Think before you For Sale By Owner

 

www.brandyfarris.com 

Real Estate - Best Long Term Investment

The Gallup organization just released their April Economy and Personal Finances Poll which asked Americans to choose the best option for long term investment. It was no surprise to us that real estate returned to the top position over other investment categories (gold, stocks/mutual funds, savings accounts/CDs and bonds).

Back in 2011, gold was the most popular long-term investment among Americans. However, with the housing market improving across the U.S. and home prices rising, more Americans now consider real estate the best option for long-term investments.

Visit www.brandyfarris.com for thousands of homes in your area!
 

Either Way, You're Still Paying a Mortgage

There are some people that have not purchased a home because they are uncomfortable taking on the obligation of a mortgage. Everyone should realize that, unless you are living with our parents rent free, you are paying a mortgage - either your mortgage or your landlord’s.

As a recent paper from the Joint Center for Housing Studies at Harvard University explains:
“Households must consume housing whether they own or rent. Not even accounting for more favorable tax treatment of owning, homeowners pay debt service to pay down their own principal while households that rent pay down the principal of a landlord plus a rate of return. That’s yet another reason owning often does—as Americans intuit—end up making more financial sense than renting.”

Also, if you purchase with a 30-year fixed rate mortgage, your ‘housing expense’ is locked in over the thirty years for the most part. If you rent, the one guarantee you will have is that your rent will increase over that same thirty year time period.

Whether you are looking for a primary residence for the first time or are considering a vacation home on the shore, owning might make more sense than renting since prices and interest rates are still at bargain prices.

Real Estate: This Spring Will Be Different

Just like May flowers, every spring the housing market blossoms as buyers come out ready to purchase their dream house. This spring, we believe we are going to see the strongest purchasing market we have seen in a decade.
Why are we so bullish on the housing market this spring?
Here are a few reasons:

MILLENNIALS 

Contrary to many reports, this age demographic is READY, WILLING and ABLE to become homeowners. As a matter of fact, the latest National Association of Realtors’ gender study revealed that the Millennial generation has recently accounted for a greater percentage of all buyers than any other generation.

BABY BOOMERS

As prices have risen, so has the equity in many homes across American. Homeowners, having been shackled to their house because of low or negative equity for the last several years, are again free to make a move without worrying about bringing cash to a closing table in order to sell. We believe this new-found freedom will release a pent-up demand of sellers who want to move-up to the home they’ve always dreamed of or want to downsize their primary residence and also purchase a second home they can use for vacation, retirement or both.

BOTH PRICES and MORTGAGE RATES are on the RISE

As the economy improves, more and more Americans are regaining faith that their own
 personal finances are headed in a positive direction. With this new confidence, they want to take advantage of the opportunity that presents itself with real estate still undervalued in most parts of the country and mortgage rates being well below historic numbers.

Current Mortgage Rates Won't Last Forever..

According to FreddieMac, the interest rate for a 30 year fixed rate mortgage at the beginning of April was 4.4%. However, FreddieMac predicts that mortgage rates will steadily climb over the next six quarters.

Let’s assume you want to purchase a home for $500,000 with a 20% down payment ($100,000). That would leave you with a $400,000 mortgage. What happens if you wait to buy this dream house?

Prices are projected to increase over the next year and a half. However, for this example, let’s assume prices remain the same. Your mortgage payment will still increase as mortgage rates climb to more historically normal levels.

This table shows how a principal and interest payment is impacted by a rise in interest rates:

Want to Sell Your House? Price it Right!

The housing market is recovering nicely. Prices have increased nationally by double digits over the last twelve months. Competition from the shadow inventory of lower priced distressed properties (foreclosures and short sales) is diminishing rapidly. Now may be the perfect time to sell your home and move to the dream house or beautiful location your family has always talked about.

The one suggestion we would definitely offer: DON’T OVERPRICE IT!!
Even though prices have increased by more than 10% over the last year, the acceleration of appreciation has slowed dramatically over the last few months. As an example, in their April Home Price Index Report, CoreLogic revealed that home prices actually depreciated by .08% this month as compared to last month’s report. What concerns us is that Trulia just reported that asking prices are still continuing to increase.

Because investor purchases are declining and there are more listings coming onto the market, we believe that sellers should be very cautious when they price their house. The alternative might be that you could lose money by overpricing your home at the start as explained in a research study on the matter.

Bottom Line
Though it is a great time to sell your house, pricing it right is crucial. Get guidance from a real estate professional in your marketplace to ensure you get the best deal possible.

Homeownership's Impact on Net Worth

Over the last six years, homeownership has lost some of its allure as a financial investment. As homeowners suffered through the housing bust, more and more began to question whether owning a home was truly a good way to build wealth. A study by the Federal Reserve formally answered this question.

Some of the findings revealed in their report:

• The average American family has a net worth of $77,300
• Of that net worth, 61.4% ($47,500) of it is in home equity
• A homeowner’s net worth is over thirty times greater than that of a renter
• The average homeowner has a net worth of $174,500 while the average net worth of a renter is $5,100

Bottom Line

The Fed study found that homeownership is still a great way for a family to build wealth in America.

www.christiefarris.com 

Eisenberg: Economic indicators positive - Baton Rouge, LA

While economist Elliot Eisenberg—keynote speaker for today's TRENDS in Real Estate Seminar—enthusiastically called the state of the Louisiana and Baton Rouge economies a "happy story," he warned that the energy boom won't last forever. "You know it will end," Eisenberg told those gathered this morning at the BREC Independence Park Theatre for the half-day seminar. "Energy booms always end. I would try and plan for what happens the day after. Lafayette in '86 wasn't a happy place, remember that. Nothing good lasts forever. Don't say this time will be different, because it won't be different." Still, Eisenberg detailed a mostly optimistic outlook for the state and Capital Region, celebrating the the area's low unemployment rate, labor force growth—which is above the national average—and 5% increase in home prices since last year. "You're a happy city and a happy state, you really are," said Eisenberg, a nationally acclaimed economist and speaker based in Washington, D.C. By contrast, he noted, the national economy is improving, but at a slower pace than has been seen locally. Crediting less economic uncertainty and increased capital expenditures, Eisenberg said we are now entering the "pleasant phase of the recovery." "Overall, the economy really is improving," he said, adding that he expects "interest rates will go up because of it." The 26h Annual TRENDS in Real Estate Seminar, hosted by the Greater Baton Rouge Association of Realtors Commercial Investment Division, kicked off this morning with Eisenberg's keynote address and will continue through noon. With roughly 680 registered to attend, this will be the largest TRENDS seminar since 2006, according to GBRAR Communications Director Saiward Pharr Hromadka. Read Daily Report PM later today for more coverage from the seminar. —Rachel Alexander

3 REASONS TO SELL YOUR HOME THIS SPRING

 
3 REASONS TO SELL YOUR HOME THIS SPRING

Many sellers are still hesitant about putting their house up for sale. Where are prices headed? Where are interest rates headed? These are all valid questions. However, there are several reasons to sell your home sooner rather than later. Here are three of those reasons.

1. DEMAND IS ABOUT TO SKYROCKET
Most people realize that the housing market is hottest from April through June. The most serious buyers are well aware of this and, for that reason, come out in early spring in order to beat the heavy competition. We also have a pent-up demand as many buyers pushed off their home search this winter because of extreme weather. These buyers are ready, willing and able to buy…and are in the market right now!

2. THERE IS LESS COMPETITION - FOR NOW
Housing supply always grows from the spring through the early summer. Also, there has been a growing desire for many homeowners to move as they were unable to sell over the last few years because of a negative equity situation. Homeowners have seen a return to positive equity as prices increased over the last eighteen months. Many of these homes will be coming to the market in the near future.

The choices buyers have will continue to increase over the next few months. Don’t wait until all the other potential sellers in your market put their homes up for sale.

3. THERE WILL NEVER BE A BETTER TIME TO MOVE-UP
If you are moving up to a larger, more expensive home, consider doing it now. Prices are projected to appreciate by approximately 4% this year and 8% by the end of 2015. If you are moving to a higher priced home, it will wind-up costing you more in raw dollars (both in down payment and mortgage payment) if you wait. You can also lock-in your 30 year housing expense with an interest rate at about 4.5% right now. Freddie Mac projects rates to be 5.1% by this time next year and 5.7% by the fourth quarter of 2015.

Moving up to a new home will be less expensive this spring than later this year or next year.

 

225-315-9003

Christiefarris@gmail.com

A Home's Cost VS. Price

Let's talk about the difference between COST and PRICE. As a home seller, you will be most concerned about ‘short term price’ – where home values are headed over the next six months. As either a first time or repeat buyer, you must not be concerned about price but instead about the ‘long term cost’ of the home. Let us explain.

Recently, it was reported that a nationwide panel of over one hundred economists, real estate experts and investment & market strategists projected that home values would appreciate by approximately 8% from now to the end of 2015.

Additionally, Freddie Mac’s most recent Economic Commentary & Projections Table predicts that the 30 year fixed mortgage rate will be 5.7% by the end of next year!

What Does This Mean to a Buyer?

Here is a simple demonstration of what impact these projected changes would have on the mortgage payment of a home selling for approximately $250,000 today:

 

New homes in Baton Rouge means the economy is improving

BATON ROUGE, LA (WAFB) -
Homeowners are seeing their homes sell quickly in Baton Rouge.  Realtors say there are only a certain amount of homes on the market, now developers are cashing in by building new options.
One of those new neighborhoods, Magnolia Lakes, off Burbank Drive is where workers are hammering, sawing and framing homes.

"You're probably looking close to $225,000 to $250,000 for a newer house," even at that amount, you may only be looking at a little square footage. Buyers are likely to find more space in older, updated homes.  But there are some who prefer new builds.  In general, homes are on the market for about five months. That means what's available is dwindling.

"So somewhere we've got to get more inventory.  That's where new construction comes in.  That's where you're seeing so much new construction." With a stronger economy, there are now more people working and they are in a position to buy.  That has developers looking for land to clear, to build on.  For example, there are 80 acres off the Millerville exit where trees have been cleared for apartments and office space.

The Baton Rouge Area Chamber has predicted more jobs for the parish this year.  That job growth, is what real estate agents say builders are banking on, to move their product.  As far as how the new stock will affect market pricing, Wattam says Baton Rouge is experiencing what's called a level market. "Buyers are going to get a good value.  Sellers are going to get what they want for their house.  Those days of coming in $60,000 under, those days are gone." Agents say they are hearing interest rates are going up later this year.

3 Reasons the Housing Market Should Thrive in 2014

Recently, HousingWire asked David Berson, chief economist at Nationwide, for his opinion on the near-term future of housing. Below are what Mr. Berson believes to be the three things you need to know about housing in 2014. We have included a quote from the article and a small comment from KCM for all three points.

Number 1: 2014 should prove to be the strongest year for housing activity since before the Great Recession

“Most economists expect an improved job market in 2014, with employment growth accelerating and the unemployment rate continuing to decline. That jobless rate drop will reflect more of a pickup in employment than further declines in the labor force participation rate. This will be the key factor improving housing demand this year, even if mortgage rates rise and affordability declines. While the housing market tends to do especially well when the job market improves and mortgage rates decline simultaneously, that combination of events occurs only rarely…People buy homes when their job and income prospects improve – even if it’s more expensive to do so – rather than buy when it is inexpensive to do so but they’re worried about keeping their jobs.”

KCM Comment:

We agree that the job market will continue to improve and that rising interest rates will not be a detriment to the market in 2014. As Doug Duncan, SVP and chief economist at Fannie Mae, recently revealed:
“Consumers have taken the interest rate rise in stride. Expectations for continued improvement in housing persist, and sentiment toward the current buying and selling environment is back on track.”

Number 2: Demographics should start to favor housing activity

“If the economy expands at a faster pace this year, bringing a more rapid rate of job creation, that should translate into more households, raising housing demand. We won’t see all three million missing households return to the housing market at once. (That wouldn’t be a good thing for the housing market anyway, since that would be on top of the 1.2 million households that normally would develop this year; such a surge would swamp the existing housing supply). Beginning in 2014, the pace of household formations should accelerate to an above-trend pace for several years, pushing up housing demand.”

KCM Comment:

The Urban Land Institute recently released a report, Emerging Trends in Real Estate 2014, projecting that 4.48 million new households will be formed over the next three years. Millennials will make up a large portion of these new households. With the economy improving, we believe they will finally be moving out of their parents’ homes and, after they compare renting versus buying, many will choose homeownership.

Number 3: Mortgage availability shouldn’t worsen and may improve

“The rise in mortgage rates already has reduced mortgage origination volumes as refinance activity declines. If mortgage rates rise further this year, as expected, then refinance activity will fall still more. In response, mortgage lenders probably will ease lending standards to the extent possible under the QM rules to boost lending activity by increasing purchase originations. As a result, the increase in new households expected to be created this year, spurred by a stronger job market, should find that qualifying for a mortgage loan will be somewhat easier in 2014 than in prior years.”

KCM Comment:

We also believe that, as the refinancing market begins to dry up, mortgage entities will be more aggressive in the purchase money market (mortgages necessary to purchase a home). There even seems to be recent evidence that lending standards are actually loosening.

 

Call Christie at 225-315-9003 or Christiefarris@gmail.com

Money Magazine: Buy Now not Later

We have often suggested that potential home buyers consider rising interest rates when thinking about the true cost of a home. Remember, cost is not determined by price alone but by price and mortgage rate. The longer a buyer waits, the higher the mortgage payment will be if rates continue to increase (as is projected by Fannie Mae, Freddie Mac, the National Association of Realtors and the Mortgage Bankers Association).

Money Magazine, in its latest issue, agreed with our analysis as they also warned their readership of the same ramification if they waited to buy a home.
Here is what they said:

"BE MINDFUL OF RATES. The average interest rate on a 30-year fixed loan is predicted to climb from the current 4.4% to 5.3% by the 2015 spring buying season, according to Freddie Mac. For a $250,000 loan, that means that a borrower who waits would pay $136 more per month and an additional $49,090 in interest over the life of the loan. Will you need a big loan? Better to act soon before rates tick up."
And the monthly increase Money mentioned did not take into consideration that prices are also projected to increase over the next year. Here is what the additional cost would be if prices rise by the 4.5% projected by the latest Home Price Expectation Survey and interest rates go to 5.3%.

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Moving Up? Do it NOW not Later

A recent study revealed that the number of existing home owners planning to buy a home this year is about to increase dramatically. Some are moving up, some are downsizing and others are making a lateral move. Another study shows that over 75% of these buyers will, in fact, be in that first category: a move-up buyer. We want to address this group of buyers in today’s blog post.

There is no way for us to predict the future but we can look at what happened over the last year. Let’s look at buyers that considered moving up last year but decided to wait instead.

Assume they had a home worth $300,000 and were looking at a home for $400,000 (putting 10% down they would get a mortgage of $360,000). By waiting, their house appreciated by 13.8% over the last year (national average based on the Case Shiller Pricing Index). Their home would now be worth $341,400. But, the $400,000 home would now be worth $455,200 (requiring a mortgage of $409,680).

Here is a table showing what additional monthly cost would be incurred by waiting:

Prices are projected to appreciate by over 4% and interest rates are also expected to rise by as much as another full percentage point. If your family plans to move-up to a nicer or bigger home this year, it may make sense to move now rather than later.

Should you Buy or Rent?

Here is one simple chart that explains why buying a home makes more sense than renting one.

Call me today for a free first time home buyer guide.

Cut the Cost of Maintaining your Home

Upgrade to lower costs

 

 

Homeowners once had to make a choice: the beauty of genuine wood and stone, or the easy maintenance of a man-made alternative. Installing vinyl siding over wood shingles, for example, meant you'd never have to repaint again, but also required sacrificing architectural charm -- and possibly getting kicked off your neighbor's dinner party guest list. Now, though, you can have it all. A new breed of manufactured products available at home centers and specialty shops looks realistic enough to preserve or even boost your home's appearance.

While some of these modern materials are pricier than the natural versions, they will save you money and effort over the long term. Plus, "it's a compelling one-two punch for selling," says Lake Forest, Ill., realtor Carol Russ. "The traditional looks draw buyers in, and then I tell them that they're actually seeing new, super-durable materials." Here are six imitations that might be better than the real deal.

1.  FIBER-CEMENT SIDING
2. CELLULAR PVC TRIM
3. QUARTZ COUNTERTOPS
4. SOLID VINYL FENCING
5. FIBERGLASS ENTRY DOORS
6. CLAD WINDOWS

More Americans Confident about Home Buying

Last week, Fannie Mae released their January 2014 National Housing Survey results.  Two categories reported all-time survey highs.

• 52% of respondents thought it would be easy for them to get a home mortgage today
• 70% of respondents said they would buy if they were going to move

Doug Duncan, senior vice president and chief economist at Fannie Mae explained what this may mean to the real estate market moving forward:

“A majority of consumers now believe that it is getting easier to get a mortgage. For the first time in the National Housing Survey’s three-and-a-half-year history, the share of respondents who said it is easy to get a mortgage surpassed the 50-percent mark. The gradual upward trend in this indicator during the last few months bodes well for the housing recovery and may be contributing to this month’s increase in consumers’ intention to buy rather than rent their next home. The dip in overall home price expectations, though notable, is consistent with our view of moderating home price gains this year from a robust pace last year, while positive trends in perceptions about the economy and personal finances over the next year support our view of stronger growth in the broader economy.”

With home prices projected to increase in 2014 (albeit at a slower pace than they did in 2013) and with mortgage interest rates projected to increase, it is good news that consumers are becoming more confident in their ability to buy a home if they so desire.

 

 If you are looking to buy or sell a home:
 call Christie Farris at 225-315-9003 or email at Christiefarris@gmail.com

Are Mom & Dad Helping or Impeding Your Home Purchase?

Homebuyers, especially First Time Home Buyers,often get advice from family, friends and colleagues. Some of it is spot on, some of it may be well-intentioned but out of sync with the market the buyers are facing, versus what another's own experience was at some past point in time.

I find that many young buyers get help from family members either financially or practically. When family has a vested interest, it’s important to consider the part they play in the transaction. Most of my clients do want the ultimate approval of their parents, but also want to play a lead role in the home selection.  Here are some scenarios that have arisen, and ideas for keeping all parties feeling good about the process.

Collaboration: Being a protective Mom myself, I can understand a parent’s desire to be watchful, making sure their kids are getting sound advice and not getting themselves in over their head.  With permission from my buyer client, I offer to engage the parents in an initial meeting, either on a conference call or in person. One buyer did elect to have his mother on speakerphone while preparing his first written offer. After that, both Mom and son were confident moving forward.

Calming: Fear is evident in many of my First Time Buyer purchases, but typically it is more prominent in the parents than the kids. Past missteps and worry can let anxieties run high. Inviting parents to home inspections or including them on report findings often allows them to feel more comfortable with the home’s condition, or the ability to ask questions. Lots of times, parents offer to help with those smaller repair or maintenance items as they can see the excitement mounting in their offspring’s eyes.

Grounding: One Mom was very instrumental in keeping her daughter realistic about the gap between her dream home and her budget - the classic “champagne taste on a beer budget” scenario.  But daughter was determined to buy a home of her own, even if that meant a fixer. Dad got cold feet when he saw the condition of homes in his daughter’s price range and did not want her to make a purchase at all. Once Mom saw what her daughter would actually get for her money, Mom & Dad decided to help out, allowing daughter to get a safer, and better-built option.

Educating: Another parent was helping financially and wanted his son to ‘get the best deal.’ In a low inventory, multiple-offer market, that wasn’t a realistic expectation. After their son lost out on several properties listening to purchase advice from his parents, Mom & Dad were copied on comp information for future purchases in order to help them understand why lower than asking price offers were costing money in the long run as prices increased on the next round of homes for sale.

I would never discourage anyone from including a family member whose advice is appreciated, especially if that person will be putting sweat equity or money into the equation. Bring all parties together early on can keep everyone feeling good about the outcome.

Exisiting Home Sales Report January 31, 2014