Tidbits from the Ville

Today, on Veterans Day, we honor those who have served our country and thank them for their continued dedication to our nation. In the United States, there are many valuable benefits available to Veterans, including VA home loans. For over 75 years, VA home loans have provided millions of Veterans and their families the opportunity to purchase their own homes.

As we consider the full impact of VA home loans, it’s important to both understand these great options for Veterans and to share them with those we know who may be able to benefit most. For a variety of different reasons, many Veterans don’t use their VA home loan options, so being knowledgeable about what’s available and how they work may be a game-changer for many.

The best thing you can do today to celebrate Veterans Day is to share this information with those who can potentially benefit from these loan options. Let’s connect today to discuss your questions about VA home loan benefits. Thank you for your service.

In today's episode, I talk briefly about our traveling experiences to Austin, TX last week as well as what I observed in airports, hotels, and restaurants. 

My wife and I had a wonderful time visiting our son and daughter-in-law in Austin, TX and I believe the economy is doing better than I expected or see what is reported in the media.

We still have a long ways to go, overall people are safe, respecting each other's space, and are wanting to interact and transact.  Have a great Monday.

Yesterday I took the time to look at 4 Reasons why the Election won't dampen the housing market.

1) Demand

2) Low-Interest Rates

3) Price Appreciation

4) History

Ali Wolf from Chief Economist at Meyers Research quoted:

"History suggests that the slowdown is largely concentrated in the month of November.  In fact, the year after a presidential election is the best of the four-year cycle.  This suggests that demand for new housing is not lost because of election uncertainty, rather it gets pushed out to the following year as long as the economy stays on track."

Top Three Reasons Homeowners are NOT putting their House on the Market according to Zillow Report:

Finally, Jeff Tucker from Zillow Senior Economist quoted:

"Homeowners who feel like is uncertain right now may think they can still get a strong price if they delay selling until they have more clarity.  The catch is that waiting to sell may raise the cost of the trade-up.  This fall's record low mortgage rates, which make a trade-up more affordable on a monthly basis, are not guaranteed to last."

Rent vs. Buy: How to Decide What’s Best for You

According to the U.S. Census Bureau, median rent continues to rise. With today’s low mortgage rates, there’s a great opportunity for current renters to make a move into homeownership that stretches each dollar a little bit further.

While the best timeline to buy a home is different for everyone, the question remains: Should I continue renting or is it time for me to buy? The answer depends on your current situation and your future plans, so here are some thoughts to help you decide if you’re ready to own a home of your own.

1. Rent Will Continue to Increase

This is one of the top reasons why renters decide to move because in most cases, rent will continue increasing each year. As noted above, the U.S. Census Bureau recently released its quarterly homeownership report, and as the graph below shows, median rent is climbing year after year. When you own a home, you’ll lock in your monthly payment for the life of your loan, creating consistency and predictability in your payments. Rent vs. Buy: How to Decide What’s Best for You | MyKCM

2. Freedom to Customize

This is a big decision-making point for many people who want to be able to paint, renovate, and make home upgrades. In many cases, landlords determine all of these selections and prefer you do not alter them as a renter. As a homeowner, you have the freedom to decorate and personalize your home to truly make it your own.

3. Privacy

When renting, your landlord has access to your space in case of an emergency. If you own your home, however, you’re the one to decide who can come inside. Given today’s health concerns around the pandemic, this may be a growing priority for you.

4. Flexibility for Relocation

If you’re renting, it may be easier to move quickly should you have a job transfer or simply decide it’s time for a change. When you’re a homeowner and need to sell your house, this might take a little more time. Today, however, with the housing market’s low inventory, this may no longer be the case. Homes are selling at a record-breaking pace, so you may have more flexibility than you think.

5. Building Equity

When you pay your rent, your landlord earns the equity the property gains. If you own your home, the benefits of your investment go directly toward your net worth. This is savings you’ll be able to use in the future for things like sending children to college, starting a new business, buying a bigger home, or simply downsizing to save for retirement.

6. Tax Advantages

When you own your home, there are additional that work in your favor as well. You can deduct things like your property taxes and mortgage interest (Always make sure you check with your accountant to see which tax-deductible benefits apply to your situation). When you rent, however, the tax benefits are directed to your landlord.

Bottom Line

It’s up to you to decide if you’d prefer to rent or buy, and it’s different for every person. If you’d like to learn more about the pros and cons of each, as well as resources to help you along the way, let’s connect to discuss your options. This way, you can make a confident and informed decision with a trusted expert on your side.

In today's episode I talk about 4 Reasons Why the Election Won't dampen the Housing Market:

Tomorrow, Americans will decide our President for the next four years. That decision will have a major impact on many aspects of life in this country, but the residential real estate market will not be one of them.

Analysts will try to measure the impact feasible changes in regulations might have on housing, the effect of a possible first-time buyer program, and any number of other situations based on who wins. The housing market, however, will remain strong for four reasons:

1. Demand Is Strong among Millennials

The nation’s largest generation began entering the housing market last year as they reached the age to marry and have children – two key drivers of homeownership. As the Wall Street Journal recently reported:

“Millennials, long viewed as perennial home renters who were reluctant or unable to buy, are now emerging as a driving force in the U.S. housing market’s recent recovery.”

2. Mortgage Rates Are Historically Low

All-time low-interest rates are also driving demand across all generations. Strong demand created by this rate drop has countered other economic disruptions (e.g., pandemic, recession, record unemployment).

In addition, Freddie Mac just forecasted mortgage rates to remain low through next year:

“One of the main drivers of the strong housing recovery is historically low mortgage interest rates…Given weakness in the broader economy, the Federal Reserve’s signal that its policy rate will remain low until inflation picks up, and no signs of inflation, we forecast mortgage rates to remain flat over the next year. From the third quarter of 2020 through the end of 2021, we forecast mortgage rates to remain unchanged at 3%.”

3. Prices Continue to Appreciate

The continued lack of supply of existing homes for sale coupled with the surge in buyer demand has experts forecasting strong price appreciation over the next twelve months.

4. History Says So

Though it’s true that the market slows slightly in November when it’s a Presidential election year, the pace returns quickly. Here’s an explanation as to why from the Homebuilding Industry Report by BTIG:

“This may indicate that potential homebuyers may become more cautious in the face of national election uncertainty. This caution is temporary, and ultimately results in deferred sales, as the economy, jobs, interest rates and consumer confidence all have far more meaningful roles in the home purchase decision than a Presidential election result in the months that follow.”

Ali Wolf, Chief Economist for Meyers Research, also notes:

“History suggests that the slowdown is largely concentrated in the month of November. In fact, the year after a presidential election is the best of the four-year cycle. This suggests that demand for new housing is not lost because of election uncertainty, rather it gets pushed out to the following year as long as the economy stays on track.”

Bottom Line

There’s no doubt this is one of the most contentious presidential elections in our nation’s history. The outcome will have a major impact on many sectors of the economy. However, as Matthew Speakman, an economist at Zillow, explained last week:

“While the path of the overall economy is likely to be most directly dictated by coronavirus-related and political developments in the coming months, recent trends suggest that the housing market – which has basically withstood every pandemic-related challenge to this point – will continue its strong momentum in the months to come.”

Today I talk about the question we often get when getting ready to sell a home?  Should I Renovate My house before I sell it?

Have an outstanding weekend and don't forget to set your clocks (fall back an hour) before going to bed on Saturday night.  Everyone will get an extra hour of sleep.

In today's episode, I talk about The number of houses for sale today is significantly lower than the high buyer activity in the current housing market. According to Lawrence Yun, Chief Economist for the National Association of Realtors (NAR):

When the demand for homes is higher than what’s available for sale, it’s a great time for homeowners to sell their house. Here are three ways low inventory can help you win if you’re ready to make a move this fall.

With so many more buyers in the market than homes available for sale, homebuyers are frequently entering into bidding wars for the houses they want to purchase. This buyer competition drives home prices up. As a seller, this can definitely work to your advantage, potentially netting you more for your house when you close the deal.

Rising prices mean homes are also gaining value, which drives an increase in the equity you have in your home. In the latest Homeowner Equity Insights Report, CoreLogic explains:

This year-over-year growth in equity gives you the ability to put that money toward a down payment on your next home or to keep it as extra savings.

When we’re in a sellers’ market like we are today, you’re in the driver’s seat if you sell your house. You have the power to sell on your terms, and buyers are more likely to work with you if it means they can finally move into their dream home.

Yes, especially if you want to sell your house at the perfect time. Today’s market gives sellers immense negotiating power. However, it won’t last forever, especially as more sellers return to the housing market next year. If you’re considering selling your house, the best time to do so is now.

If you’re interested in taking advantage of the current sellers’ market, let’s connect today to determine your best move in our local market.

Today I talk about young Buyers purchasing their first homes.

“Home sales traditionally taper off toward the end of the year, but in September they surged beyond what we normally see during this season…I would attribute this jump to record-low interest rates and an abundance of buyers in the marketplace, including buyers of vacation homes given the greater flexibility to work from home.”

What’s drawing so many buyers to the market?

As Yun mentioned, record-low interest rates are key. Today’s rates are strengthening purchasing power for buyers, too. Sam Khater, Chief Economist at Freddie Mac, emphasizes:

“Mortgage rates today are on average more than a full percentage point lower than rates over the last five years.”

If you’re a homebuyer right now, there’s no question that you want to take advantage of this opportunity – and you’re not alone. Competition among buyers is definitely increasing as more buyers enter the market and mortgage interest rates remain so low.

Who’s planning to buy a home right now?

Today’s affordability is appealing to all generations and seems to be especially attractive to younger buyers who want to begin growing their wealth through homeownership. There’s a distinct increase this year in the percentage of those in younger generations searching for homes. The National Association of Home Builders (NAHB) notes:

“Between the third quarters of 2019 and 2020, the share of Gen Z adults planning a home purchase rose three points to 14%. Millennials, however, are the generation most likely to be considering buying a home (22%).”

Finally, I had the opportunity to sit in the EDC meeting last night attending as a member of the EDC.  We are living in a city that is growing and expanding exponentially, despite the National Pandemic.  There are so many bright spots happening within our City:

1) 39 Building Permits have been issued YTD up from 33 Last year at this time

2) 7 Commercial Permits have been issued YTD which include Herzog Foundation, Shamrock, Nodaway Bank, Star Development White Box at the Marketplace, KC RV, White Iron Ridge, and Shoreline.  There are many more coming and I can't wait to share more about them.

3) Sales and Use tax is up 42% Year Over Year

4) Sales Tax is up 17% Year Over Year

5) 670 Business Licenses have been mailed out to businesses for 2021 Renewal

Today, I talk about the fact that there are people in the industry are talking about how we are going to see record-high foreclosures as well as Real Estate crash.  I spend about 1 1/2 to 2 hours a day researching our industry and I am of the opinion this will not happen as it did back during the last housing crisis.  Here is why:

1) If you look at the Bureau of Labor Statistics (BLS) Weekly unemployment filings in the millions week ending 10/17/2020 there were 800,000 to 900,000 filings down from 6.9 million on 3/28/2020.

2) Those currently receiving Unemployment Insurance according to the Department of Labor is 8.4 million down from 24.9 million in May 2020.

3) The Number of mortgages in active forbearance decreased dramatically.  Week ending 10/15/2020 is 2.99 million are in forbearance down from 4.76 million on 5/29/2020 (Source: McDash Flash Forbearance Tracker)

4) The Percentage of Overall Forebearances is decreasing according to the Mortgage Banker Association (MBA).  Currently, that number is 6.32% vs. 8.47% in May 2020

5) The Percentage of Forbearances is decreasing with Fannie/Freddie, Ginnie Mae, and Private label according to the MBA.

6) Of the5, 289,000 families granted forbearance, this is what happened upon the expiration of the plan: Source: Blacknight

- 2,801,000 Forebearance Extended

- 1,804,000 Removed while Performing

- 363,000 Paid off a mortgage through resale and or ended the life of their mortgage

- 267,000 expired / delinqueent in loss mitgation

- 54,000 expired or were delinquent

7) Quote by Rick Sharga EVP of RealtyTrac: "We'll certainly see more repossessions by lenders once the foreclosure moratoria have ended, but maybe not as many as people might expect.  Given the record amount of homeowner equity, it seems likely that many homeowners in financial distress will opt to take advantage of strong demand among home buyers and sell their property rather than risk losing it to a foreclosure auction."

8) Distribution of Loans in Active Forbearance by Current combined loan to value (91% of at least 11% equity) Source: Blacknight

- 62% less than 70%

- 17% between 70-79%

- 12% between 80-90%

- 8% between 90-99%

- 1% are 100% or Higher

Finally, I close with a quote from Ivy Zelman Founder of Zelman and Associates:

"The Likelihood of us having a foreclosure crisis again is about zero percent."

Good Monday morning,  Stay safe out there today with slick conditions expected.  

Today I talk about What equity can do for homeownership and how that can be used to either buy a new home or enable homeowners to help future generations.  The Federal Reserve, in an addendum to their recent Survey of Consumer Finances explains:

“There are numerous ways families can transmit wealth and resources across generations. Families can directly transfer their wealth to the next generation in the form of a bequest. They can also provide the next generation with inter vivos transfers (gifts), for example, providing down payment support to enable a home purchase or a substantial wedding gift.”

The Federal Reserve also explains another way wealth (including the additional net worth generated by an increase in home equity) can benefit future generations:

“In addition to direct transfers or gifts, families can make investments in their children that indirectly increase their wealth. For example, families can invest in their children’s educational success by paying for college or private schools, which can in turn increase their children’s ability to accumulate wealth.”

I also discuss Veronika Bondarenko article in Inman News regarding the Rent Price increase across the county rose above 2% for the first time since the pandemic started.  The largest increase happened this past month in Phoenix, AZ where there is a high number of young professionals moving there for work.  Rents in the City rose by 5.8% while Arizona's Tucson and North Carolina's Charlotte followed close at 4.8% and 4%, respectively. 

In my final segment, I talk about an article from Jennifer Somers about The State of The Restaurant Industry.  It is estimated that 100,000 restaurants will close in 2020.   $240 billion in industry losses are projected.  Folks we have to do everything we can to support our local restaurants in Smithville, MO.  Staying local and buying local will help these restaurants survive.