in all the uncertainty.

It seems like buying, selling, lending, and the whole nine yards is now riskier. Buying big assets, like a house take a healthy amount of confidence, and without uncertainty floating around everywhere, that confidence could fade quickly.

Despite grim headlines, the U.S. economy hasn’t faltered thus far. The silver lining in all this restlessness is cheap loans. Today we know Brexit, tomorrow is still to be handled day by day. Without seeing the future, here is what we know.

Will home prices fall?

Maybe! Nationally, homes value might slow down in the short term. The buyers who have money in the stock market aren’t sitting as pretty as they were yesterday, and they’re starting to sweat. The upside is that mortgages are about to get cheaper, which boosts their incentive.

They aren’t expecting a price surge, but they are kind of expecting a few dips in some markets. The fears of uncertainty of the stock market will probably keep people on the conservative side of bidding. They’ll be less likely to bid up $50,000 for a piece of real estate.

The luxury market will feel a slight sting. The foreign real estate investors have their hot spots in New York, Miami, and other places. With the stock market losing some of its value, there is less wealth to go around.

What will happen with interest rates?

Many loans are about to get cheaper because mortgage rates fall when Treasury rates fall, and Treasuries just took a steep dive as money fled out of the U.K.

Right now a...

Brexit: and the Impact on U.S. Markets

As we have all heard by now, the United Kingdom decided to leave the European Union last Thursday. Since this is so fresh, and never done before, no one really knows how this will play out. There’s a lot of speculation about how this will affect the U.S. economy. So below are a summary of the opinions floating around the nation about our housing market.

TO begin with, Standard & Poor’s is reporting it could downgrade UK sovereign ratings: now at “competitive disadvantage compared with other global financial centers.”

Stateside, financial institutions insisted to downplay the growing worries on Friday.

They said, “We affirm our assessment that the U.K. economy and financial sector remain resilient and are confident that the UK authorities are well-positioned to address the consequences of the referendum outcome,” the G-7 finance ministers and central bank governors stated.

“We recognize that excessive volatility and disorderly movements in exchange rates can have adverse implications for economic and financial stability,” their statement went on.

So despite their words of speculation, how will this actually affect our housing market?

Wells Fargo had this to say about Brexit, “the market action in Treasuries and Gilts continues to evolve in line with the playbook from the 2011 U.S. sovereign downgrade,” said Mike Schumacher who is the head of rate strategy for WF. He continues, “There is one key distinction: this time Gilts are leading the way, Should Gilts lead Treasuries? We think not. We still expect capital to flow out of the U.K., with the U.S. being a very likely destination.”

“In the June 17 edition of the rates explorer, we called for two-0year and 10-year Treasury yield to reach 0.5% and 1.3%, respectively, in the week or two after a leave victory. We stand by these projections /. In the Asia trading session, the two-year reached 0.5%,...

Three Deal Breakers for Home Buyers

When searching for a home, everyone has in mind exactly what they’re looking for. Home buyers hunt and walk through dozens of homes before even finding one they kind of like. Then it finally happens, they find the one they love. During the hunting process home buyers are searching for aspects of the home that they can change or alter to improve the value. Sometimes they may even love a home, knowing they can’t change some parts of it.

Here are three significant considerations to consider before deciding whether to put an offer on a house you love or not.

Location

The old real estate cliché, “location, location, location” isn’t at the top of importance just because. It’s one of the most important factors of a home, and unless you plan on making it a historical spot, you cannot change this aspect.

If the home sits on a busy road, across from a popular shopping center in town, or next to the highway, take this into consideration. This home will always be worth a little less than a similar home nearby.

If you are willing to sacrifice to get into the school district or neighborhood you’ve always dreamed of, keep on looking. Once you get the location, nobody but Uncle Sam can take that away from you.

Floor plan

Old homes with closed off kitchens are out in today’s market. It’s a thing of the past. People today want open kitchen plans that look into other rooms. If you think you can just open up the kitchen to allow people to see into the family room, think again.

To make this change will require a lot of construction, money, resources, and is quite a project. It also takes a significant ant amount of time. Think about it, you will be making architectural drawings, tearing out a wall(s), putting up temporary walls, installing beams to carry wider loads, and...

Real Estate Investing for Entrepreneurs

The world of real estate is a means of investment opportunity for successful entrepreneurs. The risk versus reward aspect relies on knowing which properties are a smart buy, and which will turn into a train wreck. How do the best real estate geniuses know when to buy and when to sell?

Long term

Don’t invest in real estate thinking you will get rich quick, it just won’t happen. Yes, there have been booming moments in history when that did happen, but today’s market isn’t anywhere near that level of activity. In the 90’s buying a property was easy, making renovations, and flipping it for a profit could be done relatively quickly. After the bubble burst, the real estate market has been one of the slowest sectors of the economy to rebound. If you’re thinking about investing in real estate, do your homework and move slowly.

Learn about past successful local investments

Most entrepreneurs find their real estate success by purchasing a property and adding significant value to it. The question is what improvements add the most value? Which are a waste of time that won’t get dollars back for your time and effort?

Look at the local case studies in your area to understand the valuation of your city. For example, if you live in a big city like Portland, you could add value to your property by adding bike lockers and a fitness area in a mixed use building. It comes down to knowing what the culture of your area is like, and what people want to see in their homes.

Knowing when to buy and when to wait for the Unicorn

When investing in real estate it is tempting to buy the first thing you see, but you shouldn’t.  You will want to make a list of “must haves” for the property you want, and wait a while until you find it....

April Foreclosures Down From This Time Last Year

Foreclosures are declining across the country, decreasing a whopping 23.4% annually in April, while completed foreclosures decreased by 15.8% annually.

The completed foreclosures averaged 37,000 nationally, which is down from 43,000 in April of 2015. From its peak of 117,813 in September 2010, this is down 68.9%.

The foreclosure inventory is the number of homes at some point in the foreclosure process, doesn’t matter where. The completed foreclosures are homes that have been foreclosed upon.

The peak was in 2010 and the number of homeowners with negative equity has decreased by two thirds, and the number of borrowers in foreclosure proceedings has also dropped at the same time.

Roughly four million homeowners were underwater in the first quarter, and they were more susceptible to foreclosure proceedings if they default.

Because home prices continued to rise, it allowed for 268,000 homeowners to regain the equity in the first quarter of 2016m which pushed the total number of mortgaged residential properties with equity to 92%.

The good news about last month is the number of homes in some stage of foreclosure and the numbers of delinquent mortgages were at levels that haven’t been seen since late 2007, just before the big collapse.

April continued the trend and hit another low not seen since 2007, when foreclosures had an average of 21,000.The total homes in the national foreclosure inventory for April was 406,000 homes, about 1.1% of which had a mortgage. Compared to 2015, it’s down from 530,000 homes, which had 1.4% with a mortgage.

The loans that have serious delinquency, meaning they are 90 days or more past due, in foreclosure, or real estate owned, declined by 21.6%, with 3%, and 1.1 million mortgages in this category.

Two major factors have helped the drop in delinquency rates, and we have the rising home prices and improvement in the labor market to thank. The home price index has risen 6.2%, and...

What Really is a Good Credit Score?

Your credit score is perhaps the most important number lenders will look at when trying to buy a home. These numbers identify you as a person who is either able, or unable to pay your debts whether they are credit cards, car, or student loans. The general rule is if your number is high, you will be fine, if it’s low, you will have trouble.

So what exactly is a good credit score?

The perfect credit score is 850, but anything above 760 is considered to be in the best range of scores. Because you have proven you can pay off your debts, mortgage lenders want to do business with you. You will also receive lower interest rates with such a high score, and this is their way of enticing you to go with them instead of another lender.

A good score is from 700 to 759; a fair score is 650 to 699. The lower scores indicate you’ve had a little trouble making payments, and lenders will assume you will struggle to make those payments as well. You can still get a mortgage with these numbers, but it will come with the cost of a higher interest rate.

Any score below 650 is deemed as poor, and you’ve had a few rough patches in your payment history. Some banks will still lend you a mortgage, but you will have to jump through a ton of hoops and pay out the wazoo in interest.

How credit scores are calculated

Three major U.S. credit bureaus track your scores; Experian, Equifax, and TransUnion. Each score is somewhat similar, but pulls its info from different sources. TransUnion looks at your job history while Equifax checks out your rent payments. Here are the variables each definitely looks at.

Payment history – 35%: Can you pay your debts on time? If you’ve never missed a payment, a 30-day delinquency can cause as much as 110 point drop in your score.

Debt-to-credit utilization – 30%: This is how much debt you have accumulated through credit cards,...

Baby Boomers and the Single-Family Market

One of the most important keys in today’s single-family housing market is the baby boomer. They were born well before the first episode of Star Trek was released in the 60’s. Baby Boomers, age 55 and older own almost two-thirds of the country’s equity, which is about $8 trillion. Their numbers are roughly 67 million homeowners ages 55 and older.

It really doesn’t matter if they stay where they are or move before their time comes, their collective impact of their decisions on mortgage demand, housing options available to millennials, affordable housing supplies, and other future homeowners will be quite significant.

A Freddie Mac survey 55+ was released recently to help better understand these opportunities and challenges. About 5,000 applicants of all sexes and races born before 1961 were surveyed. They were asked about their current housing situation, their plans, and if they plan on helping their children become homeowners if they already aren’t.

The American Dream isn’t dead

A majority of surveyors said they are very satisfied with their current homes, communities, and overall quality of life. Almost 90 percent said people their age should own a home.

Homeownership is part of a healthy retirement

76 percent of the surveyors said they trust they will have a comfortable retirement. Race was of no factor in this question, despite many of which were still working. 44 percent of those still have a mortgage.

 It makes sense to own a home

An overwhelming majority said homeowner ship makes perfect sense financial stability, especially for married couples with, and without children. Slightly less claimed it made sense for single people to own a home. A quarter of the surveyors said they...

Why Neighbors Are Important

Every home owner has to deal with neighbors, unless you live in seclusion in the county-side. They can either be good, bad, horrible, loud, and quiet; you can love them or loathe them. They come in all shapes, sizes, personalities, and quantities. Let’s focus on the positives and look for the better qualities in neighbors.

Friends indeed

I know my neighbors have my back. Living in Kentucky we are subject to all types of weather, even the worst of it. Every winter we usually get hammered with a ton of snow, and as cars typically do, they get stuck in it. My neighbors didn’t’ hesitate to grab their ATV and help pull me out.

Every summer the neighbor down the yard walks up to our house with a big basket of vegetables they’ve grown and offer their hard work with us. It’s the little things that make a great neighbor!

The way to the heart

One of our neighbors is a hunter and often shares his bounty in the form of deer jerky. He stocks our freezer with meat and fish, and we are eternally grateful.

Not only is he a hunter, but he’s an electrician as well. If we ever have any problems or questions we just give him a quick shout and he comes to inspect our problem without hesitation. A neighbor who is so selfless is the best kind to have.

One big happy family

Every year the Kentucky Derby is run, and they have a party. As sure as the sun comes up, we get the first invite. We are so close they have become like family. We share cakes during celebrations, gifts during holidays, and even food when there is plenty.

Your neighbors live near you, so keep them near your heart.

Fondly remembered

Growing up you remember who your neighbors were. You remember the memories you had with...

How Landlords are Fighting Back Against Terrible Tenants

There are plenty of stories about crappy landlords who don’t hold up their end of the deal, and just as many horror stories about disastrous tenants. Social media happens to be the medium each side uses to gripe and complaining about the others behavior. More often than one would believe it is the renter who is causing the trouble.

There’s a new Facebook page called “Disgusting Renters” which gives property owners a place to vent their frustrations about their gross tenants. Some of the time their properties look like a garbage truck blew up inside and others a bomb went off and left only the structure intact.

There are pictures and videos of all the evidence left behind. Some of it isn’t for the squeamish as it can be quite gross.

The page was created in April and already has more than 2,500 likes and plenty of video posts. Some of the highlights are below, and beware, it’s meant to gross you out.

  • “A photo of a kitchen with a recliner in the middle of it, amid a several-foot-high selection of snack bags, empty soda cans, and even less palatable trash”.
  • “A picture, simply titled, “Wow,” showing a former yard taken over by any number of coolers, construction pails, and what appears to be a partly functioning aquarium”.
  • “A bare mattress atop a soiled wooden floor with this description: Bird feces all over the floor. The smell is horrendous.”
  • “ An artfully shot photography of hundreds of roaches swarming over a bathroom wall and toilet”

The page’s creator, a landlord in Florida, had first-hand experience when the mobile home they rented out was trashed by a family with kids. They left the home infested with fleas, trash everywhere, and even feces. It was eventually gutted and sold for a $25,000 loss. It left such a sour taste in their mouth, they are finished with renting.

He urges other landlords to take precautions...

Mortgage for Studentds with Big Debt

There is a debate going on surrounding the topic of student debt keeping millennials from buying homes. One side says high-earning young professionals are saddled with student debt, while the other side other factors are to blame.

However, there is a path for these young people to buy their first home. A Florida investment advisor says he wants to launch a “BurkeyLoan” which combines the borrowers’ student loans and their mortgages. This is essentially refinancing their school loans into their mortgages.

BurkeyLoans will be targeted at college graduates who have “top-tier work and academic profiles” who are applying for mortgages around $425,000-$600,000. At the years end, this new mortgage product should be available for those needing homes in the $200,000 price range.

Student debt is one of the obstacles that is blocked millennials from obtaining a mortgage. There often times isn’t enough money to pay a mortgage once they make their student loan payment that month.

The main driver between housing haves and have-nots is education, and not the debt used to fiancé it. Men with bachelor’s degrees earn $35,000 more a year than those without a degree, and women ear n $25,000 more. That much money can go a long way with a home.

The other side of the argument is that grads with degrees leave with $35,000-$54,000 in debt. And if they decide to go to medical and or law school, they can potentially end up with six-figure debt numbers.

The millennials with the higher end debt are considered “high-performance millennials” and there are roughly 11 million of them. BurkeyLoans is aiming for the top 20% of income distribution who went to the best schools and has great work experience.

A BurkeyLoan might work like this: If a student is trying to buy a $500,000 house but has $50,000 in student debt he would roll the two amounts into a single mortgage, but would have to make a down payment close to $50,000....

Americans are buying More Homes!

Lately, Americans have signed more contracts to buy homes in April for the third consecutive month, driving home sales to its highest level in more than a decade. The National Association of Realtors has claimed that its seasonally adjusted pending home sales index surged 5.1 percent last month to 116.3, which is the highest since 117.4 in February of 2006.

The April numbers are the latest examples of great news for the housing industry, which is currently in the late spring, early summer buying season. The pending home sales are up 4.6 percent from this time last year.

The sales have increased 11.4 percent last month in the west, 6.8 percent in the south, 1.2 percent in the northeast, and have actually dropped 0.6 percent in the Midwest.

They have credited the long-term mortgage rate that remains below 4 percent as steady job growth; which gives consumers the confidence to buy homes.

After a contract is signed, the pending home sale is complete usually a month or two after. This is a significant barometer for future purchases.

The department of Commerce has stated that the new home sales have increased 16.6 percent last month to a seasonally adjusted rate of 619,000, which is the most since January of 2008. The sale of existing homes is responsible for 910 percent of the housing market, rose in April for the second straight month to an annual pace of 5.45 million. 

...