Tidbits from the Ville

Today I talked about Real Estate numbers and specifically about Rent Payments around the nation as well as Mortgage Purchase Applications.

Selling Your House is the Right Move, Right Now:

1) Demand from homebuyers has skyrocketed this year, which means today’s sellers are poised to win big.

2) This ideal moment in time to sell your house won’t last forever, though.

3) With more sellers coming to the market in the spring, waiting until next year means buyers will have more choices, so your home may not stand out from the crowd.

In my Smithville update, I talked about Governor Mike Parson's visiting the Double-A Co-Op and A Meal that counts downtown yesterday.  It was a great day for Smithville.

For our Smithville Update:  The Main Street Trail project is progressing nicely.  If you have driven down main street towards Grace Community Church you will notice the contractors have begun to pour sidewalks varying from 6-10 foot widths.  This is a wonderful project that will enhance downtown and connect downtown to the Litton Center.

Home Values Projected to Keep Rising

As we enter the final months of 2020 and continue to work through the challenges this year has brought, some of us wonder what impact continued economic uncertainty could have on home prices. Looking at the big picture, the rules of supply and demand will give us the clearest idea of what is to come.

Due to the undersupply of homes on the market today, there’s upward pressure on prices. Consider simple economics: when there is high demand for an item and a low supply of it, consumers are willing to pay more for that item. That’s what’s happening in today’s real estate market. The housing supply shortage is also resulting in bidding wars, which will also drive price points higher in the home sale process.

There’s no evidence that buyer demand will wane. As a result, experts project price appreciation will continue over the next twelve months. 

I hear many foreclosures might be coming to the market soon. Won’t that drive prices down?

Some are concerned that homeowners who entered a mortgage forbearance plan might face foreclosure once their plan ends. However, when you analyze the data on those in forbearance, it’s clear the actual level of risk is quite low.

Ivy Zelman, CEO of Zelman & Associates and a highly-regarded expert in housing and housing-related industries, was very firm in a podcast last week:

“The likelihood of us having a foreclosure crisis again is about zero percent.”

With demand high, supply low, and little risk of a foreclosure crisis, home prices will continue to appreciate.

Bottom Line

Originally, many thought home prices would depreciate in 2020 due to the economic slowdown from the coronavirus. Instead, prices appreciated substantially. Over the next year, we will likely see home values rise even higher given the continued lack of inventory of homes for sale.

In Today's episode, I talk about Why Today's Options Will Save Homeowners from Foreclosure.  

Many housing experts originally voiced concern that the mortgage forbearance program (which allows families impacted financially by COVID to delay mortgage payments to a later date) could lead to an increase in foreclosures when forbearances end.

Some originally forecasted that up to 30% of homeowners would choose to enter forbearance. Less than 10% actually did, and that percentage has been dropping steadily. Black Knight recently reported that the national forbearance rate has decreased to 5.6%, with active forbearances falling below 3 million for the first time since mid-April.

Many of those still in forbearance are actually making timely payments. Christopher Maloney of Bloomberg Wealth recently explained:

“Almost one-quarter of all homeowners who have demanded forbearance are still current on their mortgages…according to the latest MBA data.”

However, since over two million homeowners are still in forbearance, some experts are concerned that this might lead to another wave of foreclosures like we saw a little over a decade ago during the Great Recession. Here is why this time is different.

There Will Be Very Few Strategic Defaults

During the housing crash twelve years ago, many homeowners owned a house that was worth less than the mortgage they had on that home (called negative equity or being underwater). Many decided they would just stop making their payments and walk away from the house, which then resulted in the bank foreclosing on the property. These foreclosures were known as strategic defaults. Today, the vast majority of homeowners have significant equity in their homes. This dramatically decreases the possibility of strategic defaults.

Aspen Grove Solutions, a business consulting firm, recently addressed the issue in a study titled Creating Positive Forbearance Outcomes:

“Unlike in 2008, strategic defaults have not emerged as a serious problem and seems unlikely to emerge given stronger expectations for property price increases, a record low inventory of homes, and stable residential underwriting standards leading up to the crisis which has reduced the number of owners who are underwater.”

There Are Other Options That Were Not Available the Last Time

A decade ago, there wasn’t a forbearance option, and most banks did not put in other programs, like modifications and short sales, until very late in the crisis.   Today, homeowners have several options because banks understand the three fundamental differences in today’s real estate market as compared to 2008:

1. Most homeowners have substantial equity in their homes.

2. The real estate market has a shortage of listings for sale. In 2008, homes for sale flooded the market.

3. Prices are appreciating. In 2008, prices were depreciating dramatically.

In Today's episode, I am going to discuss the upcoming visit from Missouri Governor to Smithville, Double A Co-op, and A Meal That Counts a new business in downtown Smithville and some recent facts and figures posted in Outfront a weekly newsletter published by Keller Williams.

Starting with the Smithville update: Double A Co-op and A Meal That Counts is now open in downtown Smithville.  The owners are tremendous people and I joined the highest level of Membership the Co-op offers this past Saturday.    Governor Mike Parsons will be touring the facility on Thursday afternoon at 2:00 p.m.  He will be touring the store and talking about the importance of farmers and Co-ops.

In your National News update, U.S. Existing home sales reached the fastest sales price since 2006 in August, as sales climbed to a seasonally adjusted annual rate of 6 million.  This was a 10.5% increase compared to August 2019.  Inventory remains extremely low at 3 months of supply and overall listings are down 19% compared to August 2019.

Home Prices continue to accelerate.  NAR Pending sales were up 8.8% in August

New Home sales were up 43% year over year in August, as low mortgage rates and the low inventory of existing homes combined with remote work to put new homes in high demand.  This was above the consensus forecast and the fastest pace since 2006.

Today we talk about how Real Estate will finish strong in 2020.  What Realtors have been working on with buyers and sellers over the past 30 - 60 days will be completed by the end of the year.  Anything that is signed (active contract) will close between November and December of 2020. Here are a couple of key quotes from Lawrence Young and Zillow:

Lawrence Yun, Chief Economist, National Association of Realtors

“Home sales continue to amaze, and there are plenty of buyers in the pipeline ready to enter the market…Further gains in sales are likely for the remainder of the year, with mortgage rates hovering around 3% and with continued job recovery.”

Zillow

“Zillow’s predictions for seasonally adjusted home prices and pending sales are more optimistic than previous forecasts because sales and prices have stayed strong through the summer months amid increasingly short inventory and high demand.

The pandemic also pushed the buying season further back in the year, adding to recent sales. Future sources of uncertainty including lapsed fiscal relief, the long-term fate of policies supporting the rental and mortgage market, and virus-specific factors, were incorporated into this outlook.”

In closing, we look at ProAthlete receiving the Mr. K Award given annually to the chamber's small business of the year.  Startland News Reports provided this update.

In Friday's episode, I talk about How to Prepare for a Bidding War.  Some interesting facts taken from NASDAQ, National Association of Realtors, Bank of America, and Realtor.com state that:

55% of August 2020 home sales resulted in a bidding war.  

69% of homes sold were on the market for less than a month.  With so few houses available today, competition is heating up among homebuyers.  Be ready for a bidding war with these 3 tips.

Keep in mind there are few homes and limited land for sale this year and you have to be prepared to win.

1) Get Pre-Approved

2) Know What you Can Afford

3) Make Your Best Offer

Being prepared means you'll be able to move quickly and confidently in today's competitive marketplace.  Reach out to the Hartman Real Estate Team today to talk about how we can prepare you for a potential bidding war.

Good Thursday morning, In today's episode I am going to talk about the number of folks who have not reached out to their mortgage provider despite having difficulty paying their mortgage during these challenging times.

530,000 homeowners who became delinquent after the pandemic began did not take advantage of forbearance, despite being eligible to ask for the plan.  These responses reflect a need to provide better information to all homeowners (lump-sum payment) is not the only repayment option. 

Additionally, 205,000 homeowners who did not extend their forbearance after its term ended in June or July became delinquent on their loans.  We need to examine who these people are and why they are not extending their options.

The challenge, according to Matt Hulstein, Staff Attorney at non-profit Chicago Volunteer Legal Services, is "A lot of homeowners aren't aware of this option."

Why Some Homeowners Haven't Opted for Forbearance:

69.88 % Fear of Lump Sump Payment / 56.63% Didn't know they could request forbearance / 20.48% Servicer doesn't allow / 13.25% Servicer required proof / 34.94% Difficulty connecting / 31.33% other.

It is important to note that any homeowner experiencing financial hardship has the right to request forbearance.  If you are unfamiliar with the plans available contact your mortgage provider or reach out to me or someone or the Hartman Real Estate Team".  We will talk through all of your options.

In today's episode, I discuss some key points in the latest NFID Small Business Economic Trends - September 2020 Report.  Some of the key points are:

1) Housing is probably the hottest sector, posting record home sales last month, and double-digit price increases.  More construction firms have unfilled job openings than in any other industry.  Durable goods were strong except for aircraft, autos were weak after several strong months.  Non-Defense capital goods orders (excluding aircraft) were also very strong

2) The ratio of inventories to sales in retailing is at a record low level, spurring more production and imports to fill the gap.

3) The Fed has succeeded in creating inflation in the asset market, stocks and bonds are at record levels, but alas, no goods and services inflation.  Home prices rose at double-digit rates because the demand for homes exceeded supply, the traditional cause of "inflation" (not indirectly included in the inflation measures).  But no significant increase in the overall price level. - no inflation

Today we talk about what is going on with Housing Inventory across the country as well in the State of Missouri and right here in Clay County.  The one obstacle we face as Realtors across the country and locally is lack of inventory availability.  We're at a severe shortage across the country in the number of available homes for the number of people wanting them because the home has grown, the value of the home has grown over the pandemic.  Interesting quote from Realtor.com "Since the beginning of Covid pandemic in March, nearly 400,000 fewer homes have been listed compared to last year, leaving a gaping hole in the US Housing inventory."  As a result, home prices are accelerating at double last year's pace."

According to the Kansas City Association of Realtors and the Heartland MLS Closed Sales for September are up 12.5%, The Average Sales Price is up 11.3% to $264,359, the Days on Market is down -15%, Percentage of Original List Price Received is up 2.4% at 100.1%, inventory is down -60% from 885 homes in 2019 to 354 for sale in September 2020.  Finally, the Supply of inventory is .8 months down 61.9% from last September.

Today we talk about Six Reasons You'll Win by Selling with a Real Estate Agent This Fall vs. trying to sell your own house by For Sale By Owner (FSB0).  I discuss those six reasons briefly.  The material is provided by Keeping Current Matters:

1) Your Safety is a Priority

2) A Powerful Online Strategy is a must to Attract a Buyer.

3) There are too many negotiations

4) You won't know if your Purchaser is qualified for a mortgage

5) FSBoing has become more difficult from a legal standpoint

6) You Net more money when using an Agent

In your Smithville update, I remind everyone about Price Chopper in Smithville being closed for the transition to the new store through Wednesday.  This is something I talked about last week in my Podcast.  It seems like a lot of people were caught off guard by this.  Store shelves were very empty on Friday evening and throughout the weekend.