4 Reasons Why Summer Is a Great Time to Buy a Home!

Here are four great reasons to consider buying a home today instead of waiting.

1. Prices Will Continue to Rise

CoreLogic’s latest Home Price Insights reports that home prices have appreciated by 7% over the last 12 months. The same report predicts that prices will continue to increase at a rate of 5.2% 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 mortgage have increased by half a percentage point already in 2018 to around 4.5%. 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 that rates will increase by nearly a full percentage point 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

There are some renters who 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 that equity.

Are you ready to put your housing cost to work for you?

4. It’s Time to Move on with Your Life

The ‘cost’ 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?

Look at 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, you want your family to be safer, or you just want to have control over renovations, maybe now is 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.

4 Reasons Why Today’s Housing Market is NOT 2006 All Over Again

4 Reasons Why Today’s Housing Market is NOT 2006 All Over Again

With home prices rising again this year, some are concerned that we may be repeating the 2006 housing bubble that caused families so much pain when it collapsed. Today’s market is quite different than the bubble market of twelve years ago. There are four key metrics that explain why:

  1. Home Prices
  2. Mortgage Standards
  3. Mortgage Debt
  4. Housing Affordability

1. HOME PRICES

There is no doubt that home prices have reached 2006 levels in many markets across the country. However, after more than a decade, home prices should be much higher based on inflation alone.

Frank Nothaft is the Chief Economist for CoreLogic (which compiles some of the best data on past, current, and future home prices). Nothaft recently explained:

“Even though CoreLogic’s national home price index got to the same level it was at the prior peak in April of 2006, once you account for inflation over the ensuing 11.5 years, values are still about 18% below where they were.” (emphasis added)

2. MORTGAGE STANDARDS

Some are concerned that banks are once again easing lending standards to a level similar to the one that helped create the last housing bubble. However, there is proof that today’s standards are nowhere near as lenient as they were leading up to the crash.

The Urban Institute’s Housing Finance Policy Center issues a Housing Credit Availability Index (HCAI).According to the Urban Institute:

“The HCAI measures the percentage of home purchase loans that are likely to default—that is, go unpaid for more than 90 days past their due date. A lower HCAI indicates that lenders are unwilling to tolerate defaults and are imposing tighter lending standards, making it harder to get a loan. A higher HCAI indicates that lenders are willing to tolerate defaults and are taking more risks, making it easier to get a loan.”

The graph below reveals that standards today are much tighter on a borrower’s credit situation and have all but eliminated the riskiest loan products.

4 Reasons Why Today’s Housing Market is NOT 2006 All Over Again | Simplifying The Market

3. MORTGAGE DEBT

Back in 2006, many homeowners mistakenly used their homes as ATMs by withdrawing their equity and spending it with no concern for the ramifications. They overloaded themselves with mortgage debt that they couldn’t (or wouldn’t) repay when prices crashed. That is not occurring today.

The best indicator of mortgage debt is the Federal Reserve Board’s household Debt Service Ratio for mortgages, which calculates mortgage debt as a percentage of disposable personal income.

At the height of the bubble market a decade ago, the ratio stood at 7.21%. That meant over 7% of disposable personal income was being spent on mortgage payments. Today, the ratio stands at 4.48% – the lowest level in 38 years!

4. HOUSING AFFORDABILITY

With both house prices and mortgage rates on the rise, there is concern that many buyers may no longer be able to afford a home. However, when we look at the Housing Affordability Index released by the National Association of Realtors, homes are more affordable now than at any other time since 1985 (except for when prices crashed after the bubble popped in 2008).

4 Reasons Why Today’s Housing Market is NOT 2006 All Over Again | Simplifying The Market

Bottom Line

After using four key housing metrics to compare today to 2006, we can see that the current market is not anything like the bubble market.

What is PMI?

When it comes to buying a home, whether it is your first time or your fifth, it is always important to know all the facts. With the large number of mortgage programs available that allow buyers to purchase homes with down payments below 20%, you can never have too much information about Private Mortgage Insurance (PMI).

What is PMI?

Freddie Mac defines PMI as:

“An insurance policy that protects the lender if you are unable to pay your mortgage. It’s a monthly fee, rolled into your mortgage payment, that is required for all conforming, conventional loans that have down payments less than 20%.

Once you’ve built equity of 20% in your home, you can cancel your PMI and remove that expense from your mortgage payment.”

As the borrower, you pay the monthly premiums for the insurance policy, and the lender is the beneficiary. Freddie Mac goes on to explain that:

“The cost of PMI varies based on your loan-to-value ratio – the amount you owe on your mortgage compared to its value – and credit score, but you can expect to pay between $30 and $70 per month for every $100,000 borrowed.” 

According to the National Association of Realtors, the average down payment for all buyers last year was 10%. For first-time buyers, that number dropped to 5%, while repeat buyers put down 14% (no doubt aided by the sale of their homes). This just goes to show that for a large number of buyers last year, PMI did not stop them from buying their dream homes.

Here’s an example of the cost of a mortgage on a $200,000 home with a 5% down payment & PMI, compared to a 20% down payment without PMI:

 The larger the down payment you can make, the lower your monthly housing cost will be, but Freddie Mac urges you to remember:

“It’s no doubt an added cost, but it’s enabling you to buy now and begin building equity versus waiting 5 to 10 years to build enough savings for a 20% down payment.”

Bottom Line

If you have questions about whether you should buy now or wait until you’ve saved a larger down payment, let’s get together to discuss our market’s conditions and help you make the best decision for you and your family.

Spring Forward Safety Checklist

Daylight savings is this Sunday, March 11th! Don’t forget to change your clocks! The National safety council also ask everyone to take this time to check a few things around your house:

1. Check your smoke and carbon monoxide detectors. Did you know that each detector has an expiration date? If you didn’t purchase your home in the last few years it’s possible that you don’t have the proper amount or type of detectors in your home. Call your local fire department’s fire prevention bureau or visit their website for guidelines to help keep you and your family safe. At the very least, change your batteries and test each system!

2. The National Safety Council recommends every family have an emergency plan in place in the event of a natural disaster or other catastrophic event. Spring is a great time to review that plan with family members. Have a home and car emergency kit.

3. Dispose of unused, expired or unwanted medicines and prescriptions.  You can take unwanted or expired medicines to a prescription drop box or take-back event near you. NSC offers free Stericycle Seal & Send envelopes, so you can send your unwanted medication to be safely destroyed.

4. Does your home have a fire extinguisher? Does everyone in your home know where the extinguishers are kept? Most extinguishers last between five and 15 years, according to manufacturers. Check the tag on your extinguisher for dates and manufacturer’s instructions. A fire extinguisher with a gauge should be checked every month to make sure it is properly charged.

There may be a few inches of snow on the ground in Boston, but spring is right around the corner! Only 20 days til Opening Day at Fenway Park!

 

12 questions to ask your contractor before you hire

Making updates to your home is a great way to add value and make your space work for you. I am constantly  asked for contractor recommendations by my clients, unfortunately i’ve also been on the receiving end of a few horror stories. Here are some helpful tips and questions you should ask before hiring a contractor. 

QUESTIONS
  1. Are you licensed in Massachusetts?
  2. How long have you been in the business?
  3. Can I have the contact information for at least three references?
  4. Will you be pulling permits and handling town inspections? Will you make sure the final permit is signed off on?
  5. Do you have up to date liability insurance? Can you provide me with a copy.
  6.  Who will be my primary point of contact throughout the process?
  7. What is the payment schedule?
  8. What type of warranty do you offer for the work?
  9. What time will they arrive each day? What time does the work day end?
  10. Will you clean up at the end of each day? at the end of the job?
  11. What is the timeline for the project?
  12. How often are their projects completed on time and on budget?
A FEW TIPS
  1. Ask for an itemized AND detailed estimate
  2. What is/is not included (trash removal? a full clean up or broom clean? who will fix the accidental hole in the wall?)
  3. Who is their supplier? Is it cheaper for you to purchase some of the materials direct or does he get a discount?
  4. Ask the community! Many of us are part of an online community bulletin board (Facebook, NextDoor) ask for personal recommendations and feedback
  5. Always collect and compare multiple estimates
  6. Is your contractor the one actually pulling the permit for the work?
  7. Unexpected costs are likely to arise when you’re remodeling an older home. Create a budget, and build in some room for these repairs (i’m not talking about upgrades!). Older homes can come with old wiring and plumbing that you might not have been aware of – no matter how good your home inspector. A buffer in your budget is always a good idea.
  8. Read reviews on sites like Angie’s List, Home Advisor and Yelp

Want to check a contractors license? Visit the state’s guide to hiring a contractor.

Average Home Seller Profits at 10 Year High!

Prices are rising and homeowners are staying put longer, and that means more homeowners can cash in when they go to sell. Home seller profits surged to a 10-year high in the fourth quarter of 2017. Sellers saw an average home price gain since purchase of $54,000, up from $47,133 a year ago. In Boston, Cambridge, Newton markets the average seller profit was $141,800, that’s an average Seller ROI or 54%.

“It’s the most profitable time to sell a home in more than 10 years, yet homeowners are staying put longer than we’ve ever seen,” says Daren Blomquist, senior vice president at ATTOM Data Solutions. “While home sellers on the West Coast are realizing the biggest profits, rapid home price appreciation in red state markets is rivaling that of the high-flying coastal markets and producing sizable profits for home sellers in those middle-American markets as well.”

That $54,000 national average seller profit represents an average 29.7 percent return on investment compared to the original purchase price. That is the highest average home seller return on investment since the third quarter of 2007, according to ATTOM Data Solutions’ Q4 2017 Home Sales Report, released this week.

In downtown Boston and the immediate suburbs each week we’re seeing only a few new homes hit the market in each neighborhood and in each price point.  With such little competition they are quickly snapped up in bidding wars by Monday.  At our own open houses in neighborhoods like South Boston, Jamaica Plain, Newton and Somerville we’re seeing buyers out actively looking each weekend. The rising interest rates and somewhat mild winter are certainly helping to get buyers out into the market.

Meanwhile, homeownership tenure set a new record high in the fourth quarter of 2017. Homeowners who sold in the quarter had owned their homes on average 8.18 years, up from 7.78 years in the fourth quarter of 2016. It is the longest average home seller tenure since ATTOM Data Solutions has tracked it starting in the first quarter of 2000.

 

Five Things You’ll Love About 65 Green Street, Jamaica Plain

 

 

Contact me for more information about this development, or others:  MarkRyanHand@gmail.com

 

Here are five features I think you’ll love about 65 Green Street, the new eight-unit condominium development in a prime part of Jamaica Plain.

1. Location. When it comes to finding the best possible location for your city home, you’re often faced with a tradeoff: be able to walk to trendy restaurants or roll out of bed and make the train in minutes flat. Owners at 65 Green Street won’t have to make this version of Sophie’s real estate choice. Exit the building stage right, and a few blinks later, you’ll arrive at the Green Street Orange Line Station. Exit stage left, and before your stomach growls even once, you’ll find yourself passing City Feed, the Centre Street Café, JP Licks, and a host of other restaurants and retail shops that dot this key section of Centre Street, Jamaica Plain’s version of Main Street.

2. Not-So Vanilla Features. 65 Green Street has high ceilings. Super high. Like, Everest high. And when you combine the high ceilings with 65 Green Street’s over-sized windows, you get not only a lot of light but also the feeling that the living area in the residence exceeds the amount stated on the listing sheet. To get more space costs money, but the illusion of more space is priceless.

All of 65 Green Street’s residences have unique layouts, and all except Unit 204 have privately deeded outdoor space. 65 Green Street’s three penthouses also come with large private roof decks and two-car parking.

65 Green Street has a large package delivery room, a bike storage area, remote building access, and some thoughtful environmental friendly finishes—a.k.a. green finishes.

3. Something You Don’t Get. 65 Green Street has a lot of impressive features, but my favorite feature of the development might be what you don’t get: noise from your neighbors. Listing agent Mark Hand, an associate partner of the Residential Group at William Raveis Real Estate, said there are 30-inches of space between 65 Green Street’s second-floor ceiling and the floor of its third floor. As a result, the residences don’t have unsightly soffits or unattractive visible air ducts. But perhaps the biggest benefit of the large space between the ceiling and next floor is the soundproofing the developer installed. Asked why the developer went to such extents on the sound matter, Hand said, “They’ve been building since the 80s. They know the issue is always sound.”

4. That JP Vibe. JP has eclectic residents, intimate restaurants, an abundance of nature, and sense of community. Watermark Development Inc., a JP-based firm with 30-years of development experience whose website proudly asserts, “WE BUILD WHERE WE LIVE,” understands what makes JP JP. To put together the best possible plan for the site, Watermark engaged a collection of architects and designers at Embarc, a studio that has worked on nearly a dozen JP developments. And to make sure buyers saw the development with the proper JP perspective, Watermark contracted Mark Hand, a co-worker of mine who is part of a team that has sold more than 200 JP condos.

5. The Value Equation. One long-established and somewhat well-known Hub real estate tradition is for a South End or Brookline buyer to stroll by a JP condo and say, “SOLD!” That’s because JP buyers are often convinced that they get much more for their money than buyers in those other two locations. In 2017, buyers were paying more than $800,000 for the average Brookline condo and more than $1.2 million for the average South End condo. So what are they supposed to say when they see they can get a brand new condo with all the bells and whistles and live in one of the very best locations one market over? “I’ll take two!”

 

 

Written By:  David Bates, The Bates Real Estate Report

What Impact Will the New Tax Code Have on Home Values?

Every month, CoreLogic releases its Home Price Insights Report. In that report, they forecast where they believe residential real estate prices will be in twelve months.

Below is a map, broken down by state, reflecting how home values are forecasted to change by the end of 2018 using data from the most recent report.

What Impact Will the New Tax Code Have on Home Values? | MyKCM

As we can see, CoreLogic projects an increase in home values in 49 of 50 states, and Washington, DC (there was insufficient data for HI). Nationwide, they see home prices increasing by 4.2%.

How might the new tax code impact these numbers?

Recently, the National Association of Realtors (NAR) conducted their own analysisto determine the impact the new tax code may have on home values. NAR’s analysis:

“…estimated how home prices will change in the upcoming year for each state, considering the impact of the new tax law and the momentum of jobs and housing inventory.”

Here is a map based on NAR’s analysis:

What Impact Will the New Tax Code Have on Home Values? | MyKCM

Bottom Line

According to NAR, the new tax code will have an impact on home values across the country. However, the effect will be much less significant than what some originally thought.

Boston Residents: Have you claimed your Residential Exemption?

Owning a home and living in Boston have many perks! One of those perks is our low tax rate. Did you know that if you own and live in your property as a primary residence, you qualify for Boston’s exemption?

Here are a few key facts:

  • For Fiscal Year 2018, you have until April 2, 2018, to file an application
  • This year, the residential exemption saves qualified Boston homeowners up to $2,538.47 on their tax bill
  • To qualify for any exemption, you need to show that you have an ownership interest in the property.
  • You need to have owned and lived in your home as your primary residence on January 1 before the current fiscal year. For example, to be eligible for Fiscal Year 2018 (July 1, 2017 to June 30, 2018), you need to have owned and occupied your property as your primary residence on January 1, 2017.
  • The city will apply the exemption amount to your third-quarter tax bill that is issued in late December.

Thanks Boston, we appreciate the tax savings! Aren’t sure if you’re currently receiving your Residential Exemption? You have an online record with the City of Boston’s assessing office – it’s public record.

Just search for your property here: City of Boston Assessor 

Want to file your application? Start here

What other towns offer a Residential ExemptionCambridge  and Brookline and Somerville

*Brookline’s residential exemption is actually calculated differently, it’s a percentage of the total assessed value of a home, not exceed 20%

2017 | Our Year in Review!

Thank you to all of our clients for your continued support! The future looks bright in 2018!