Blog :: 2020

The #1 Thing You Can Do Now to Position Yourself to Buy a Home This Year

The #1 Thing You Can Do Now to Position Yourself to Buy a Home This Year | MyKCM

The last few weeks and months have caused a major health crisis throughout the world, leading to a pause in the U.S. economy as businesses and consumers work to slow the spread of the coronavirus. The rapid spread of the virus has been compared to prior pandemics and outbreaks not seen in many years. It also has consumers remembering the economic slowdown of 2008 that was caused by a housing crash. This economic slowdown, however, is very different from 2008.

One thing the experts are saying is that while we’ll see a swift decline in economic activity in the second quarter, we’ll begin a sharp rebound in the second half of this year. According to John Burns Consulting:

“Historical analysis showed us that pandemics are usually V-shaped (sharp recessions that recover quickly enough to provide little damage to home prices), and some very cutting-edge search engine analysis by our Information Management team showed the current slowdown is playing out similarly thus far.” 

Given this situation, if you’re thinking about buying a home this year, the best thing you can do right now is use this time to get pre-approved for a mortgage, which you can do from the comfort of your home. Pre-approval will help you better understand how much you can afford so that you can confidently do the following two things when you’re ready to buy:

1. Gain a Competitive Advantage

Today’s low inventory, like we’ve seen recently and will continue to see, means homebuyers need every advantage they can get to make a strong offer and close the deal. Being pre-approved shows the sellers you’re serious about buying a home, which is always a plus in your corner.

2. Accelerate the Homebuying Process

Pre-approval can also speed-up the homebuying process so you can move faster when you’re ready to make an offer. Being ready to put your best foot forward when the time comes may be the leg-up you need to cross the finish line first and land the home of your dreams.

Bottom Line

Pre-approval is the best thing you can do right now to be in a stronger position to buy a home when you’re ready. Let’s connect today to get the process started.

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    The Best Advice Does Not Mean Perfect Advice

    The Best Advice Does Not Mean Perfect Advice | MyKCM

    The angst caused by the coronavirus has most people on edge regarding both their health and financial situations. It’s at times like these when we want exact information about anything we’re doing – even the correct protocol for grocery shopping. That information brings knowledge, and this gives us a sense of relief and comfort.

    If you’re thinking about buying or selling a home today, the same need for information is very real. But, because it’s such a big step in our lives, that desire for clear information is even greater in the homebuying or selling process. Given the current level of overall anxiety, we want that advice to be truly perfect. The challenge is, no one can give you “perfect” advice. Experts can, however, give you the best advice possible.

    Let’s say you need an attorney, so you seek out an expert in the type of law required for your case. When you go to her office, she won’t immediately tell you how the case is going to end or how the judge or jury will rule. If she could, that would be perfect advice. What a good attorney can do, however, is discuss with you the most effective strategies you can take. She may recommend one or two approaches she believes will be best for your case.

    She’ll then leave you to make the decision on which option you want to pursue. Once you decide, she can help you put a plan together based on the facts at hand. She’ll help you achieve the best possible resolution and make whatever modifications in the strategy are necessary to guarantee that outcome. That’s an example of the best advice possible.

    The role of a real estate professional is just like the role of the lawyer. An agent can’t give you perfect advice because it’s impossible to know exactly what’s going to happen throughout the transaction – especially in this market.

    An agent can, however, give you the best advice possible based on the information and situation at hand, guiding you through the process to help you make the necessary adjustments and best decisions along the way. An agent will get you the best offer available. That’s exactly what you want and deserve.

    Bottom Line

    If you’re thinking of buying or selling, our agents are ready to help make sure you get the best advice possible.

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      Three Reasons Why Pre-Approval Is the First Step in the 2020 Homebuying Journey

      Three Reasons Why Pre-Approval Is the First Step in the 2020 Homebuying Journey | MyKCM

      When the number of buyers in the housing market outnumbers the number of homes for sale, it’s called a “seller’s market.” The advantage tips toward the seller as low inventory heats up the competition among those searching for a place to call their own. This can create multiple offer scenarios and bidding wars, making it tough for buyers to land their dream homes – unless they stand out from the crowd. Here are three reasons why pre-approval should be your first step in the homebuying process.

      1. Gain a Competitive Advantage

      Low inventory, like we have today, means homebuyers need every advantage they can get to make a strong impression and close the deal. One of the best ways to get one step ahead of other buyers is to get pre-approved for a mortgage before you make an offer. For one, it shows the sellers you’re serious about buying a home, which is always a plus in your corner.

      2. Accelerate the Homebuying Process

      Pre-approval can also speed up the homebuying process, so you can move faster when you’re ready to make an offer. In a competitive arena like we have today, being ready to put your best foot forward when the time comes may be the leg-up you need to cross the finish line first and land the home of your dreams.

      3. Know What You Can Borrow and Afford

      Here’s the other thing: if you’re pre-approved, you also have a better sense of your budget, what you can afford, and ultimately how much you’re eligible to borrow for your mortgage. This way, you’re less apt to fall in love with a home that may be out of your reach.

      Freddie Mac sets out the advantages of pre-approval in the My Home section of their website:

      “It’s highly recommended that you work with your lender to get pre-approved before you begin house hunting. Pre-approval will tell you how much home you can afford and can help you move faster, and with greater confidence, in competitive markets.”

      Local real estate professionals also have relationships with lenders who can help you through this process, so partnering with a trusted advisor will be key for that introduction. Once you select a lender, you’ll need to fill out their loan application and provide them with important information regarding “your credit, debt, work history, down payment and residential history.”

      Freddie Mac also describes the ‘4 Cs’ that help determine the amount you’ll be qualified to borrow:

      1. Capacity: Your current and future ability to make your payments
      2. Capital or Cash Reserves: The money, savings, and investments you have that can be sold quickly for cash
      3. Collateral: The home, or type of home, that you would like to purchase
      4. Credit: Your history of paying bills and other debts on time

      While there are still many additional steps you’ll need to take in the homebuying process, it’s clear why pre-approval is always the best place to begin. It’s your chance to gain the competitive edge you may need if you’re serious about owning a home.

      Bottom Line

      Getting started with pre-approval is a great way to begin the homebuying journey. Let’s get together today to make sure you’re on the fastest path to homeownership.

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        Make the Dream of Homeownership a Reality in 2020

        Make the Dream of Homeownership a Reality in 2020 | MyKCM

        In 1963, Martin Luther King, Jr. led and inspired a powerful movement with his famous “I Have a Dream” speech. Through his passion and determination, he sparked interest, ambition, and courage in his audience. Today, reflecting on his message encourages many of us to think about our own dreams, goals, beliefs, and aspirations. For many Americans, one of those common goals is owning a home: a piece of land, a roof over our heads, and a place where our families can grow and flourish.

        If you’re dreaming of buying a home this year, the best way to start the process is to connect with a Real Estate professional to understand what goes into buying a home. Once you have that covered, then you can answer the questions below to make the best decision for you and your family.

        1. How Can I Better Understand the Process, and How Much Can I Afford?

        The process of buying a home is not one to enter into lightly. You need to decide on key things like how long you plan on living in an area, school districts you prefer, what kind of commute works for you, and how much you can afford to spend.

        Keep in mind, before you start the process to purchase a home, you’ll also need to apply for a mortgage. Lenders will evaluate several factors connected to your financial track record, one of which is your credit history. They’ll want to see how well you’ve been able to minimize past debts, so make sure you’ve been paying your student loans, credit cards, and car loans on time. Most agents have loan officers they trust that they can refer you to.

        According to ConsumerReports.org,

        Financial planners recommend limiting the amount you spend on housing to 25 percent of your monthly budget.”

        2. How Much Do I Need for a Down Payment?

        In addition to knowing how much you can afford on a monthly mortgage payment, understanding how much you’ll need for a down payment is another critical step. Thankfully, there are many different options and resources in the market to potentially reduce the amount you may think you need to put down up front.

        If you’re concerned about saving for a down payment, start small and be consistent. A little bit each month goes a long way. Jumpstart your savings by automatically adding a portion of your monthly paycheck into a separate savings account or house fund. AmericaSaves.org says,

        “Over time, these automatic deposits add up. For example, $50 a month accumulates to $600 a year and $3,000 after five years, plus interest that has compounded.”

        Before you know it, you’ll have enough for a down payment if you’re disciplined and thoughtful about your process.

        3. Saving Takes Time: Practice Living on a Budget

        As tempting as it is to settle in each morning with a fancy cup of coffee from your favorite local shop, putting that daily spend toward your down payment will help accelerate your path to homeownership. It’s the little things that count, so start trying to live on a slightly tighter budget if you aren’t doing so already. A budget will allow you to save more for your down payment and help you pay down other debts to improve your credit score. A survey of Millennial spending shows,

        “70 percent of would-be first-time homebuyers will cut spending on spa days, shopping and going to the movies in exchange for purchasing a home within the next year.”

        While you don’t need to cut all of the fun out of your current lifestyle, making smarter choices and limiting your spending in areas where you can slim down will make a big difference.

        Bottom Line

        If homeownership is on your dream list this year, take a good look at what you can prioritize to help you get there. Let’s get together today to discuss the best steps you can take to start the process.

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          Buying a Home Early Can Significantly Increase Future Wealth

          Buying a Home Early Can Significantly Increase Future Wealth | MyKCM
           

          According to an Urban Institute study, homeowners who purchase a house before age 35 are better prepared for retirement at age 60.

          The good news is, our younger generations are strong believers in homeownership.

          According to a Freddie Mac survey,

          “The dream of homeownership is alive and well within “Generation Z,” the demographic cohort following Millennials.

          Our survey…finds that Gen Z views homeownership as an important goal. They estimate that they will attain this goal by the time they turn 30 years old, three years younger than the current median homebuying age (33).”

          Buying a Home Early Can Significantly Increase Future Wealth | MyKCM

          If these aspiring homeowners purchase at an early age, the Urban Institute study shows the impact it can have.

          Based on this data, those who purchased their first homes when they were younger than 25 had an average of $10,000 left on their mortgage at age 60. The 50% of buyers who purchased in their mid-20s and early-30s had close to $50,000 left but traditionally purchased more expensive homes.

          Buying a Home Early Can Significantly Increase Future Wealth | MyKCM

          Although the vast majority of Gen Zers want to own a home and are somewhat confident in their future, “In terms of financial awareness, 65% of Gen Z respondents report that they are not confident in their knowledge of the mortgage process.”

          Bottom Line

          As the numbers show, you’re not alone. If you want to buy this year but you’re not sure where to start the process, let’s get together to help you understand the best steps to take from here.

           

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            2020 Luxury Market Forecast

            2020 Luxury Market Forecast | MyKCM - Open Stairwell with Couple in the Foyer
             

            By the end of last year, many homeowners found themselves with more equity than they realized, and at the same time their wages were increasing. When those two factors unite, it can spark homeowners to think about making a move to a larger or more expensive home in the luxury space. That said, now is a perfect opportunity to take a look at the forecast for the 2020 luxury market.

            Three Things to Think About in the 2020 Luxury Housing Market

            1. Prices

            The U.S. economy is strong today, with buying opportunities throughout the luxury end of the market. Thomas Veraguth, Strategist at UBS Global Wealth Management, says in Barrons.com,

            “There’s a good link between luxury real estate prices and [economic] growth.”

            Available inventory is a key element that can impact home prices. At the upper range, the inventory is greater in comparison to the entry-level market, making moving up to a luxury home a growing reality for many buyers right now.

            2. Activity in the Market

            With more buying opportunities at the higher end, we should start to see an increase in activity. The same article states,

            “Affluent homebuyers will start to come out of the woodwork as they find rising luxury rents less appealing and sellers get even more negotiable on price.”

            Buyers looking in the luxury market are taking the opportunity to negotiate on price in a segment where there are more choices, too. According to the Luxury Market Report, homes sold for an average of 96.94% of the list price in December.

            Buyers are also getting more for their money with greater purchasing power due to the current low interest rates.

            3. Buyers Are Coming Back

            Keep in mind, buyers are often sellers too, especially those looking to move up. Homeowners with an entry-level home can take advantage of the inventory shortage at the lower end of the market, thus driving higher sales prices for their current homes. Combined with growing equity in the homes they’re listing, it’s a great time for those who are ready to make a luxury move.

            The extra equity and greater purchasing power are bringing many buyers back to the market. The same article mentioned that,

            “We’ve already seen buyers who’ve been on the sidelines for two years tread back into the market.”

            Bottom Line

            If you’re considering entering the luxury market, 2020 is shaping up to be a great year for those who are ready to make that move. Let’s get together to set your real estate plan for the year.

            2020 Outlook: Real Estate Market Forecast

            We’re in the midst of the longest economic expansion in U.S. history, and economists think there’s still room to grow. A recent survey by the National Association for Business Economics found that experts believe the U.S. economy will remain positive throughout 2020.1

            Still, given that recessions are a natural (and necessary) part of a business cycle, we know this period of growth will inevitably end. So you may be wondering … how will an eventual recession impact the real estate market?

            Many Americans assume a recession would lead to a decline in housing prices like we saw during the Great Recession of 2008. But the real estate market crash we experienced wasn’t typical. In fact, the last recession wasn’t typical at all. It was the worst economic downturn since the Great Depression of the 1930s.

            ATTOM Data Solutions analyzed real estate prices during the last five recessions and found that, in the majority of cases, home prices actually went up. Only twice (in 1990 and 2008) did prices decline, and in 1990 it was by less than one percent.2

            So what can historical precedent—combined with today’s data—tell us about the future of real estate? Here’s where experts predict the housing market is headed in 2020 and beyond.

             

            HOME PRICES WILL KEEP RISING

            Economists predict U.S. housing prices will continue to rise, regardless of a recession. In fact, property data firm CoreLogic forecasts a faster rate of growth for home prices in 2020 than we saw in 2019, with the biggest gains at the lower end of the market.3

            Arch MI Chief Economist Ralph DeFranco expects entry-level home prices to increase faster than incomes this year, making it even more difficult for many first-time buyers to afford to enter the market.4

            “Low interest rates and a shortage of starter homes will continue to push up prices,” predicts DeFranco. “This is especially the case for lower price points, since builders have tended to focus on more expensive, higher-profit houses and less on replenishing low inventories of entry-level homes.”4

            “Real estate is on firm ground with little chance of price declines,” said National Association of Realtors Chief Economist Lawrence Yun. "However, in order for the market to be healthier, more supply is needed to assure home prices as well as rents do not consistently outgrow income gains.”5

            What does it mean for you? If you have the ability and desire to buy a home now, don’t let a fear of recession or falling prices hold you in limbo. Economists expect home values, as well as rent prices, to continue rising. So you’ll likely pay more the longer you wait.

             

            INVENTORY CONSTRAINTS WILL CONTINUE

            According to Redfin, Americans are staying in their homes longer. In 2019, the average homeowner had resided in their home for 13 years, up from just eight years in 2010. That means there are fewer homes available today for those who want to buy.6

            It’s possible that an increase in new construction could offer some relief. The National Association of Realtors (NAR) expects single-family housing starts to total one million this year, the highest level since 2007. And NAR Chief Economist Lawrence Yun predicts the average price of new construction will decline slightly as builders shift to building smaller, more affordable homes.7

            However, these efforts may not be enough to meet current demand. “Despite improvements to new construction and short waves of sellers, next year will once again fail to bring a solution to the inventory shortage,” predicts Realtor.com Senior Economist George Ratiu. “In 2020, we expect inventory to struggle to grow and could instead reach a historic low level.”8

            What does it mean for you? If you’re looking to buy a starter home, be prepared to compete for the best listings. Start your search early, and if you’re up against a deadline (like a new baby), build in plenty of time to find the right home. We can help you assess your options, including new construction and up-and-coming developments.

             

            MORTGAGE RATES WILL REMAIN LOW

            Mortgage rates have declined more than a full percentage point since November 2018, when they hit a recent peak of 4.94%.9 The Mortgage Bankers Association predicts rates will remain low, at around 3.7%, through mid-2021.10

            While it may not seem significant, on a $200,000 30-year fixed-rate mortgage, that lower rate means buyers could save around $145 on their monthly payment and more than $52,000 over the life of their mortgage. Lower mortgage rates make homeownership more accessible and affordable for buyers.

            Although economists expect mortgage rates to stay low, they caution against waiting to act. Economic factors, shifts in supply and demand, or unforeseen impacts of the November election could cause rates to rise unexpectedly. “We recommend borrowers with long-term plans of staying in their homes to lock in a low rate now because there’s no telling how long these low rates will last,” warns Preetam Purohit, a capital markets trader at Embrace Home Loans.11

            What does it mean for you? If you’re looking to buy a home, act soon to lock in a historically low mortgage rate. It will minimize your monthly payment and could save you a bundle over the long term. And if you plan to stay in your current home for a while, consider whether it makes sense to refinance your mortgage at today’s lower rates.

             

            MILLENNIALS WILL DRIVE THE MARKET

            Millennials are expected to account for more than half of all mortgages this year, outnumbering Generation X and Baby Boomers combined. It’s not surprising, considering their age and stage of life. In 2020, the largest cohort of millennials will turn 30, and the oldest millennials will turn 39.8

            "Family changes tend to drive home-buying decisions," explains Realtor.com Chief Economist Danielle Hale. "Millennials are going to be active in the housing market not just because they're just at the age when they're thinking about becoming first-time home buyers, but they're also in the age range when they're having kids."12

            Younger millennials flocked to urban centers that offered easy access to work, shopping, and restaurants. But high prices, lack of square footage, and subpar schools are driving millennials out to the suburbs as they begin to marry and expand their families.

            In response, a new model for suburban living has emerged. “Hipsturbias,” or mixed-use communities that bring the live/work/play concept to the suburbs, were recently named one of the top real estate trends for 2020 by the Urban Land Institute.4

            What does it mean for you? If you’re a millennial who has been priced out of urban living or is looking for more space for your growing family, a number of suburbs in our area have a lot to offer. We can point you towards the communities that will best meet your needs. And if you’re a homeowner with plans to sell, give us a call. We know how to market your home to millennials … and can help you sell quickly for top dollar by appealing to this leading market segment!

             

            WE’RE HERE TO GUIDE YOU

            While national real estate numbers can provide a “big picture” outlook, real estate is local. As local market experts, we can guide you through the ins and outs of our market and the issues most likely to impact sales and home values in your particular neighborhood.

            If you’re considering buying or selling a home in 2020, contact us now to schedule a free consultation. We’ll work with you to develop an action plan to meet your real estate goals this year.

             

            START PREPARING TODAY


            If you plan to BUY this year:

            1. Get pre-approved for a mortgage. If you plan to finance part of your home purchase, getting pre-approved for a mortgage will give you a jump-start on the paperwork and provide an advantage over other buyers in a competitive market. The added bonus: you will find out how much you can afford to borrow and budget accordingly.
            2. Create your wish list. How many bedrooms and bathrooms do you need? How far are you willing to commute to work? What’s most important to you in a home? We can set up a customized search that meets your criteria to help you find the perfect home for you.
            3. Come to our office. The buying process can be tricky. We’d love to guide you through it. We can help you find a home that fits your needs and budget, all at no cost to you. Give us a call to schedule an appointment today!

             

            If you plan to SELL this year:

            1. Call us for a FREE Comparative Market Analysis. A CMA not only gives you the current market value of your home, it will also show how your home compares to others in the area. This will help us determine which repairs and upgrades may be required to get top dollar for your property, and it will help us price your home correctly once you’re ready to list.
            2. Prep your home for the market. Most buyers want a home they can move into right away, without having to make extensive repairs and upgrades. We can help you determine which ones are worth the time and expense to deliver maximum results.
            3. Start decluttering. Help your buyers see themselves in your home by packing up personal items and things you don’t use regularly and storing them in an attic or storage locker. This will make your home appear larger, make it easier to stage ... and get you one step closer to moving when the time comes!

             

            Sources:

            1. NBC News -
              https://www.nbcnews.com/business/economy/what-impending-recession-new-survey-shows-most-people-think-they-n1098511
            2. Curbed -
              https://www.curbed.com/2019/1/10/18139601/recession-impact-housing-market-interest-rates
            3. HousingWire  -
              https://www.housingwire.com/articles/corelogic-expects-home-prices-to-do-this-in-the-next-12-months/
            4. Forbes -
              https://www.forbes.com/sites/alyyale/2019/11/15/2020-housing-outlook-expert-predictions-for-mortgage-rates-home-prices-tech-and-more/#343ea4522935
            5. National Association of Realtors -
              https://www.nar.realtor/newsroom/expect-continued-economic-growth-slower-real-estate-price-gains-and-small-chance-for-recession-in
            6. Redfin -
              https://www.redfin.com/blog/homeowners-staying-in-their-homes-longer/
            7. HousingWire -
              https://www.housingwire.com/articles/builders-are-coming-to-the-housing-markets-rescue/
            8. Realtor.com -
              https://www.realtor.com/research/2020-national-housing-forecast/
            9. YCharts -
              https://ycharts.com/indicators/30_year_mortgage_rate
            10. MBA Mortgage Market Forecast November 2019  -
              https://www.mba.org/news-research-and-resources/research-and-economics/forecasts-and-commentary
            11. Dallas Morning News -
              https://www.dallasnews.com/sponsored/real-estate/2019/11/23/experts-predict-where-mortgage-interest-rates-land-in-2020/
            12. Realtor.com -
              https://www.realtor.com/news/trends/biggest-changes-coming-in-2020-real-estate-and-tips-for-buyers-and-sellers/

             

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