Pre-Approval: Your 1st Step in Buying a Home

Pre-Approval: Your 1st Step in Buying a Home

In many markets across the country, the number of buyers searching for their dream homes outnumbers the number of homes for sale. This has led to a competitive marketplace where buyers often need to stand out. One way to show you are serious about buying your dream home is to get pre-qualified or pre-approved for a mortgage before starting your search. Even if you are in a market that is not as competitive, understanding your budget will give you the confidence of knowing if your dream home is within your reach. Freddie Mac lays out the advantages of pre-approval in the ‘My Home’ section of their website: “It’s highly recommended that you work with your lender to get pre-approved before you begin house hunting. Pre-approval will tell you how much home you can afford and can help you move faster, and with greater confidence, in competitive markets.” One of the many advantages of working with a local real estate professional is that many have relationships with lenders who will be able to help you through this process. Once you have selected a lender, you will need to fill out their loan application and provide them with important information regarding “your credit, debt, work history, down payment and residential history.” Freddie Mac describes the ‘4 Cs’ that help determine the amount you will be qualified to borrow: Capacity: Your current and future ability to make your payments Capital or cash reserves: The money, savings, and investments you have that can be sold quickly for cash Collateral: The home, or type of home, that you would like to purchase Credit: Your history of paying bills and other debts on time Getting pre-approved...

Are We About to Enter a Buyers’ Market?

Thursday October 4th, 2018 First Time Home Buyers, For Buyers, For Sellers, Housing Market Updates, Move-Up Buyer Home sales are below last year’s levels, home values are appreciating at a slower pace, and there are reports showing purchasing demand softening. This has some thinking we may be entering a buyers’ market after sellers have had the upper hand for the past several years. Is this really happening? The market has definitely softened. However, according to two chief economists in the industry, we are a long way from a market that totally favors the purchaser: Dr. Svenja Gudell, Zillow Chief Economist: “These seller challenges don’t indicate we’re suddenly in a buyers’ market – we don’t expect market conditions to shift decidedly in favor of buyers until 2020 or later. But buyers certainly are starting to balk at the rapid rise in prices and home values are starting to grow at a less frenetic pace.” Danielle Hale, Chief Economist of realtor.com: “The signs are pointing to a market that’s shifting toward buyers. But, in most places, we’re still a long way from a full reversal.” In addition, Pulsenomics Inc. recently surveyed over one hundred economists, real estate experts, and investment & market strategists and asked this question: “When do you expect U.S. housing market conditions to shift decidedly in favor of homebuyers?” Only 5% said the market has already shifted. Here are the rest of the survey results: Bottom Line The market is beginning to normalize but that doesn’t mean we will quickly shift to a market favoring the buyer. We believe Ivy Zelman, author of the well-respected ‘Z’ Report, best...

Is the Real Estate Market Finally Getting Back to Normal?

  The housing market has been anything but normal for the last eleven years. In a normal real estate market, home prices appreciate 3.7% annually. Below, however, are the price swings since 2007 according to the latest Home Price Expectation Survey: After the bubble burst in June 2007, values depreciated 6.1% annually until February 2012. From March 2012 to today, the market has been recovering with values appreciating 6.2% annually. These wild swings in values were caused by abnormal ratios between the available supply of inventory and buyer demand in the market. In a normal market, there would be a 6-month supply of housing inventory. When the market hit its peak in 2007, homeowners and builders were trying to take advantage of a market that was fueled by an “irrational exuberance.” Inventory levels grew to 7+ months. With that many homes available for sale, there weren’t enough buyers to satisfy the number of homeowners/builders trying to sell, so prices began to fall. Then, foreclosures came to market. We eventually hit 11 months inventory which caused prices to crash until early 2012. By that time, inventory levels had fallen to 6.2 months and the market began its recovery. Over the last five years, inventory levels have remained well below the 6-month supply needed for prices to continue to level off. As a result, home prices have increased over that time at percentages well above the appreciation levels seen in a more normal market.  That was the past. What about the future? We currently have about 4.5-months inventory. This means prices should continue to appreciate at above-normal levels which most experts...

Are Home Buyers Starting to Hit the ‘Pause’ Button?

For the last several years, buyer demand has far exceeded the housing supply available for sale. This low supply and high demand have led to home prices appreciating by an average of 6.2% annually since 2012.   With this being said, three of the four major reports used to measure buyer activity have revealed that purchasing demand may be softening. Here are the four indices, how they measure demand (methodology), what their latest reports said, and a quick synopsis of the report. The Foot Traffic Report by the National Association of Realtors Methodology: Every month SentriLock, LLC provides NAR Research with data on the number of properties shown by a REALTOR®. Lockboxes made by SentriLock, LLC are used in roughly a third of home showings across the nation. Foot traffic has a strong correlation with future contracts and home sales, so it can be viewed as a peek ahead at sales trends two to three months into the future. Latest Report: “Foot Traffic climbed 3.2 points to 55.8 mid-summer in July. Additionally, the diffusion index is higher than last year by 13.5 points. Despite a healthy economy and labor market, supply and new construction remains unable to keep up with buyer demand.” Synopsis: Buyer demand remains strong. The Showing Index by ShowingTime Methodology: The ShowingTime Showing Index® tracks the average number of buyer showings on active residential properties on a monthly basis, a highly reliable leading indicator of current and future demand trends. Latest Report: “Showing activity throughout the country increased by 0.3 percent year over year in July, the third consecutive month that the U.S. ShowingTime Showing Index recorded buyer interest deceleration compared to the previous year. The June 2018 figures revealed...