Get new listings emailed daily! SIGN UP OR LOGIN

BHHS Bay Street Realty Group Cora Bett Thomas Realty Blog

BHHS Bay Street Realty Group Cora Bett Thomas Realty Blog Home

Subscribe and receive email notifications of new blog posts.




rss logo RSS Feed
Agents | 1 Posts
Beaufort | 13 Posts
Bluffton | 1 Posts
Commercial | 1 Posts
Finance | 10 Posts
GOLDEN ISLES | 1 Posts
Home Decor | 9 Posts
Home Ownership | 19 Posts
Office Culture | 1 Posts
Real Estate | 40 Posts
Savannah | 1 Posts
South Carolina | 2 Posts
The Islands | 1 Posts
Tips and Tricks | 5 Posts
Uncategorized | 141 Posts
June
20

Hope Is on the Horizon for Today's Housing Shortage

Hope Is on the Horizon for Today's Housing Shortage | MyKCM

The major challenge in today's housing market is that there are more buyers looking to purchase than there are homes available to buy. Simply put, supply can't keep up with demand. A normal market has a 6-month supply of homes for sale. Anything over that indicates it's a buyers' market, but an inventory level below that threshold means we're in a sellers' market. Today's inventory level sits far below the norm.

According to the Existing Home Sales Report from the National Association of Realtors (NAR):

"Total housing inventory at the end of April amounted to 1.16 million units, up 10.5% from March's inventory and down 20.5% from one year ago (1.46 million). Unsold inventory sits at a 2.4-month supply at the current sales pace, slightly up from March's 2.1-month supply and down from the 4.0-month supply recorded in April 2020. These numbers continue to represent near-record lows."

Basically, while we are seeing some improvement, we're still at near-record lows for housing inventory (as shown in the graph below). Here's why. Since the pandemic began, sellers have been cautious when it comes to putting their homes on the market. At the same time that fewer people are listing their homes, more and more people are trying to buy them thanks to today's low mortgage rates. The influx of buyers aiming to capitalize on those rates are purchasing this limited supply of homes as quickly as they're coming to market.

Hope Is on the Horizon for Today's Housing Shortage | MyKCMThis inventory shortage doesn't just apply to existing homes that are already built. When it comes to new construction, builders are trying to do their part to bring more newly built homes into the market. However, due to challenges with things like lumber supply, they're also not able to keep up with demand. In their Monthly New Residential Sales report, the United States Census Bureau states:

"The seasonally‐adjusted estimate of new houses for sale at the end of April was 316,000. This represents a supply of 4.4 months at the current sales rate."

Hope Is on the Horizon for Today's Housing Shortage | MyKCMSam Khater, Chief Economist at Freddie Mac, elaborates:

"In the span of five decades, entry level construction fell from 418,000 units per year in the late 1970s to 65,000 in 2020.

While in 2020 only 65,000 entry-level homes were completed, there were 2.38 million first-time homebuyers that purchased homes. Not all renters looking to purchase their first home were in the market for entry-level homes, however, the large disparity illustrates the significant and rapidly widening gap between entry-level supply and demand."

Despite today's low inventory, there is hope on the horizon.

Regarding existing home sales, Sabrina Speianu, Senior Economic Research Analyst at realtor.com, explains:

"In May, newly listed homes grew by 5.4% on a year-over-year basis compared to the earlier days of the COVID-19 pandemic last year

In May, the share of newly listed homes compared to active daily inventory hit a historical high of 44.4%, 17.3 percentage points higher than last year and 15.1 percentage points above typical levels seen in 2017 to 2019. This is a reflection of quickly selling homes and, for buyers, it means that while they can expect fresh new listings every week, they will have to be prepared to move quickly on desirable homes."

As for newly built homes, builders are also confident about what's ahead for housing inventory. Robert Dietz, Chief Economist at the National Association of Home Builders (NAHB), shares:

"Builder confidence in the market remains strong due to a lack of resale inventory, low mortgage interest rates, and a growing demographic of prospective home buyers."

Things are starting to look up for residential real estate inventory. As the country continues to reopen, more houses are likely to be listed for sale. However, as long as buyer demand remains high, it will take time for the balance between supply and demand to truly neutralize.

Bottom Line

Although it may be challenging to find a house to buy in today's market, there is hope on the horizon. Let's connect to talk about your home search so we can find your dream home this summer.

June
18

Don't Wait To Sell Your House

Don't Wait To Sell Your House | MyKCM

We're in the ultimate sellers' market right now. If you're a homeowner thinking about selling, you have a huge advantage in today's housing market. High buyer demand paired with very few houses for sale makes this the optimal time to sell for those who are ready to do so. Whatever the move you want to make looks like, here's an overview of what's creating the prime opportunity to sell this summer.

High Buyer Demand

Demand is strong, and buyers are actively searching for homes to purchase. In the Realtors Confidence Index Survey published monthly by the National Association of Realtors (NAR), buyer traffic is considered "very strong" in almost every state. Homebuyers aren't just great in number right now – they're also determined to find their dream home. NAR shows the average home for sale today receives five offers from hopeful buyers. These increasingly frequent bidding wars can drive up the price of your house, which is why high demand from competitive homebuyers is such a win for this summer's sellers.

Low Inventory of Houses for Sale

Purchaser demand is so high, the market is running out of available homes for sale. Danielle Hale, Chief Economist at realtor.com, explains:

"For most sellers listing sooner rather than later could really pay off with less competition from other sellers and potentially a higher sales price... They'll also avoid some big unknowns lurking later in the year, namely another possible surge in COVID cases, rising interest rates and the potential for more sellers to enter the market."

NAR also reveals that unsold inventory sits at a 2.4-months' supply at the current sales pace. This is far lower than the historical norm of a 6.0-months' supply. Homes are essentially selling as fast as they're hitting the market. Below is a graph of the existing inventory of single-family homes for sale:

Don't Wait To Sell Your House | MyKCMAt the same time, homebuilders are increasing construction this year, but they can't keep up with the growing demand. While reporting on the inventory of newly constructed homes, the U.S. Census Bureau notes:

"The seasonally‐adjusted estimate of new houses for sale at the end of April was 316,000. This represents a supply of 4.4 months at the current sales rate."

What Does This Mean for You? 

If you're thinking of putting your house on the market, don't wait. A seller will always negotiate the best deal when demand is high and supply is low. That's exactly what's happening in the real estate market today.

Bottom Line

As vaccine rollouts progress and we continue to see the economy recover, more houses will come to the market. Don't wait for the competition in your neighborhood to increase. If you're ready to make a move, now is the time to sell. Let's connect today to get your house listed at this optimal moment in time.

June
14

Why This Is Not Like 2008 Again

Why This Is Not Like 2008 Again | MyKCM

During the Great Recession, just over a decade ago, the financial systems the world depended on started to collapse. It created a panic that drove some large companies out of business (ex. Lehman Brothers) and many more into bankruptcy.

The financial crisis that accompanied the current pandemic caused hardship to certain industries and hurt many small businesses. However, it hasn't rattled the world economy. It seems that a year later, things are slowly getting back to normal for many companies.

Why is there a drastic difference between 2008 and now?

In a post from RealtyTrac, they explain:

"We changed the rules. We told banks they needed more reserves and that they could no longer underwrite toxic mortgages. It turns out that regulation — properly done — can help us navigate financial minefields."

Here are the results of that regulation, captured in a graph depicting the number of failed banks since 2007.

Why This Is Not Like 2008 Again | MyKCM

What was different this time?

The post mentioned above explains:

"In 2008 the government saw the foreclosure meltdown as a top-down problem and set aside $700 billion for banks under the Troubled Asset Relief Program (TARP). Not all of the $700 billion was used, but the important point is that the government did not act with equal fervor to help flailing homeowners, millions of whom lost their homes to foreclosures and short sales.

This time around the government forcefully moved to help ordinary citizens. Working from the bottom-up, an estimated $5.3 trillion went to the public in 2020 through such mechanisms as the Paycheck Protection Program (PPP), expanded unemployment benefits, tax incentives, and help for local governments. So far this year we have the $1.9 billion American Rescue Plan with millions of $1,400 checks as well as proposals to spend trillions more on infrastructure…Bank deposits increased by nearly $2 trillion during the past year and credit card debt fell."

Bottom Line

Many have suffered over the past year. However, the economic toll of the current recession was nowhere near the scope of the Great Recession, and it won't result in a housing crisis.

June
10

Why You May Want To Cash in on Your Second Home

Why You May Want To Cash in on Your Second Home | MyKCM

When stay-at-home mandates were enforced last year, many households realized their homes didn't really fulfill their new lifestyle needs. An office (in some cases two), a media room, space for children to learn, a gym, and a large yard are all examples of amenities that became highly desirable almost overnight.

Zelman & Associates recently reported that sales of primary residences grew by 9% in 2020. That increase in demand was met by the lowest supply of homes for sale in history. High demand and low supply caused prices to skyrocket over the past twelve months. Here are three home price indexes released most recently that show how home values have risen:

Prices increased by double digits in every region of the country and in 19 of 20 major metros. Chicago was the only exception, where prices still rose by 9%.

What does this mean to those who purchased a second home during the pandemic?

Many people didn't want to give up a home in the city or close to their office. Instead, they purchased a larger second home farther away and moved there to stay safe and have more space. According to the same Zelman report, sales for second homes rose an astonishing 27% in 2020.

That large second-home retreat on a lake or in the mountains would demand a higher price than the average house. Let's assume a buyer purchased such a home for $500,000. Assuming the middle 13.2% appreciation shown above, that home would now be worth about $566,000.

Those who bought second homes to improve their lifestyle during the height of the pandemic, or those who just wanted to be in a safer environment, also made a great investment.

What should these homeowners do now as the pandemic is receding, and the economy is reopening?

The buyers of those second homes now have a decision to make. Many will move back to the original home they still own (the one that's closer to work, friends, and family). Should they keep the second home? That could depend on answers to questions like these:

  • Now that you may have to go back to the office (at least a few days a week) and students are required to physically attend school, would you still use the second house enough to warrant the expenses of an additional home?
  • Would you go to the second home on most weekends, or would you return to the movie theater, attend sporting events, eat out at fine restaurants, or spend your time traveling again?

Bottom Line

If you purchased a larger second home during the pandemic, you were able to make day-to-day life much easier for those important to you. You also made it much safer. However, with those goals already accomplished, you now need to decide whether to continue paying the extra expenses or sell the house and cash in your profit. If you decide selling makes sense, let's connect today to discuss the value of your second home.

June
1

6 Reasons to Celebrate National Homeownership Month

6 Reasons to Celebrate National Homeownership Month | MyKCM

Our homes are so much more than the houses we live in. For many, they've also become our workplaces, schools for our children, and safe harbors in which we've weathered the toughest moments of a global pandemic. Today, 65.6% of Americans call their homes their own, a rate that has risen to its highest point in 8 years.

As National Homeownership Month kicks off this June, homeowners have every reason to celebrate. A survey by Gallup just ranked real estate as the best investment you can make for the eighth year in a row. However, unlike other investment options, the benefits of owning a home aren't purely financial. Here are the top ways Americans are winning by owning a home.

Non-Financial Benefits:

1. Civic Participation: Owning a home is owning a part of your neighborhood. Homeowners have a stronger connection to their neighborhoods and are more committed to volunteer work and other ways to get involved.

2. Pride of Ownership: Owning a home is having a space that is uniquely yours. You can customize it to your personal liking and make it reflect your personality and values.

3. A Safe Space: Owning a home gives you a sense of security and privacy – two things that have become even more valuable as we've tackled the challenges of the recent health crisis.

Financial Benefits:

1. Forced Savings: Owning a home builds equity. Your equity grows with each payment you make toward your mortgage. This form of forced savings can be used down the road to help you accomplish your biggest financial goals.

2. Appreciation: Owning a home is making an investment that steadily gains value, and experts project home values will continue to rise in the years to come.

3. Stability: Owning a home means having better control over your future housing payments. Over the years, a mortgage stays relatively steady, but rent costs continue to rise.

Bottom Line

If you own your home, take time this June to celebrate the ways homeownership has added value to your life. If you hope to become a homeowner this year, let's connect today to take the first steps toward achieving your goal.

May
26

Buying a Home Is Still Affordable

Buying a Home Is Still Affordable | MyKCM

The last year has put emphasis on the importance of one's home. As a result, some renters are making the jump into homeownership while some homeowners are re-evaluating their current house and considering a move to one that better fits their current lifestyle. Understanding how housing affordability works and the main market factors that impact it may help those who are ready to buy a home narrow down the optimal window of time in which to make a purchase.

There are three main factors that go into determining how affordable homes are for buyers:

  1. Mortgage Rates
  2. Mortgage Payments as a Percentage of Income
  3. Home Prices

The National Association of Realtors (NAR) produces a Housing Affordability Index. It takes these three factors into account and determines an overall affordability score for housing. According to NAR, the index:

"…measures whether or not a typical family earns enough income to qualify for a mortgage loan on a typical home at the national and regional levels based on the most recent price and income data."

Their methodology states:

"To interpret the indices, a value of 100 means that a family with the median income has exactly enough income to qualify for a mortgage on a median-priced home. An index above 100 signifies that family earning the median income has more than enough income to qualify for a mortgage loan on a median-priced home, assuming a 20 percent down payment."

So, the higher the index, the more affordable it is to purchase a home. Here's a graph of the index going back to 1990:Buying a Home Is Still Affordable | MyKCMThe blue bar represents today's affordability. We can see that homes are more affordable now than they've been at any point since the housing crash when distressed properties (foreclosures and short sales) dominated the market. Those properties were sold at large discounts not seen before in the housing market for almost one hundred years.

Why are homes so affordable today?

Although there are three factors that drive the overall equation, the one that's playing the largest part in today's homebuying affordability is historically low mortgage rates. Based on this primary factor, we can see that it's more affordable to buy a home today than at any time in the last eight years.

If you're considering purchasing your first home or moving up to the one you've always hoped for, it's important to understand how affordability plays into the overall cost of your home. With that in mind, buying while mortgage rates are as low as they are now may save you quite a bit of money over the life of your home loan.

Bottom Line

If you feel ready to buy, purchasing a home this summer may save you a significant amount of money over time based on historical affordability trends. Let's connect today to determine if now is the right time for you to make your move.

May
24

Should I Move or Refinance?

Should I Move or Refinance? | MyKCM

The level of equity homeowners have is at an all-time high. According to the U.S. Census, over 38% of owner-occupied homes are owned free and clear, meaning they don't have a mortgage. Those with a mortgage are seeing their equity skyrocket too. Every time real estate values increase, homeowners get a dollar-for-dollar gain in their home equity.

According to the first-quarter 2021 U.S. Home Equity Report from ATTOM Data Solutions:

"17.8 million residential properties in the United States were considered equity-rich, meaning that the combined estimated amount of loans secured by those properties was 50 percent or less of their estimated market value.

The count of equity-rich properties in the first quarter of 2021 represented 31.9 percent, or about one in three, of the 55.8 million mortgaged homes in the United States. That was up from 30.2 percent in the fourth quarter of 2020, 28.3 percent in the third quarter and 26.5 percent in the first quarter of 2020."

This surge in home equity has given most homeowners the opportunity to use that equity in one of two ways:

  1. Refinance to cash out some of the equity or lower their current payment
  2. Move to a home that better fits their current needs

Let's break down the possibilities.

1. Refinance

An abundance of equity and record-low mortgage rates can make refinancing a home very easy. Some homeowners choose to refinance so they can lower their payments. Others convert a portion of the equity to cash while keeping their monthly payment the same.

There are many homeowners who could take advantage of lower rates and higher levels of equity, but they haven't yet. According to an Economic & Housing Research Note from earlier this month, there were over five million homeowners with a loan funded by Freddie Mac who would benefit by refinancing their loan. As of January 2021, there were:

  • 452,122 loans with an average mortgage rate of 6.17%
  • 1,027,834 loans with an average mortgage rate of 4.39%
  • 3,687,780 loans with an average mortgage rate of 4.21%

With mortgage rates currently hovering around 3%, any of these homeowners would benefit from refinancing. They could lower their payments by hundreds of dollars per month or cash out large sums of equity while keeping their monthly payment the same.

Example:

If a homeowner has a $200,000 fixed-rate mortgage with a 6% interest rate and refinances that loan to a 3% interest rate, their monthly mortgage payment (principal and interest) will go from $1,199 per month to $843 per month – a savings of $356 a month, or $4,272 each year.

On the other hand, if they keep their mortgage payment the same, they could cash out a significant amount of their equity.

2. Move into your dream home

The past year prompted many households to redefine what a dream home really means, and it's something different to everyone. Those who have a high mortgage rate could use their equity as a down payment and perhaps buy their next home without significantly raising their mortgage payment.

Example:

Suppose a person bought a house for $216,000 at the height of the market in 2006. (The median home price in May of 2006). If they put 10% down and took out a mortgage of $194,400 at 6.41% (the average rate in 2006), the monthly mortgage payment (principal and interest) would have been $1,217.

According to the National Association of Realtors (NAR), a typical single-family home has grown in value by approximately $150,000 over the last fifteen years. That means the $216,000 house would be worth about $366,000 today.

After deducting selling expenses, they would be left with about $130,000 ($150,000 minus approximately $20,000 in selling expenses).

A seller could take that equity and use it as a down payment on a new house. Let's assume they purchased a home for $450,000 (roughly $80,000 more than the value of their current home). If they put the $130,000 down, they could take out a mortgage of $320,000 with a 3% interest rate. The monthly mortgage payment (principal and interest) would be $1,349. Therefore, they could buy a home worth $80,000 more than the one they have today and only spend an extra $132 per month.

Bottom Line

Whether you're refinancing your house or moving to a new home, your current mortgage rate and your level of equity are crucial in your decision-making process. Look at your mortgage documentation to find out your interest rate, and then let's connect to determine the potential equity in your home. You may be surprised by the opportunities you have.

May
19

Don't Forget to Budget for Closing Costs

Don't Forget to Budget for Closing Costs | MyKCM

When buying a home, it's important to have a budget and make sure you plan ahead for certain homebuying expenses. Saving for a down payment is the main cost that comes to mind for many, but budgeting for the closing costs required to get a mortgage is just as important.

What Are Closing Costs?

According to Trulia:

"When you close on a home, a number of fees are due. They typically range from 2% to 5% of the total cost of the home, and can include title insurance, origination fees, underwriting fees, document preparation fees, and more."

For example, for someone buying a $300,000 home, they could potentially have between $6,000 and $15,000 in closing fees. If you're in the market for a home above this price range, your closing costs could be greater. As mentioned above, closing costs are typically between 2% and 5% of your purchase price. 

Trulia gives more great advice, explaining:

"There will be lots of paperwork in front of you on closing day, and not enough time to read them all. Work closely with your real estate agent, lender, and attorney, if you have one, to get all the documents you need ahead of time.

The most important thing to read is the closing disclosure, which shows your loan terms, final closing costs, and any outstanding fees. You'll get this form about three days before closing since, once you (the borrower) sign it, there's a three-day waiting period before you can sign the mortgage loan docs. If you have any questions about the numbers or what any of the mortgage terms mean, this is the time to ask—your real estate agent is a great resource for getting you all the answers you need."

Bottom Line

As home prices are rising and more buyers are finding themselves competing in bidding wars, it's more important than ever to make sure your plan includes budgeting for closing costs. Let's connect to be sure you have everything you need to land your dream home.

Login to My Homefinder

Login to My Homefinder