The famous quote attributed to Mark Twain can apply to homeownership
in the United States today. During the housing bubble of the last
decade, the homeownership rate soared to over sixty-nine percent. After
the crash, that percentage continued to fall for the next ten years.
That led to speculation that homeownership was no longer seen as a major component of the American Dream. That belief became so widespread that the term “renters’ society” began to be used by some to define American consumers.
However, the latest report by the Census Bureau
on homeownership shows that over the last two years, the percentage of
homeowners has increased in each of the last eight quarters.
It appears the homeownership rate will continue to increase.
The 2019 Aspiring Home Buyers Profile recently released by the National Association of Realtors revealed that 84% of non-owners want to own a home in the future. That percentage increased from 73% earlier last year.
In the United States, the concept of homeownership as part of the American Dream is very much alive and well.
Call me now and let’s get moving! Your dream…my mission. 847.630.1032
Congratulations! You’ve found a home to buy and have applied for a
mortgage! You are undoubtedly excited about the opportunity to decorate
your new home! But before you make any big purchases, move any money
around, or make any big-time life changes, consult your loan officer.
They will be able to tell you how your decision will impact your home
Below is a list of 7 Things You Shouldn’t Do After Applying for a Mortgage! Some may seem obvious, but some may not!
1. Don’t change jobs or the way you are paid at your job! Your
loan officer must be able to track the source and amount of your annual
income. If possible, you’ll want to avoid changing from salary to
commission or becoming self-employed during this time as well.
2. Don’t deposit cash into your bank accounts.
Lenders need to source your money and cash is not really traceable.
Before you deposit any amount of cash into your accounts, discuss the
proper way to document your transactions with your loan officer.
3. Don’t make any large purchases like a new car or new furniture for your new home.
New debt comes with it, including new monthly obligations. New
obligations create new qualifications. People with new debt have higher
debt to income ratios… higher ratios make for riskier loans… and
sometimes qualified borrowers no longer qualify.
4. Don’t co-sign other loans for anyone.
When you co-sign, you are obligated. As we mentioned, with that
obligation comes higher ratios as well. Even if you swear you will not
be the one making the payments, your lender will have to count the
payment against you.
5. Don’t change bank accounts.
Remember, lenders need to source and track assets. That task is
significantly easier when there is consistency among your accounts.
Before you even transfer money between accounts, talk to your loan
6. Don’t apply for new credit.
It doesn’t matter whether it’s a new credit card or a new car. When you
have your credit report run by organizations in multiple financial
channels (mortgage, credit card, auto, etc.), your FICO score
will be affected. Lower credit scores can determine your interest rate
and maybe even your eligibility for approval.
7. Don’t close any credit accounts.
Many clients have erroneously believed that having less available
credit makes them less risky and more likely to be approved. Wrong. A
major component of your score is your length and depth of credit history
(as opposed to just your payment history) and your total usage of
credit as a percentage of available credit. Closing accounts has a
negative impact on both those determinants of your score.
Any blip in income, assets, or credit should be reviewed and executed in a way that ensures your home loan can still be approved. The best advice is to fully disclose and discuss your plans with your loan officer before you do anything financial in nature. They are there to guide you through the process.
Call now and let’s get moving! Your dream…my mission! 847.630.1032
In a strong seller’s market, like the one we have experienced over the past few years, bidding wars are common and expected. This makes sense!
A seller’s market is defined as a market in which the inventory of
homes for sale cannot satisfy the number of buyers who want to purchase a
According to the Cambridge English Dictionary, bidding
wars occur when two or more parties repeatedly outbid each other as
they compete to purchase something- in this case, a home.
In some areas of the country, first-time buyers have been met with
fierce competition throughout their experience. Some have been out-bid
multiple times before finally winning a bid on a home to call their own.
According to the latest Existing Home Sales Report from the National Association of Realtors (NAR), there is currently a 3.7-month supply of homes for sale.
With the current number of houses listed for sale and the level of
demand from buyers, this means it would take 3.7 months for all the
homes listed to sell if no additional listings came to market. Any
supply number under a 6-month supply is considered a seller’s market.
According to NAR, the housing market hasn’t had a 6-month supply of
homes for sale since August 2012.
Good News for Buyers
A recent report
shows that the percentage of houses sold including a bidding war before
settling on a final price decreased from 53% in January of 2018 to 13%
One reason for the decline is an influx of homes being listed for
sale. Even though the month’s supply number is not increasing, the
number of homes for sale is. The chart below shows the year-over-year change in inventory over the last 12 months.
As you can see, the number of homes for sale has started to build
over the last eight months. Prior to this reversal, inventory levels had
fallen for 36 consecutive months when compared to the year before.
Danielle Hale, realtor.com’s Chief Economist, gave some insight into why bidding wars are less common on a local level this year,
“[Last year] you
might have been the only listing in your neighborhood, and you could put
your home up at a certain list price and you would likely see multiple
offers at or above that list price. That tide is turning this year.
It’s going to depend on what neighborhood you’re in, but we
expect it to be more common this year that you won’t be the only
Inventory in the luxury and premium markets (the top 25% of listings
in an area by price), is increasing at a greater rate than the starter
home market. As the choices buyers have continued to increase, the
likelihood of a bidding war will decrease.
If you are debating listing your house for sale this year, you may not want to wait for additional competition as inventory continues to rise.
Call me and let’s get moving! Your dream…my mission! 847.630.1032
Spring has sprung, and it’s a great time to buy a home! Here are four reasons to consider buying today instead of waiting.
1. Prices Will Continue to Rise
CoreLogic’s latest U.S. Home Price Insights
reports that home prices have appreciated by 4.4% over the last 12
months. The same report predicts that prices will continue to increase
at a rate of 4.6% over the next year.
Home values will continue to appreciate for years. Waiting no longer makes sense.
2. Mortgage Interest Rates Are Projected to Increase
Freddie Mac’s Primary Mortgage Market Survey
shows that interest rates for a 30-year fixed rate mortgage came in at
4.41% last week. Most experts predict that rates will rise over the next
12 months. The Mortgage Bankers Association, Fannie Mae, Freddie Mac, and the National Association of Realtors are in unison, projecting rates will increase by this time next year.
An increase in rates will impact YOUR monthly mortgage payment. A year from now, your housing expense will increase if a mortgage is necessary to buy your next home.
3. Either Way, You Are Paying a Mortgage
Some renters have not yet purchased a home because they are
uncomfortable taking on the obligation of a mortgage. Everyone should
realize that unless you are living with your parents rent-free, you are paying a mortgage – either yours or your landlord’s.
As an owner, your mortgage payment is a form of ‘forced savings’
that allows you to have equity in your home that you can tap into later
in life. As a renter, you guarantee your landlord is the person with
Are you ready to put your housing cost to work for you?
4. It’s Time to Move On with Your Life
of a home is determined by two major components: the price of the home
and the current mortgage rate. It appears that both are on the rise.
But what if they weren’t? Would you wait?
Examine the actual reason you are buying and decide if it is worth
waiting. Whether you want to have a great place for your children to
grow up, greater safety for your family, or you just want to have
control over renovations, now could be the time to buy.
If the right thing for you and your family is to purchase a home this year, buying sooner rather than later could lead to substantial savings.
Call me and let’s get moving! Your dream…my mission. 847.630.1032
Study after study shows that no matter what generation Americans
belong to, the vast majority believe that homeownership is an important
part of their American Dream. The benefits of homeownership can be
broken into two main categories: financial and non-financial (often
referred to as emotional or social reasons.)
For Americans approaching retirement age, one of the greatest
benefits to homeownership is the added net worth they have been able to
achieve simply by paying their mortgage!
The Joint Center for Housing Studies at Harvard Universityfocused on homeowners and renters
over the age of 65. Their study revealed that the difference in net
worth between homeowners and renters at this age group was actually 47.5
times greater, with nearly half their net worth coming from home
Homeowners over the age of 65 are much more financially prepared for
retirement and often own their homes outright if they were fortunate
enough to purchase their homes before the age of 36.
Their 30 years of mortgage payments have paid off as they gained
equity through their monthly payments and as home values appreciated.
It is no surprise that lifelong renters have had a hard time accruing net worth as the latest Census report shows that the Median Asking Rent has been climbing consistently over the last 30 years.
Your monthly mortgage payment is a form of ‘forced savings’ building your net worth with every payment!
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
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.
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.”
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!
Last week, the National Association for Business Economics released their February 2019 Economic Policy Survey. The survey revealed that a majority of the panel believe an economic slowdown is in the near future:
“While only 10% of panelists expect a recession in 2019, 42% say a recession will happen in 2020, and 25% expect one in 2021.”
Their findings coincide with three previous surveys calling for a slowdown sometime in the next two years:
That raises the question: Will the real estate market be impacted like it was during the last recession?
A recession does not equal a housing crisis. According to the dictionary definition, a recession is:
“A period of
temporary economic decline during which trade and industrial activity
are reduced, generally identified by a fall in GDP in two successive
During the last recession, prices fell dramatically because the housing collapse caused the recession. However, if we look at the previous four recessions, we can see that home values weren’t negatively impacted:
January 1980 to July 1980: Home values rose 4.5%
July 1981 to November 1982: Home values rose 1.9%
July 1990 to March 1991: Home values fell less than 1%
March 2001 to November 2001: Home values rose 4.8%
Most experts agree with Ralph McLaughlin, CoreLogic’s Deputy Chief Economist, who recently explained:
“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
The housing market is just “normalizing”. Inventory is
starting to increase and home prices are finally stabilizing. This is a
good thing for both buyers and sellers as we move forward.
If there is an economic slowdown in our near future, there is no need
for fear to set in. As renowned financial analyst, Morgan Housel, recently tweeted:
thing is the widespread assumption that the next recession will be as
bad as 2008. Natural to think that way, but, statistically, highly
unlikely. Could be over before you realized it began.”
Call me now and let’s get moving! Your dream…my mission! 847.630.1032
Heading into the spring buying market, there are strong trends starting to emerge.
The inventory of homes for sale has increased on a year-over-year
basis for eight months in a row. Home price appreciation has continued
to grow, although at a slower rate. The homeownership rate has reached
heights last seen in 2014, with millennials and Generation X leading the
Let’s dive a little deeper into some of the recent reports that have
been released and what they mean for the spring buying season!
Sales of existing homes were down for the third consecutive month in
January. Some of this can be explained by the natural seasonality that
the real estate market experiences every year, and some can be explained
even further by a lack of homes available for sale on the market.
For the last eight months, the inventory of homes for sale has been
higher when compared to the same month the year before. The challenge in
the market is the mismatch of the type of home that is available for
sale. First-time homebuyers looking for a starter home are often
competing with other buyers to stand out, often outbidding each other.
Lawrence Yun, NAR’s Chief Economist, agrees that the market is still experiencing an inventory shortage.
“In particular,the lower end of the market is experiencing a greater shortage, and more home construction is needed.”
The median home price for homes sold in January was $247,500. This is up 2.8% from January 2018 and marks the 83rd
consecutive month of year-over-year gains. The 2.8% growth in home
prices represents the smallest year-over-year change since February 2012
but is a welcome change for buyers who had feared being priced out of
Days on the Market
Properties that sold in January were on the market for an average of
49 days with 38% of homes on the market for less than a month.
Yun is positive about how today’s market conditions will help buyers this spring,
sales in January were weak compared to historical norms; however, they
are likely to have reached a cyclical low. Moderating home prices
combined with gains in household income will boost housing
affordability, bringing more buyers to the market in the coming months.”
The national Pending Home Sales Index (PHSI) rose 4.6% to
103.2 in January from 98.7 in December. An index score of 100 is
considered normal. All four major regions of the country experienced
gains in January, with the largest increase coming in the South.
is a leading indicator for the housing sector, based on pending sales
of existing homes. A sale is listed as pending when the contract has
been signed but the transaction has not closed, though the sale usually
is finalized within one or two months of signing.”
Increases in the PHSI often predict increases in the level of home
sales in the coming months, which is great news for the housing market
leading in to spring! Yun had this to say,
“Homebuyers are now
returning and taking advantage of lower interest rates, while a boost
in inventory is also providing more choices for consumers.”
The housing market in 2019 will require homeowners to list their house at the right price to attract buyers. If interest rates continue to stay low while wages increase, and more inventory comes to market, 2019 could be one of the best years for home sales in recent history.
Every family has a list of important dates. We celebrate birthdays, anniversaries, pet adoptions…and the list goes on. For64.4 percentof households in the United States, this list includes the day they became a homeowner for the first time!
Why is this date important? Homeownership is not just a roof over your head! It represents shelter, stability, wealth, and pride! For decades, homeownership has been an important part of the American Dream!
However, many question if the next generations see the same benefits of homeownership as their predecessors.
In case we have forgotten, some of those benefits are:
1)Educational Achievement: Homeownership has a positive impact on academic achievement, including reading and math performance in children 3-12 years old.
2)Civic Participation:“Owning a home means owning a part of the neighborhood.” Homeowners have a stronger connection to their neighborhood and are more committed to volunteer.
3)Health Benefits:Adjusting for a range of demographic, socioeconomic and housing-related characteristics, homeowners have a substantial health advantage over renters.
4)Public Assistance:The report shows 47% of homeowners use their home equity credit lines to help pay other debts, diminishing their need for public assistance.
5)Property Maintenance and Improvement:A well-maintained home not only generates benefits through consumption and safety, but a high-quality structure also raises mental health.
6)Pride of Ownership:This place is uniquely “yours.” You can customize it according to your likes and personality.
In addition to financial benefits, homeownership also brings significant social benefits. These not only pertain to the family, but extend to the communities, the state, and the country!
Buying a home is an investment in your future!
Appreciation:On average, home prices are appreciating annually at a rate of 3.6%. This helps to create a safety net.
Forced Savings:Your mortgage is like a forced savings plan! With each payment, you are reducing the principal of your loan.
Home Equity:Homeownership builds equity every single month. You can later use that equity to start a business, send your children to college, etc.
Net Worth:A homeowners’ net worth is 44x greater than renters! This gives you the financial freedom to invest.
Stability:Rent prices increase 4% annually! A fixed mortgage payment allows you to save for future projects and guard against inflation.
Tax Benefits:The government has created tax benefits to encourage customers to purchase. (Talk to your CPA to see which benefits apply to you).
Homeownership is and will always be part of the American Dream! There are many financial and non-financial benefits to take advantage of when owning a home. If owning a home is part of your dream, contact a local real estate professional to help you with the process!