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Kevin McVicker

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Need Ways To Save Money?

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20 Ways to Save Money and Stretch Your Household Budget

These days, it seems like everyone’s looking for ways to cut costs and stretch their income further. Fortunately, there are some simple steps you can take to reduce your household expenses without making radical changes to your standard of living. When combined, these small adjustments can add up to significant savings each month.

Here are 20 things you can start doing today to lower your bills, secure better deals, and begin working toward your financial goals.

  1. Refinance Your Mortgage – For prime borrowers, mortgage rates are at or near historic lows. Depending on your current mortgage rate and the terms you choose, refinancing could save you a sizable amount on your monthly payments. There are fees and closing costs associated with refinancing, so you’ll need to talk to your lender to find out if refinancing is a good option for you.
  1. Evaluate Your Insurance Policies – If it’s been a while since you priced home or auto insurance, it may be worthwhile to do some comparison shopping. Get quotes from at least three insurers or independent agents. Try bundling your policies to see if there’s a discount. And inquire about raising your deductible, which should lower your premium.1
  1. Bundle Cable, Phone, and Internet – You can also save money by bundling your cable, phone, and internet services together. Shop around to see who is willing to give you the best deal. If switching is too much of a hassle, ask your current provider to match or beat their competitor’s offer.
  1. Better Yet, Cut the Cord on Cable – In many cases, you can save even more if you cancel your cable subscription altogether. An antenna should give you access to the major stations, and many of your favorite shows are probably available on-demand through a less expensive streaming service subscription.
  1. Revisit Your Wireless Plan – You can often save by switching from a big brand to an independent, low-cost carrier. If that’s not feasible, ask your current provider for a better deal or consider downgrading to a cheaper plan.
  1. Adjust Your Thermostat – Turning your thermostat up or down a few degrees can have a noticeable impact on your monthly heating and cooling costs. To maximize efficiency, change your filters regularly, and make sure your windows and doors are well insulated.
  1. Use Less Hot Water – After heating and cooling, hot water accounts for the second largest energy expense in most homes.2 To cut back, repair any leaks or dripping faucets, install low-flow fixtures, only run your dishwasher when full, and wash clothes in cold water when possible.
  1. Lower Overall Water Consumption – To decrease your water usage, take shorter showers, and turn off the sink while you brush your teeth and wash your hands. If you don’t have a low-flow toilet, retrofit your current one with a toilet tank bank or fill cycle diverter.And irrigate your lawn in the morning or evening to minimize evaporation.3
  1. Conserve Electricity – Save electricity by shutting off your computer at night and installing energy-efficient LED light bulbs. You can minimize standby or “vampire” power drain by utilizing power strips and unplugging idle appliances.4
  1. Purchase a Home Warranty – While there is an upfront cost, a home warranty can provide some protection and peace of mind when it comes to unexpected home repair costs. Most plans provide coverage for major systems (like electrical, plumbing, and HVAC) and appliances (such as your dishwasher, stove, or refrigerator).
  1. Outsource Less – From lawn care to grocery shopping to minor home repairs, we pay people to do a lot of things our parents and grandparents did themselves. To save money, try cutting back on the frequency of these services or taking some of them on yourself.
  1. Prepare Your Own Meals – It costs nearly five times more to have a meal delivered than it does to cook it at home.5 And home cooking doesn’t just save money; it’s healthier, cuts down on calorie consumption, and can offer a fun activity for families to do together.
  1. Plan Your Menu in Advance – Meal planning is deciding before you shop what you and your family will eat for breakfast, lunch, and dinner. It can help you lower your overall food bill, eliminate waste, and minimize impulse purchases. When possible, buy produce that is in season, and utilize nutrient-rich but inexpensive protein sources like eggs, beans, ground turkey, and canned tuna.
  1. Plant a Garden – You can save even more on produce by growing it yourself. If you have space in your yard, start-up costs are relatively minimal. Gardening can be a rewarding and enjoyable (not to mention delicious) hobby for the whole family. And it could save you around $600 per year at the grocery store!6
  1. Review Memberships and Subscriptions – Are you paying for services and subscriptions you no longer need, want, or can utilize? Determine if there are any that you should suspend or cancel.
  1. Give Homemade Gifts – Who wouldn’t appreciate a scratch birthday cake or tin of cookies? And if you enjoy crafting, Pinterest and Instagram are full of inspiring ideas. Show your recipient how much you care with a homemade gift from the heart.
  1. Minimize Your Debt Payments – The best way to reduce a debt payment is to pay down the balance. But if that’s not an option right now, try to negotiate a better interest rate. If you have a good credit score, you may be able to qualify for a balance transfer to a 0% or low-interest rate credit card. Keep in mind, the rate may expire after a certain period—so be sure to read the fine print.
  1. Get a Cash-back Credit Card – If you regularly pay your credit card balance in full, a cash-back credit card can be a good way to earn a little money back each month. However, they often come with high-interest rates and fees if you carry a balance. Commit to only using it for purchases you can afford.
  1. Ask for Deals and Discounts – It may feel awkward at first, but becoming a master haggler can save you a lot of money. Many companies are willing to negotiate under the right circumstances. Always inquire about special promotions or incentives. See if they are able to price match (or beat) their competitors. And if an item is slightly defective or nearing its expiration date, ask for a discount.
  1. Track Your Household Budget – One of the most effective ways to reduce household expenses is to set a budget—and stick to it. A budget can help you see where your money is going and identify areas where you can cut back. By setting reasonable limits, you’ll be able to reach your financial goals faster.

Want more help getting a handle on your finances? Use the budget worksheet below to track income and expenses—and start working towards your financial goals today! Please reach out to me for a downloadable version.

HOUSEHOLD BUDGET WORKSHEET
 ExpectedActualDifference
HOUSING
Mortgage/taxes/insurance or Rent   
Utilities (electricity, water, gas, trash)   
Phone, internet, cable   
Home maintenance and repairs   
FOOD
Groceries   
Restaurants   
TRANSPORTATION
Car payment/insurance   
Gas, maintenance, repairs   
OTHER
Health insurance   
Clothing and personal care   
Childcare   
Entertainment   
Gifts and charitable contributions   
Savings, retirement, college fund   
INCOME
Salary/wages   
Tips and other   
MONTHLY TOTALS
Total Actual Income 
Total Actual Expenses 
ADDITIONAL SAVINGS 

WE’RE HERE TO HELP

We would love to help you meet your financial goals. Whether you want to refinance your mortgage, save up for a down payment, or simply find lower-cost alternatives for home repairs, maintenance, or utilities, we are happy to provide our insights and referrals. And if you have plans to buy or sell a home this year, we can discuss the steps you should be taking to financially prepare. Contact us today to schedule a free consultation!

The above references an opinion and is for informational purposes only. It is not intended to be financial advice. Consult a financial professional for advice regarding your individual needs.

Sources:

  1. Insurance Information Institute –
    https://www.iii.org/article/twelve-ways-to-lower-your-homeowners-insurance-costs
  2. Department of Energy –
    https://www.energy.gov/energysaver/water-heating/reduce-hot-water-use-energy-savings
  3. Money Crashers –
    https://www.moneycrashers.com/ways-conserve-water/
  4. Harvard University –
    https://green.harvard.edu/tools-resources/poster/top-5-steps-reduce-your-energy-consumption
  5. Forbes –
    https://www.forbes.com/sites/priceonomics/2018/07/10/heres-how-much-money-do-you-save-by-cooking-at-home/#2c53b2f35e54
  6. Money –
    https://money.com/gardening-grocery-savings/
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#StayHome: How to Create Functional Spaces in Your Home During the Coronavirus Outbreak

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Since the outbreak of the novel coronavirus (COVID-19), many of us are spending a lot more time at home. We’re all being called upon to avoid public spaces and practice social distancing to help slow the spread of this infectious disease. While it can be understandably challenging, there are ways you can modify your home and your lifestyle to make the best of this difficult situation.

Here are a few tips for creating comfortable and functional spaces within your home for work, school, and fitness. We also share some of our favorite ways to stay connected as a community, because we’re all in this together … and no one should face these trying times alone.

Begin with the Basics

A basic home emergency preparedness kit is a great addition to any home, even under normal circumstances. It should include items like water, non-perishable food, a flashlight, first aid kit, and other essentials you would need should you temporarily lose access to food, water, or electricity.

Fortunately, authorities don’t anticipate any serious interruptions to utilities or the food supply during this outbreak. However, it may be a good time to start gathering your emergency basics in a designated location, so you’ll be prepared now-—and in the future—should your family ever need them.

Ready to start building an emergency kit for your home? Contact us for a free copy of our Home Emergency Preparation Checklist!

Working From Home

Many employees are being asked to work remotely. If you’re transitioning to a home office for the first time, it’s important to create a designated space for work … so it doesn’t creep into your home life, and vice versa. If you live in a small condominium or apartment, this may feel impossible. But try to find a quiet corner where you can set up a desk and comfortable chair. The simple act of separating your home and work spaces can help you focus during work hours and “turn off” at the end of the day.

Of course, if you have children who are home with you all day (given many schools and daycares are now closed), separating your home and work life will be more difficult. Unless you have a partner who can serve as the primary caregiver, you will need to help manage the needs of your children while juggling work and virtual meetings.

If both parents are working from home, try alternating shifts, so you each have a designated time to work and to parent. If that’s not an option, experts recommend creating a schedule for your children, so they know when you’re available to play, and when you need to work.1 A red stop sign on the door can help remind them when you shouldn’t be disturbed. And for young children, blocking off a specific time each day for them to nap or have independent screen time can give you a window to schedule conference calls or work uninterrupted.

Homeschooling Your Children

Many parents with school-aged children will be taking on a new challenge: homeschooling. Similar to a home office, designating a space for learning activities can help your child transition between play and school. If you’re working from home, the homeschooling area would ideally be located near your workspace, so you can offer assistance and answer questions, as needed.

If possible, dedicate a desk or table where your child’s work can be spread out—and left out when they break for meals and snacks. Position supplies and materials nearby so they are independently accessible, and place a trash can and recycling bin within reach for easy cleanup. A washable, plastic tablecloth can help transition an academic space into an arts and crafts area.

 If the weather is nice, try studying outside! A porch swing is a perfect spot for reading, and gardening in the backyard is a great addition to any science curriculum.

In addition to creating an academic learning environment, find age-appropriate opportunities for your children to help with household chores and meal preparation. Homeschooling advocates emphasize the importance of developing life skills alongside academic ones.2 And with more meals and activities taking place at home, there will be ample opportunity for every family member to pitch in and help.

Staying Fit

With gyms closed and team sports canceled, it can be tempting to sit on the sofa and binge Netflix. However, maintaining the physical health and mental wellness of you and your family is crucial right now. Implementing a regular exercise routine at home can help with both.

If you live in a community where you can safely exercise outdoors while maintaining the recommended distance between you and other residents, try to get out as much as possible. If the weather is nice, go for family walks, jogs, or bike rides.

Can’t get outside? Fortunately, you don’t need a home gym or fancy exercise equipment to stay fit. Look for a suitable space in your home, garage, or basement where you can comfortably move—you’ll probably need at least a 6’ x 6’ area for each person. Many cardio and strength training exercises require little (or no) equipment, including jumping jacks, lunges, and pushups.

And if you prefer a guided workout, search for free exercise videos on YouTube—there are even options specifically geared towards kids—or try one of the many fitness apps available.

Socializing From a Distance

Even though we’re all being called upon to practice “social distancing” right now, there are still ways to stay safely connected to our communities and our extended families. Picking up the phone is a great place to start. Make an effort to reach out to neighbors and loved ones who live alone and may be feeling particularly isolated right now.

And while parties and playdates may be prohibited, modern technology offers countless ways to organize networked gatherings with family and friends. Try using group video conferencing tools like Google Hangouts and Zoom to facilitate a virtual happy hour or book club. Host a Netflix Party to watch (and chat about) movies with friends. Or plan a virtual game night and challenge your pals to a round of Psych or Yahtzee.

There are safe ways to connect offline, too. Rediscover the lost art of letter writing. Drop off groceries on an elderly neighbor’s porch. Or organize a neighborhood “chalk walk,” where children use sidewalk chalk to decorate their driveways and then head out for a stroll to view their friends’ artwork.

Of course, there’s one group of people who you can still socialize with freely—those who reside in your home. Family dinners are back, siblings are reconnecting, and many of us have been given the gift of time, with commutes, activities, and obligations eliminated. In fact, some families are finding that this crisis has brought them closer than ever.

YOU ARE NOT ALONE

Even with all of the tools and technology available to keep us connected, many of us are still feeling stressed, scared, and isolated. However, you can rest assured that you are not alone. We’re not only here to help you buy and sell real estate. We want to be a resource to our clients and community through good times and bad. If you and your family are in need of assistance, please reach out and let us know how we can help.

Sources:

  1. CNBC –
    https://www.cnbc.com/2020/03/16/how-to-work-from-home-with-your-kids-during-the-coronavirus-outbreak.html
  2. TheHomeSchoolMom.com –
    https://www.thehomeschoolmom.com/benefits-of-homeschooling-2/
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Top 5 Home Design Trends for a New Decade

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Whether you’re planning a simple refresh or a full-scale renovation, it’s important to stay up-to-date on the latest trends in home design. Sellers who make tasteful updates can generate increased buyer interest and, in some cases, a premium selling price. And buyers should consider which features of a home will need updating immediately (or in the near future) so they can factor renovation costs into their overall budget.

Even if you have no immediate plans to buy or sell, we advise our clients to be thoughtful about the colors, materials, and finishes they select when planning a remodel, or even redecorating. Choosing over-personalized or unpopular options could hurt a home’s value when it does come time to list your property. And selecting out-of-style or overly-trendy elements could cause your home to feel dated quickly.

To help, we’ve rounded up five of the hottest home design trends for 2020. Keep in mind, not all of these will work well in every house. If you plan to buy, list, or renovate your property, give us a call. We can help you realize your vision and maximize the impact of your investment.

Photo by Rethink Design Studio – Browse living room ideas

1.  IN: Sustainability / OUT: Fast Furniture

Consumers have become increasingly eco-conscious. Many are shunning the mass-produced, “fast furniture” popularized by retailers like IKEA, opting instead for higher-quality pieces that are built to last. And the availability of non-toxic, environmentally-friendly furniture and decor options is set to grow in 2020 and beyond.

At the same time, there’s been a noticeable shift toward individuality in today’s interior design. Instead of following the latest fad, more homeowners are opting to embrace their personal style and invest in items they believe will “spark joy” (à la Marie Kondo) for years to come.

Want to know more about Marie Kondo’s famous organization method and how it can increase your home’s value? Contact us for a free copy of our recent report, “Top 6 Home Organization Upgrades That ‘Spark Joy’ for Buyers.”

To incorporate this trend, designers recommend layering old and new pieces for a curated look that you can build over time. Instead of purchasing a matching furniture set from a big-box retailer, buy one or two sustainably-sourced pieces that complement what you already own. Try searching estate sales and Craigslist for vintage classics or well-built furniture that can be refinished. And to accessorize your room, mix sentimental items with newer finds to create a truly personalized space.

Photo by Wander Designs – More dining room photos

2.  IN: Cozy / OUT: Cold

Designers are moving away from cool grays, industrial finishes, and stark modernism. In 2020, there’s a big emphasis on creating warm and cozy spaces through color, texture, and shape.

Gray has dominated the color palette for the past decade. This year, expect to see a move toward warmer neutrals, earth tones, and nature-inspired shades of blue and green. Warm metals, like gold and brass, will also continue to trend. And hardwood floors are heating up, as cool gray and whitewashed finishes fade in popularity. Expect to see a rise in classic choices like walnut, mahogany, and oak in richer and darker tones.

Furniture will also get cozier—and curvier—in 2020. From rounded sofas and curved-back chairs to oval dining tables, softened-angles are dominating the furniture scene right now. And designers expect softly-textured fabrics—like velvet, shearling, and mohair—to be big this year, as homeowners strive to add a touch of “hygge” (the Danish concept of calming comfort).

Want to warm up your home decor? Try one of the top paint colors for 2020: Benjamin Moore’s First Light (soft pink), Sherwin Williams’s Naval (rich blue), or Behr’s Back to Nature (light green).

Photo by Halo Interior Design – Search powder room design ideas

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3.  IN: Bold / OUT: Boring

Bold is back! After years of neutral overload, vivid colors and prints will take center stage in 2020. Expect to see geometric designs, color blocking, and floral and botanical patterns on everything from pillows to rugs to wallpaper.

The hottest trend in interior paint right now is bold trim and ceilings. Monochromatic rooms (e.g., walls, ceilings, and millwork painted the same color) will be big this year, as well as high-contrast pairings, like white walls with black trim. Color is coming back to kitchens, too, and two-toned color schemes continue to gain steam. In 2019, 40% of remodelers chose a contrasting color for their kitchen island.1 While white was still the top choice for cabinets, blue and gray are increasingly popular alternatives.

If you’re ready to “go bold,” separated spaces like laundry and powder rooms are great places to start. It’s easier to incorporate busy wallpaper or a bright wall color in an enclosed area because it doesn’t have to flow with the rest of your decor.

Of course, clients always want to know how design choices could impact their home’s value. The reality is, neutral finishes are still the safest bet for resale. If you’re prepping your home to go on the market, stick with non-permanent fixtures—like artwork and accessories—to brighten your space.

Photo by CplusC Architectural Workshop – Discover staircase design ideas

4.  IN: Nature / OUT: Industrial

Biophilic design has been big the past few seasons, and it isn’t going anywhere in 2020. It centers around the health and wellness benefits of connecting with nature, even while indoors, and it’s impacted the latest trends in color, prints, and materials.

As we mentioned previously, floral and botanical patterns are hot right now, along with nature-inspired hues, like blues, greens, and earth tones. We’re also seeing a heightened use of organic shapes and sustainable materials in furniture and furnishings, including wood, wicker, rattan, and jute. This infusion of nature coincides with a decline in the popularity of urban-industrial fixtures. Designers predict that concrete floors and Edison light bulbs are on the way out.

Want to bring in elements of biophilic design on a budget? Houseplants are a great place to start. But you can also enhance your home’s natural light and create a visual sightline to the outdoors by removing heavy curtains and blinds. And when the weather is nice, open your windows and enjoy the breeze, sounds, and smells of nature. These simple acts are scientifically proven to help reduce stress, boost cognitive performance, and enhance mood!2

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Photo by Wickes – Browse kitchen photos

5.  IN: Functional / OUT: Fussy

In 2020, homeowners want design that’s beautiful, but also liveable. With the rise in remote workplaces, online shopping, and virtual exercise classes, many of us are spending more time at home than ever before. Cue the growing appeal of multi-functional spaces, like a combination kitchen/office or gym/playroom. Real life—and rising housing prices—necessitates creative use of limited space.

Durable, low-maintenance materials will also surge in popularity this year. Engineered quartz—which is more stain, heat, and chip-resistant than natural stone—is now the #1 choice for kitchen countertops.1 Waterproof, wood-look luxury vinyl is the fastest-growing segment in the flooring industry.3 And improvements to water and stain-resistant performance fabric has made it a mainstream option for both indoor and outdoor upholstery.

Now that functional is hot, what’s not? Designers say that mirrored furniture, open shelving, and all-white kitchens are too impractical for today’s busy families.

So how can you start enjoying the time and energy-saving benefits of this design trend? Begin by structuring each room so that it best suits your needs. And when purchasing furniture or fixtures, choose options that are durable and easy-to-clean. The truth is, design fads come and go. But a comfortable and relaxed home (that you don’t spend every spare minute maintaining!) can help create memories to last a lifetime.

DESIGNED TO SELL

Are you contemplating a remodel? Want to find out how upgrades could impact the value of your home? Buyer preferences vary greatly by neighborhood and price range. We can share our insights and offer tips on how to maximize the return on your investment. And if you’re in the market to sell, we can run a Comparative Market Analysis on your home to find out how it compares to others in the area. Contact us to schedule a free consultation!

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Housing Market Ready To “Spring Forward”

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Greetings Raleigh and Durham Homeowners!

Just like our clocks this weekend, in the majority of the country, the housing market will soon “spring forward!” Similar to tension in a spring, the lack of inventory available for sale has been holding back the market.

Many potential sellers believe that waiting until Spring is in their best interest. Traditionally, they would have been right.

Buyer demand has seasonality to it. Usually, this falls off in the winter months, especially in areas of the country impacted by arctic conditions.

That hasn’t happened in Raleigh and Durham this year.

Demand for housing has remained strong as mortgage rates have remained near historic lows. Even with an increase in rates forecasted for 2019, buyers are still able to lock in an affordable monthly payment. Buyers are increasingly jumping off the fence and into the market to secure a lower rate.

The National Association of Realtors (NAR) recently reported that in 2018 the top 10 dates sellers listed their homes all fell in April, May, or June.

Those who act quickly and list now, before a flood of increased competition, will benefit from additional exposure to buyers.

Bottom Line

If you are planning on selling your home in 2019, let’s talk and discuss the opportunities in your neighborhood!

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2019 Market Indicators

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The housing market has been hot for a while now. Homes have been flying off the shelves as fast as they have been listed. Buyers have been competing in bidding wars just to find a home to buy, let alone find their dream home.

This ‘seller’s market’ has driven home prices to new heights. Home price appreciation averaged over 6% across the country.

However, home price growth has recently started to cool down. The latest report from CoreLogic shows that home prices have only risen by 4.7% over the last 12 months.

Many buyers and sellers planning to enter the housing market this year have started to wonder if we are headed towards another housing crash. Ralph McLaughlin, Deputy Chief Economist at CoreLogic, recently stated in an interview,

“There’s no reason to panic right now, even if we may be headed for a recession. We’re seeing a cooling of the housing market, but nothing that indicates a crash.

The real elephant in the room here is housing supply.”

The simple answer is we are returning to a ‘normal’ market. The inventory of homes for sale more closely matches the demand in the market. The added supply means fewer buyers are outbidding each other. Therefore, prices are experiencing less upward pressure. McLaughlin went on to explain,

“If there are a lot of homes on the market and suddenly no one wants to buy them, you’ll get into a downward spiral of price competition. Right now, however, we’re in the opposite situation, there isn’t an over-abundance of homes on the market.”

As more renters looking for their piece of the American Dream enter the housing market, demand for housing will continue to grow. The Joint Center for Housing Studies at Harvard University estimates over 30 million new households will enter the market from now through 2040.

“There’s the natural life cycle of young people getting older and starting to do adult life things which include … buying a house and that’s a lot of potential inertia that could last indefinitely.”

With home prices softening, some are concerned that we may be headed toward the next housing crash. However, it is important to remember that today’s market is quite different than the bubble market of twelve years ago.

Here are three key metrics that will explain why:

  1. Home Prices
  2. Mortgage Standards
  3. Foreclosure Rates

HOME PRICES

A decade ago, home prices depreciated dramatically, losing about 29% of their value over a four-year period (2008-2011). Today, prices are not depreciating. The level of appreciation is just decelerating.

Home values are no longer appreciating annually at a rate of 6-7%. However, they have still increased by more than 4% over the last year. Of the 100 experts reached for the latest Home Price Expectation Survey, 94 said home values would continue to appreciate through 2019. It will just occur at a lower rate.

MORTGAGE STANDARDS

Many are concerned that lending institutions are again easing standards to a level that helped create the last housing bubble. However, there is proof that today’s standards are nowhere near as lenient as they were leading up to the crash.

The Urban Institute’s Housing Finance Policy Center issues a quarterly index which,

“…measures the percentage of home purchase loans that are likely to default—that is, go unpaid for more than 90 days past their due date. A lower HCAI indicates that lenders are unwilling to tolerate defaults and are imposing tighter lending standards, making it harder to get a loan. A higher HCAI indicates that lenders are willing to tolerate defaults and are taking more risks, making it easier to get a loan.”

Last month, their January Housing Credit Availability Index revealed:

“Significant space remains to safely expand the credit box. If the current default risk was doubled across all channels, risk would still be well within the pre-crisis standard of 12.5 percent from 2001 to 2003 for the whole mortgage market.”

FORECLOSURE INVENTORY

Within the last decade, distressed properties (foreclosures and short sales) made up 35% of all home sales. The Mortgage Bankers’ Association
revealed just last week that:

“The percentage of loans in the foreclosure process at the end of the fourth quarter was 0.95 percent…This was the lowest foreclosure inventory rate since the first quarter of 1996.”

Bottom Line

After using these three key housing metrics to compare today’s market to  that of the last decade, we can see that the two markets are nothing alike.  

Home prices will start to appreciate by historical norms as we continue to head towards a more ‘normal’ market, rather than the over 6% seen over the course of the last couple of years. This is great news! Homeowners looking to sell their home will have buyers, as more buyers will be able to afford them!

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Protect Your Family From Radon

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​ House with text that says radon and your health

Radon is the second leading cause of lung cancer after cigarette smoking. If you smoke and live in a home with high radon levels, you increase your risk of developing lung cancer. Having your home tested is the only effective way to determine whether you and your family are at risk of high radon exposure.

Radon is a radioactive gas that forms naturally when uranium, thorium, or radium, which are radioactive metals break down in rocks, soil and groundwater. People can be exposed to radon primarily from breathing radon in air that comes through cracks and gaps in buildings and homes. Because radon comes naturally from the earth, people are always exposed to it.

The U.S. Environmental Protection Agency and the Surgeon General’s office estimate radon is responsible for more than 20,000 lung cancer deaths each year in the U.S. When you breathe in radon, radioactive particles from radon gas can get trapped in your lungs. Over time, these radioactive particles increase the risk of lung cancer. It may take years before health problems appear.

People who smoke and are exposed to radon are at a greater risk of developing lung cancer. EPA recommends taking action to reduce radon in homes that have a radon level at or above 4 picocuries per liter (pCi/L) of air (a “picocurie” is a common unit for measuring the amount of radioactivity).

Your chances of getting lung cancer from radon depend mostly on:

  • How much radon is in your home–the location where you spend most of your time (e.g., the main living and sleeping areas)
  • The amount of time you spend in your home
  • Whether you are a smoker or have ever smoked
  • Whether you burn wood, coal, or other substances that add particles to the indoor air

The chances of getting lung cancer are higher if your home has elevated radon levels and you smoke or burn fuels that increase indoor particles.

Infographic: Protect Your Family from Radon

Protect Yourself and Your Family from Radon

Having your home tested is the only effective way to determine whether you and your family are exposed to high levels of radon. Steps you can take to measure and reduce radon levels include:

  • Purchasing a radon test kit
  • Testing your home or office
    • Testing is inexpensive and easy — it should only take a few minutes of your time. It requires opening a package and placing a small measuring device in a room and leaving it there for the desired period. Short-term testing can take from a few days to 90 days. Long-term testing takes more than 90 days. The longer the test, the more relevant the results are to your home and lifestyle.
  • Sending the kit to appropriate sources to determine radon level
    • Follow the directions on the test kit packaging to find out where to send the device to get the results.
  • Fixing your home if radon levels are high
  • Stop smoking and discourage smoking in your home.
    • Smoking significantly increases the risk of lung cancer from radon.
  • Increase air flow in your house by opening windows and using fans and vents to circulate air.
    • Natural ventilation in any type of house is only a temporary strategy to reduce radon.
  • Seal cracks in floors and walls with plaster, caulk, or other mate­rials designed for this purpose.
  • Contact your state radon office for a list of qualified contractors in your area and for information on how to fix radon problems yourself. Always test again after fin­ishing to make sure you’ve fixed your radon problem.
    • Ask about radon resistant construction techniques if you are buy­ing a new home.
      • It is almost always cheaper and easier to build these features into new homes than to add them later.

For more information on testing your home, check with your state radon office or call the National Radon Hotline at 1-800-SOS-RADON.

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Supply And Demand Set Home Values

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Supply and Demand = Home Value

Will home values continue to appreciate throughout 2018? The answer is simple: YES! – as long as there are more purchasers in the market than there are available homes for them to buy. This is known as the theory of “supply and demand,” which is defined as:

“The amount of a commodity, product, or service available and the desire of buyers for it, considered as factors regulating its price.”

When demand exceeds supply, prices go up. Every month this year, demand (buyer traffic) has increased as compared to last year and for the first five months of 2018, supply (the number of available listings) had decreased as compared to last year. However, a recent report by the National Association of Realtors (NAR) revealed the first year-over-year increase in supply in three years.

Here are the numbers for supply and demand as compared to last year since the beginning of 2018:

Supply vs. Demand in 2018

The increase in the June numbers doesn’t mean that prices won’t continue to appreciate. In that same report, Lawrence Yun, NAR’s Chief Economist, explained:

“It’s important to note that despite the modest year-over-year rise in inventory, the current level is far from what’s needed to satisfy demand levels.

Furthermore, it remains to be seen if this modest increase will stick, given the fact that the robust economy is bringing more interested buyers into the market, and new home construction is failing to keep up.”

How does this impact Home Buyers and Sellers?

​The reason home prices are still rising is that there are many purchasers looking to buy but very few homeowners ready to sell. This imbalance is the reason prices will remain on the uptick.

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Housing Market Changed in Last 10 Years

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Today's Housing Market

Some are attempting to compare the current housing market to the market leading up to the “boom and bust” that we experienced a decade ago. They look at price appreciation and conclude that we are on a similar trajectory, speeding toward another housing crisis.

However, there is a major difference between the two markets. Last decade, while demand was being artificially created by extremely loose lending standards, a tremendous amount of inventory was coming to the market to satisfy that demand. Below is a graph of the inventory of homes available for sale leading up to the 2008 crash.

Months Of Inventory In 2008

A normal market should have approximately 6 months supply of housing inventory. As we can see, that number jumped to over 11 months supply leading up to the housing crisis. When questionable mortgage practices ceased, and demand dried up, there was a glut of inventory on the market which caused prices to drop as there was too much supply and not enough demand.

2018 Inventory Is Different

There are those who believe that low mortgage rates have created an artificial demand in the current market. They fear that if mortgage rates continue to rise, some of the current demand will dry up (which is a possibility).

However, if we look at supply again, we can see that the current supply of homes is well below the norm of 6 months.

2018 Inventory Level

​What Does This Mean To Buyers and Sellers

​We will not have a glut of inventory like we did back in 2008 and home values won’t come tumbling down. Instead, if demand weakens, we will return to a normal market (approximately a 6-month supply) with historic levels of appreciation (3.6% annually).

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Top 3 Myths About Today’s Real Estate Market

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There are many conflicting headlines when it comes to describing today’s real estate market. Some are making comparisons to the market we experienced 10 years ago and are starting to believe that we may be doomed to repeat ourselves. Others are just plain wrong when it comes to what it takes to qualify for a mortgage.

Today, I want to try and clear the air by shedding some light on what’s causing some of these headlines, as well as what’s truly going on.

Myth #1: We Are Headed for Another Housing Bubble

Home prices have appreciated year-over-year for the last 76 straight months. Many areas of the country are at or near their peak prices achieved before the last housing bubble burst. This has many worried that we are headed towards another housing bubble.

Reality: The biggest challenge facing today’s real estate market is a lack of homes for sale! Demand is strong, as many renters have come off the fence and are searching for their dream homes. 

Historically, a normal market requires a 6-month supply of inventory in order for prices to rise with the rate of inflation. According to the National Association of Realtors (NAR) there is currently a 4.3-month supply of inventory.

The US housing market hasn’t had 6-months inventory since August 2012! The concept of supply and demand is what is driving home prices up!

Myth #2: The Rumored Recession Will Lead to Another Housing Market Crash

Economists and analysts know that the country has experienced economic growth for almost a decade. When this happens, they also know that a recession can’t be too far off. But what is a recession?

Merriam-Webster defines a recession as “a period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two consecutive quarters.”

Reality: Recession DOES NOT equal housing crisis. Many people associate these two terms with one another because the last time we had a recession it was caused by a housing crisis. According to the Federal Reserve, over the last 40 years, there have been six recessions. In each of the previous five recessions, home values appreciated.

Myth #3: There is an Affordability Crisis Looming

Rising home prices have many concerned that the average family will no longer be able to afford the most precious piece of the American Dream – their own home.

There are many different affordability indexes supported by different organizations that all measure different data. For this reason, there is a lot of confusion about what “affordable” actually means.

The monthly cost of a home is determined by the home’s price and the interest rate on the mortgage used to purchase it. According to Freddie Mac, interest rates have risen from 3.95% in January to 4.59% just last week.

Reality: As we mentioned earlier, home prices have appreciated year-over-year for the last 76 months, largely driven by high demand and low supply.

According to a recent study by Zillow, the percentage of median income necessary to buy a home in today’s market (17.1%) is well below the mark reached in 1985 – 2000 (21%), as well as the mark reached in 2006 (25.4)! Interest rates would have to increase to 6% before buying a home would be less affordable than historical norms.

The starter-home market has appreciated at higher levels (9.4% year-over-year) than any other market. One reason for this is the fact that many of the first-time buyers who have flocked to the starter-home market are being met with high competition. For some hopeful buyers, it may take more than a good offer to stand out from the crowd!

Bottom Line

There is a lot of confusion in today’s real estate market. If your future plans include buying or selling, please let me know.  I will be by your side as your trusted advisor and market expert, helping guide you to the best decision for you and your family.  Simply send me an email or call me at (919) 369-4926.

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Have Your Housing Needs Changed

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For many Americans, buying their first home is their first taste of achieving part of the American Dream. There is a sense of pride that comes along with owning your own home and building your family’s wealth through your monthly mortgage payment.

It may seem hard to imagine that the first home you purchased (which made your dreams come true) might not be the home that will allow you to achieve the rest of your dreams. The good news is that it’s ok to admit that your home no longer fits your needs!

According to CoreLogic’s latest Home Price Index, prices in the starter home market have appreciated faster than any other category over the last year, at 9.4%. At the same time, inventory in this category has dropped 14.2%.

These two stats are directly related to one another. As inventory has decreased and demand has increased, prices have been driven up.

This is great news if you own a starter home and are looking to move up to a larger home. The equity in your home has risen as prices have gone up. Even better is the fact that there is a large pool of buyers out there searching for your starter home to help them achieve their American Dream!

A move in the opposite direction is equally important in today's real estate environment.  Homeowners that now find themselves in a home that is larger than they need, see themselves spending more of their time and money maintaining a home rather than investing that money in areas that will enhance their quality of life.  

Bottom Line

 If your current home no longer fits your needs,  give me a call today and let's develop a plan to help you move into a home that is the right fit for your current lifestyle!

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Rising Interest Rates Have Not Dampened Demand

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Since the beginning of the year, mortgage interest rates have risen over a half of a percentage point (from 3.95% to 4.52%), according to Freddie Mac. Even a small rise in interest rates can greatly impact a buyer’s monthly mortgage payment.

First American recently released the results of their quarterly Real Estate Sentiment Index (RESI), in which they surveyed title and real estate agents across the country about the impact of rising rates on first-time homebuyers.

Real estate professionals around the country have not noticed a slowdown in demand for housing among young buyers; nearly 93% of all first-time homebuyers last quarter were between the ages of 21-35, with the largest share of buyers (51%) coming from those ages 26-30.

First American’s Chief Economist Mark Fleming had this to say,

“On a national level, mortgage rates would need to hit 5.6%, 1 percentage point above the current rate, before first-time homebuyers withdraw from the market.”

So, what is slowing down sales?

According to the last Existing Home Sales Report from the National Association of Realtors, sales are now down 3.0% year-over-year and have fallen for the last three months. If rising interest rates aren’t to blame, then what is?

Fleming addressed the cause, saying that:

“The housing market is facing its greatest supply shortage in 60 years of record keeping, according to the Federal Reserve Bank of Kansas City. The ongoing housing supply shortage will make it difficult for first-time buyers to find a home to buy, even when they are financially ready.”

Bottom Line

First-time homebuyers know the importance of owning their own homes and a spike in interest rates is not going to keep them from buying this year! Their biggest challenge is finding a home to buy!

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Will Housing Be Affected With A Future Recession?

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Some experts are calling for a slowdown in the economy later this year and most economists have predicted that the next recession could only be eighteen months away. The question is, what affect will a recession have on the housing market?

Here are the opinions of several experts on the subject:

Ivy Zelman in her latest “Z Report”:

“While economic activity appears to have accelerated so far in 2018, some prominent economic forecasters have become more cautious about growth prospects for 2019 and 2020…

All told, while solid long-term demographic underpinnings support our positive fundamental outlook for housing, in the event micro-economic headwinds surface, we would expect housing transaction volumes and home prices to weather the storm.”

Aaron Terrazas, Zillow’s Senior Economist:

“While much remains unknown about the precise path of the U.S. economy in the years ahead, another housing market crisis is unlikely to be a central protagonist in the next nationwide downturn.”

Mark Fleming, First American’s Chief Economist:

“If a recession is to occur, it is unlikely to be caused by housing-related activity, and therefore the housing sector should be one of the leading sources to come out of the recession.”

Mark J. Hulbert, Financial Analyst and Journalist:

“Real estate may be one of your best investments during the next bear market for stocks. And by real estate, I mean your home or other residential properties.”

U.S. News and World Report:

“Fortunately – and hopefully – the history of recessions and current issues that could harm the economy don’t lead many to believe the housing market crash will repeat itself in an upcoming decline.”

One of the most common questions I get from my clients is. “Where is the real estate market headed”?

What we do know is that demand for housing is high right now, in both the residential rental and buyer markets.  After all, no matter what else happens with other sectors of the economy, people still need a place to live.  Investors from around the world recognize this fact and these investors play an important role in the real estate market.  Until we see a balance between supply and demand, I believe we will continue to see an appreciating market.  Once this balance is achieved, we may see a leveling off of pricing.

I value your thoughts on this subject.  Please send me an email with any other points of view that you care to share and I may include them in an upcoming post.

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May 2018 Newsletter

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Why Home Prices Are Increasing

Why Home Prices Are Increasing | MyKCM

There are many unsubstantiated theories as to why home values are continuing to increase. From those who are worried that lending standards are again becoming too lenient(data shows this is untrue), to those who are concerned that prices are again approaching boom peaks because of “irrational exuberance” (this is also untrue as prices are not at peak levels when they are adjusted for inflation), there seems to be no shortage of opinion.

However, the increase in prices is easily explained by the theory of supply & demand. Whenever there is a limited supply of an item that is in high demand, prices increase.

It is that simple. In real estate, it takes a six-month supply of existing salable inventory to maintain pricing stability. In most housing markets, anything less than six months will cause home values to appreciate and anything more than seven months will cause prices to depreciate (see chart below).

Why Home Prices Are Increasing | MyKCM

According to the Existing Home Sales Report from the National Association of Realtors (NAR), the monthly inventory of homes for sale has been below six months for the last five years (see chart below).

Why Home Prices Are Increasing | MyKCM

Bottom Line

If buyer demand continues to outpace the current supply of existing homes for sale, prices will continue to appreciate. Nothing nefarious is taking place. It is simply the theory of supply & demand working as it should.

 

 

13 Simple DIY Home Maintenance Tips & Ideas

man cleaning gutters on ladder?

It’s tempting to disregard the steep price tag and hire a professional contractor for home improvement repairs rather than doing them yourself. Home repairs can seem complex and intimidating to the uninitiated, and fear that your own attempts at fixing that leaky faucet or drafty window will cause further damage may further discourage you from going DIY.

However, having a home maintenance plan can make a huge difference in your bank account. And, fortunately, performing proper home maintenance does not require a lot of specialized know-how or training, nor does it require a lot of time or money.

Simple Home Maintenance Tips

1. Toilets

Water leaking from your toilet tank will not only cost you money when it comes to your utility bill, but it can also cause water damage to your bathroom floor and premature wear of your toilet’s internal workings. To find out whether your toilet tank is leaking, add some red food coloring to the water in the tank. Come back in about an hour and see if the water in the bowl is pink. If it is, you have a leak.

If you find that your toilet is leaking from the tank to the bowl, the flapper needs to be replaced. To change your toilet’s flapper, first shut off the water supply to your toilet. To do this, simply turn the water valve located directly behind the toilet. Remove the tank lid and flush the toilet in order to empty the tank. Use a towel or sponge to mop out any excess water left in the tank. Remove the flush chain from the lever, and then slide the old flapper up off the overflow tube. Slide the new flapper in place over the overflow tube, reconnect the chain, and turn the water supply back on.

2. Faucets

The main cause of leaky faucets is worn out washers. The washers inside of the faucet handles are rubber and tend to wear out quickly. Replace them by turning off the main water supply, unscrewing the leaky handle that controls the flow of water to the spout, removing the old washer, and dropping in the new one.

3. Washing Machine & Dryer

It is important to regularly inspect your washing machine water supply hoses for leaks. One of the top reasons for insurance claims is for water damage caused by leaky washing machine supply lines. Inspect washing machine water supply lines at least annually and replace them every three years if they are plastic. If you notice that the metal ends of your water supply lines are discolored or rusty, replace them immediately.

Faulty washing machine drain hoses are as important as water supply lines when it comes to keeping water off of your floor and in your drain where it belongs. As with supply lines, regularly inspect the ends of your washing machine drain lines for discoloration or rust, and replace them immediately if you find evidence of leaking.

Additionally, check the snugness of the drain lines by using a crescent wrench or a pair of pliers. You should not be able to tighten the line any further if the line is properly tightened. Plastic lines should be replaced every three years.

When it comes to your dryer, it is important to make sure that you regularly clean your lint screen in order to prevent fires. Not only will a clean lint screen prevent fires, but it will also increase the life of the heating element. Physically remove the lint from the screen between each load of laundry. Also, be sure to remove fabric softener residue by washing the screen with warm water and dish detergent once per week.

working man plumber repairs washing machine

4. Water Heater

There is nothing more frustrating than turning on the hot water in your shower and instead receiving cold water. Water heaters, like other appliances, need maintenance to increase longevity and reduce the possibility of damage.

Water has sediment suspended in it, and as the water sits in your water heater, these particles will often settle to the bottom of the tank, causing damage to the floor of your water heater. At least once per year, drain the water from your water heater and clean the inside surface of its floor.

To drain your water heater, first turn off the water supply and power to the water heater. For electric water heaters, turning off the power means that you simply flip the circuit breaker to the “off” position. For gas water heaters, turn the thermostat setting to the pilot position.

Next, connect a water hose to the drain fitting at the bottom of the tank and put the other end in a place, such as your driveway, where the draining hot water won’t cause any damage. A typical garden hose is a direct fit to the drain fitting. Turn on all the hot water faucets in your home and then open the drain valve on the water heater. Turn the water supply back on with the drain valve still open to remove any built up sediment in the bottom of the tank. Then close the drain valve, refill the tank, and turn the power back on.

5. Plumbing

In order to keep water flowing freely through your pipes, keep the following things in mind:

  • Accumulating fats and oils are the main cause for clogs, so never pour fats or other oils down your drains. This includes oils that are not solid at room temperature. If you accidentally spill oils or fats down the drain, run hot water down your drain along with a healthy serving of dishwashing liquid. The soap will emulsify the fat or oil and move it on down the pipe, preventing a clog.
  • Get a hair strainer for the bathtub drain. If fats and oils are the main source of clogs in the kitchen, hair is the primary culprit in the bathroom. If you have a strainer, make sure that you remove any accumulated hair from it following each shower. This will reduce the amount of hair that finds its way through the strainer and into your plumbing.
  • Skip the Drano. Though the acids it contains can help unclog a drain, they also cause significant damage to your plumbing, including premature leaking. This can lead to costly repairs later on. If your bathtub or toilet is completely clogged, use a small drain snake – which you can purchase at any hardware outlet – to pull the offending clog to the surface. If your kitchen sink is clogged, try plunging it before trying to snake the drain. If you cannot remove the clog using a drain snake, call a professional.

6. Air Conditioning

Air conditioners are among the most overlooked appliances when it comes to performing regular home maintenance. However, they can be one of the most costly appliances to repair.

Regularly inspect the condensation hose to make sure that water can flow freely from the line. If there is standing water where your condensation line drains, create a drainage path using a small garden trowel and line the path with gravel to keep mold and algae from forming, which can be a serious health hazard when the spores are drawn into the appliance and blown into your home.

Additionally, keep the screen around your air conditioner free from debris to keep air flowing easily. This will prevent your air conditioner from using more power than necessary to keep your house cool and keep the internal parts from wearing out too quickly.

ac

7. Humidifiers

Some climate control systems have in-duct humidifiers that help keep air moist and healthy during the winter when artificial heat systems are in use. But when these systems aren’t working properly, they become a breeding ground for mold and bacteria, which can cause serious air quality issues.

At the end of each winter season, it is important to drain the unit and close the water valve to keep water from stagnating in the system. Also, cleaning the reservoir with a mixture of water and white vinegar helps to keep mineral deposits to a minimum.

8. Air Filters

Change the air filter in your central heat and air unit often, especially during peak usage months. Thirty days is the absolute longest you should ever leave an air filter in place; two weeks is maximum for high-usage months.

Using cheap fiberglass filters is actually preferred as opposed to more expensive HEPA filters for two reasons: First, replacing the more expensive filters often isn’t cost-effective. Second, the fiberglass filters actually allow for more air to flow into your climate-controlled unit, reducing the amount of energy needed to effectively heat or cool your home.

9. Paint

You can easily give your house a facelift by repainting the interior. However, repainting the entire interior of your house can be costly and difficult to accomplish. You can save both time and money by strategically touching up your paint job every so often. The first thing you need is a spot-on color match. The only way to get this is to save paint from your current paint job for future touch-ups. If you have leftover paint, simply roll the paint over the dirty spots on your walls. When the paint dries, it will dry perfectly, leaving you with a wall that looks as though you just painted it.

If you don’t have any leftover paint, you can still touch up your walls, though your efforts will be more labor intensive than spot painting. Take a sample of your color to your local hardware outlet and have your paint tinted to match. When you are ready to touch up your walls, paint the dirty wall from corner to corner, being careful to keep the new paint off any surface you aren’t looking to touch up. If there is a shade difference, you won’t notice it, even if the wall you are painting butts up against another wall.

If you are trying to cover up nicotine-stained walls, you will need to apply a stain blocker to the walls before applying paint. Nicotine will prevent your paint from adhering properly to the wall surface and will cause bubbles. Additionally, if stale smoke or other odor is an issue, add a few drops of vanilla to your paint. This will help combat odors that have seeped into your drywall.

10. Refrigerators

The main component of your refrigerator that should get your attention is the door seals. Keeping your door seals tight will reduce the amount of energy it takes to keep your food cool or frozen, but will also keep your refrigerator working efficiently, preventing premature wear on internal parts.

To test the door seals, close the door on a dollar bill and attempt to pull it out with the door closed. If you cannot easily pull the dollar bill out from the door, your seals are in good shape. However, if the bill slides out without much resistance, it’s time to replace the seals. You can purchase new seals from any home repair outlet store.

Also, if you have a refrigerator that has coils along the back, periodically vacuum these coils to remove dirt and dust build up. These coils contain the coolant the refrigerator uses to keep the internal temperature cold. If they become dirty, they won’t work efficiently and your refrigerator may stop cooling altogether.

As a general tip, keeping your refrigerator full uses less energy than trying to cool when it’s empty. Therefore, keep as many items in your refrigerator as possible to help reduce energy costs.

portrait happy young woman cleaning refrigerator

11. Drafty Windows

Drafty windows are a major culprit of high energy bills in the summer and winter months. Periodically check the condition of the caulk line that holds your windows in place. If the caulk appears to be dry, cracked, or otherwise weathered, remove the old caulk with a box cutter or other sharp knife and run a new bead of caulk along the seam.

For added utility bill savings, you can further insulate your window by applying an insulating window film over the glass. These methods cost much less than the price of replacing your windows and implementing green energy technologies in your home.

12. Gutters

While gutters may go practically unnoticed when you look at your house, they are the main line of defense between your foundation and siding and the elements. Gutters are designed to capture water and debris runoff from your roof and divert it away from your foundation, and one of the main causes of water accumulation in basements is a lack of gutter maintenance and proper water diversion.

Clean your gutters at least once per year by physically removing debris from the channels and rinsing them thoroughly by using a garden hose. Avoid installing gutter guards – not only do these not adequately prevent debris from entering your gutters, they also make it extremely difficult (if not impossible) to properly clean your gutter system.

Also, be sure to regularly check that your gutters are properly affixed to your fascia boards, and replace any sections that appear to be damaged or leaking.

13. Roof

Periodically check your roof for damage. Damaged, discolored, or gravel-less shingles should be quickly replaced to prevent the need to replace your roof, water-damaged trusses, or drywall when you finally discover a leak. During the inspection of your roof, pay special attention to shingles that surround skylights, vents, and chimneys, as these areas are the most leak-prone.

Final Word

Keeping your home properly maintained will not only save you money by increasing the longevity of your appliances and existing structures, but it will also help you become more energy-efficient and save money on your utility bills. These tips merely scratch the surface of the things you can do around your home to keep everything running in tiptop shape.

 

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Moving Up Is More Affordable

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If you are considering selling your current home, to either move up to a larger home or into a home in an area that better suits your current family needs, great news was just revealed.

Last week, Trulia posted a blog, Not Your Father’s Housing Market, which examined home affordability over the last 40+ years (1975-2016). Their research revealed that:

“Nationally, homes are just about the most affordable they’ve been in the last 40 years… the median household could afford a home 1.5 times more expensive than the median home price. In 1980, the median household could only afford about 3/4 of the median home price.

Despite relatively stagnant incomes, affordability has grown due to the sharp drop in mortgage rates over the last 30 years – from a high of over 16% in the 1980s to under 4% by 2016.

Of the nation’s 100 largest metros, only Miami became unaffordable between 1990 and 2016. Meanwhile, 22 metros have flipped from being unaffordable to becoming affordable in that same time frame.”

Here is a graph showing the Affordability Index compared to the 40-year average:

Moving up Is MORE Affordable Now Than Almost Any Other Time in 40 Years | MyKCM

The graph shows that housing affordability is better now than at any other time in the last forty years, except during the housing crash last decade.

(Remember that during the crash you could purchase distressed properties – foreclosures and short sales – at 20-50% discounts.)

There is no doubt that with home prices and mortgage rates on the rise, the affordability index will continue to fall. That is why if you are thinking of moving up, you probably shouldn’t wait.

Bottom Line

If you have held off on moving up to your family’s dream home because you were hoping to time the market, that time has come.

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Gap Between Homeowners and Appraisers

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In today’s housing market, where supply is very low and demand is very high, home values are increasing rapidly. Many experts are projecting that home values could appreciate by another 4% or more over the next twelve months. One major challenge in such a market is the bank appraisal.

When prices are surging, it is difficult for appraisers to find adequate, comparable sales (similar houses in the neighborhood that recently closed) to defend the selling price when performing the appraisal for the bank.

Every month in their Home Price Perception Index (HPPI), Quicken Loans measures the disparity between what a homeowner who is seeking to refinance their home believes their house is worth and what an appraiser’s evaluation of that same home is.

In the latest release, the disparity was the narrowest it has been in over two years, as the gap between appraisers and homeowners was only -0.5%. This is important for homeowners to note as even a .5% difference in appraisal can mean thousands of dollars that a buyer or seller would have to come up with at closing (depending on the price of the home)

The chart below illustrates the changes in home price estimates over the last two years.

Gap Between Homeowners & Appraisers Narrows to Lowest Mark in 2 Years | MyKCM

Bill Banfield, Executive VP of Capital Markets at Quicken Loans urges homeowners to find out how their local markets have been impacted by supply and demand:

“Appraisers and real estate professionals evaluate their local housing markets daily. Homeowners, on the other hand, may only think about their housing market when they see ‘for sale’ signs hit front yards in the spring or when they think about accessing their equity.”

“With several years of growth, owners may have more equity than they realize. Many consumers use the tax season at the beginning of the year to reevaluate their entire financial life. It also provides a good opportunity for them to consider how best to take advantage of their equity while mortgage interest rates and borrowing costs are still near record lows.”

Bottom Line

Every house on the market must be sold twice; once to a prospective buyer and then to the bank (through the bank’s appraisal). With escalating prices, the second sale might be even more difficult than the first. If you are planning on entering the housing market this year, let’s get together to discuss this and any other obstacles that may arise.

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The Impact of Tight Inventory on the Housing Market

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The housing crisis is finally in the rearview mirror as the real estate market moves down the road to a complete recovery. Home values are up, home sales are up, and distressed sales (foreclosures and short sales) have fallen to their lowest points in years. It seems that the market will continue to strengthen in 2018.

However, there is one thing that may cause the industry to tap the brakes: a lack of housing inventory. While buyer demand looks like it will remain strong throughout the winter, supply is not keeping up.

Here are the thoughts of a few industry experts on the subject:

National Association of Realtors

“Total housing inventory at the end of November dropped 7.2 percent to 1.67 million existing homes available for sale, and is now 9.7 percent lower than a year ago (1.85 million) and has fallen year-over-year for 30 consecutive months. Unsold inventory is at a 3.4-month supply at the current sales pace, which is down from 4.0 months a year ago.”

Joseph Kirchner, Senior Economist for Realtor.com

“The increases in single-family permits and starts show that builders are planning and starting new construction projects, that’s a good thing because it will help to relieve the shortage of homes on the market.”

Sam Khater, Deputy Chief Economist at CoreLogic

“Inventory is tighter than it appears. It’s much lower for entry-level buyers.”

Bottom Line

If you are thinking of selling, now may be the time. Demand for your house will be strong at a time when there is very little competition. That could lead to a quick sale for a really good price.

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There’s More To A Bubble Than Rising Home Prices

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What truly causes a housing bubble and the inevitable crash? For the best explanation, let’s go to a person who correctly called the last housing bubble – a year before it happened.

“A bubble requires both overvaluation based on fundamentals and speculation. It is natural to focus on an asset’s fundamental value, but the real key for detecting a bubble is speculation…Speculation tends to chase appreciating assets, and then speculation begets more speculation, until finally, for some reason that will become obvious to all in hindsight, the ‘bubble’ bursts.

I have taken to calling the housing market a ‘bubble’.”

– Bill McBride of Calculated Risk calling the bubble back in April 2005

Where do we stand today regarding speculation?

There are two measurements that are used to determine the speculation in a housing market:

  1. The number of homes purchased by an investor and
  2. The number of homes being flipped (resold within a twelve-month period)

As compared to 2005, investor purchases are down dramatically (from 23% to 13%) and so is flipping (from 8.2% to 5.7%). McBride explains:

“There is currently some flipping activity, but this is more the normal type of flipping (buy, improve and then sell). Back in 2005, people were just buying homes and letting them sit vacant – and then selling without significant improvements. Classic speculation.”

What are the experts saying about speculation in today’s market?

DSNews recently ran an article which asked two economists to compare the speculation in today’s market to that in 2005-2007. Here is what they said:

Dr. Eddie Seiler, Chief Housing Economist at Summit Consulting:

“The speculative ‘flipping mania’ of 2006 is absent from most metro areas.”

Tian Liu, Chief Economist of Genworth Mortgage Insurance:

“The nature of housing demand is different as well, with more potential homeowners and far fewer speculators in the housing market compared to the 2005-2007 period.”

And what does McBride, who called the last housing bubble, think about today’s real estate market?

Sixty days ago, he explained:

“In 2005, people were just buying homes and letting them sit vacant – and then selling without significant improvements. Classic speculation. And even more dangerous during the bubble was the excessive use of leverage (all those poor-quality loans). Currently lending standards are decent, and loan quality is excellent…

I wouldn’t call house prices a bubble – and I don’t expect house prices to decline nationally like during the bust.”

Bottom Line

Speculation is a major element of the housing bubble formula. Right now, there are not elevated percentages of investors and house flippers. Therefore, there is not an elevated rate of speculation.

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Buyers Market or Sellers Market

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A Tale of Two Markets: A 6-Month Update

A Tale of Two Markets: A 6-Month Update | MyKCM

Six months ago, we reported that the mismatch between the type of inventory of homes for sale and the demand of buyers in the US was causing the formation of two markets.  If you own a home in Raleigh, Durham or Charlotte this two market condition exist in your city.

In the starter and trade-up home categories, there were significantly more buyers than there were homes for sale, causing a seller’s market. In the premium, or luxury, home categories, the opposite was true as there was a surplus of these homes compared to the buyers that were out searching for their dream homes, which created a buyer’s market.

According to the National Association of Realtors latest Existing Home Sales Report, the inventory of existing homes for sale in today’s market is at a 4.2-month supply. Inventory is now 6.5% lower than this time last year, marking the 27th consecutive month of year-over-year decreases.

Looking at the latest report from Trulia, we can see that not much has changed, and in fact, recent natural disasters across the country have made inventory conditions even more dire.

Trulia’s market mismatch score measures the search interest of buyers against the category of homes that are available on the market. For example: “if 60% of buyers are searching for starter homes but only 40% of listings are starter homes, [the] market mismatch score for starter homes would be 20.”

The results of their latest analysis are detailed in the chart below.

A Tale of Two Markets: A 6-Month Update | MyKCM

Nationally, buyers are searching for starter and trade-up homes and are coming up short with the listings available, which is leading to a highly competitive seller’s market in these categories.

Premium homebuyers, on the other hand, have the best chance of less competition and more inventory of listings in their price range with a 14.7-point surplus, which is creating more of a buyer’s market.

Bottom Line

Real estate is local. If you are thinking about buying OR selling this fall, let’s get together to discuss the exact market conditions in your area.

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Are We Facing A Housing Bubble?

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A Housing Bubble? Industry Experts Say NO!

A Housing Bubble? Industry Experts Say NO! | MyKCM

With residential home prices continuing to appreciate at levels above historic norms, some are questioning if we are heading toward another housing bubble (and subsequent burst) like the one we experienced in 2006-2008.

Recently, five housing experts weighed in on the question.

Rick Sharga, Executive VP at Ten-X:

“We’re definitely not in a bubble.”

“We have a handful of markets that are frothy and probably have hit an affordability wall of sorts but…while prices nominally have surpassed the 2006 peak, we’re not talking about 2006 dollars.”

Christopher Thornberg, Partner at Beacon Economics:

“There is no direct or indirect sign of any kind of bubble.”

“Steady as she goes. Prices continue to rise. Sales roughly flat.…Overall this market is in an almost boring place.”

Bill McBride, Calculated Risk:

“I wouldn't call house prices a bubble.”

“So prices may be a little overvalued, but there is little speculation and I don't expect house prices to decline nationally like during the bust.”

David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices:

“Housing is not repeating the bubble period of 2000-2006.”

“…price increases vary unlike the earlier period when rising prices were almost universal; the number of homes sold annually is 20% less today than in the earlier period and the months’ supply is declining, not surging.”

Bing Bai & Edward Golding, Urban Institute:

“We are not in a bubble and nowhere near the situation preceding the 2008 housing crisis.”

“Despite recent increases, house prices remain affordable by historical standards, suggesting that home prices are tracking a broader economic expansion.”

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Moving Up To A Luxury Home ?

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Now’s the Time!

Moving-Up to a Luxury Home? Now’s the Time! | MyKCM

If your house no longer fits your needs and you are planning on buying a luxury home, now is a great time to do so! We recently shared data from Trulia’s Market Mismatch Study which showed that in today’s premium home market, buyers are in control.

The inventory of homes for sale in the luxury market far exceeds those searching to purchase these properties in many areas of the country. This means that homes are often staying on the market longer which can eventually lead to a price change.

Those who have a starter or trade-up home to sell will find buyers competing, and often entering bidding wars, to be able to call your house their new home.

The sale of your starter or trade-up house will aid in coming up with a larger down payment for your new luxury home. Even a 5% down payment on a million-dollar home is $50,000.

But not all who are buying luxury properties have a home to sell first.

In a Washington Post article, Daryl Judy, an associate broker with Washington Fine Properties, gave some insight into what many millennials are choosing to do:

“Some high-earning millennials save money until they are in their early 30s to buy a place and just skip over that starter-home phase. They’ll stay in an apartment until they can afford to pay for the place they want.”

Bottom Line

The best time to sell anything is when demand is high and supply is low. If you are currently in a starter or trade-up house that no longer fits your needs and you are looking to step into a luxury home, now’s the time to list your house for sale and make your dreams come true.

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