St Louis Real Estate Blog | St Louis Real Estate Today

March 1, 2018

It’s Tax Season… Use Your Refund to Jump Start Your Down Payment Savings!

Tax Refund As Down Payment According to data released by the Internal Revenue Service (IRS), Americans can expect an estimated average refund of $2,840 this year when filing their taxes. This is down slightly from the average refund of $2,895, last year. Tax refunds are often thought of as ‘extra money’ that can be used toward larger goals; for anyone looking to buy a home in 2018, this can be a great jump start toward a down payment!

The map below shows the average tax refund Americans received last year by state. (The refunds received for the 2017 tax year should continue to reflect these numbers as the new tax code will go into effect for 2018 tax filings.) It's Tax Season… Use Your Refund to Jump Start Your Down Payment Savings! | MyKCM

Many first-time buyers believe that a 20% down payment is required to qualify for a mortgage. Programs from the Federal Housing Authority, Freddie Mac, and Fannie Mae all allow for down payments as low as 3%, with Veterans Affairs Loans allowing many veterans to purchase a home with 0% down.

If you started your down payment savings with your tax refund check this year, how close would you be to a 3% down payment?

The map below shows what percentage of a 3% down payment is covered by the average tax refund by taking into account the median price of homes sold by state. It's Tax Season… Use Your Refund to Jump Start Your Down Payment Savings! | MyKCM  

The darker the blue, the closer your tax refund gets you to homeownership! 

For those in Alabama looking to purchase their first homes, their tax refund could potentially get them 69% closer to that dream! Saving for a down payment can seem like a daunting task. But the more you know about what’s required, the more prepared you can be to make the best decision for you and your family!

This tax season, your refund could be your key to homeownership!

Feb. 27, 2018

Latest NAR Data: Now Is a Great Time to Sell!

Great Time to Sell Your hOme

We all realize that the best time to sell anything is when demand for that item is high, and the supply of that item is limited. Two major reports released by the National Association of Realtors (NAR) revealed information that suggests that now is a great time to sell your house. Let’s look at the data covered in the latest REALTORS® Confidence Index and Existing Home Sales Report.

REALTORS® CONFIDENCE INDEX

Every month, NAR surveys “over 50,000 real estate practitioners about their expectations for home sales, prices and market conditions.” This month, the index showed (again) that homebuying demand continued to outpace the supply of homes available in January. The map below illustrates buyer demand broken down by state (the darker your state, the stronger demand there is). Latest NAR Data Shows Now Is a Great Time to Sell! | MyKCM

In addition to revealing high demand, the index also shows that compared to conditions in the same month last year, seller traffic conditions were ‘weak’ in 22 states, ‘stable’ in 25 states, and ‘strong’ in only 4 states (Alaska, Nevada, North Dakota & Utah). Takeaway: Demand for housing continues to be strong but supply is struggling to keep up, and this trend is likely to continue throughout 2018.

THE EXISTING HOME SALES REPORT

The most important data revealed in the report was not sales but was instead the inventory of homes for sale (supply). The report explained:

  • Total housing inventory rose 4.1% from December to 1.52 million homes available for sale.
  • Unsold inventory is 9.5% lower than a year ago, marking the 32nd consecutive month with year-over-year declines.
  • This represents a 3.4-month supply at the current sales pace.

According to Lawrence Yun, Chief Economist at NAR:

“Another month of solid price gains underlines this ongoing trend of strong demand and weak supply. The underproduction of single-family homes over the last decade has played a predominant role in the current inventory crisis that is weighing on affordability.”

In real estate, there is a guideline that often applies; when there is less than a 6-month supply of inventory available, we are in a seller’s market and we will see appreciation. Between 6-7 months is a neutral market, where prices will increase at the rate of inflation. More than a 7-month supply means we are in a buyer’s market and should expect depreciation in home values.

As we mentioned before, there is currently a 3.4-month supply, and houses are going under contract fast. The Existing Home Sales Report shows that 43% of properties were on the market for less than a month when sold. In January, properties sold nationally were typically on the market for 42 days. As Yun notes, this will continue unless more listings come to the market.

“While the good news is that Realtors in most areas are saying buyer traffic is even stronger than the beginning of last year, sales failed to follow course and far lagged last January’s pace. It’s very clear that too many markets right now are becoming less affordable and desperately need more new listings to calm the speedy price growth.”

Takeaway: Inventory of homes for sale is still well below the 6-month supply needed for a normal market and supply will ‘fail to catch up with demand’ if a ‘sizable’ supply does not enter the market. If you are going to sell, now may be the time to take advantage of the ready, willing, and able buyers that are still out searching for your house.

Feb. 22, 2018

Is Now a Good Time to Rent?

Good Time to Rent

People often ask if now is a good time to buy a home, but nobody ever asks when it’s a good time to rent. Regardless, we want to make certain that everyone understands that today is NOT a good time to rent.

The Census Bureau recently released their 2017 fourth quarter median rent numbers. Here is a graph showing rent increases from 1988 until today: Is Now a Good Time to Rent? | MyKCM

As you can see, rents have steadily increased and are showing no signs of slowing down. If you are faced with making the decision of whether or not you should renew your lease, you might be pleasantly surprised at your ability to buy a home of your own instead. One way to protect yourself from rising rents is to lock in your housing expense is by buying a home.

Curious if you are ready? Email us at office@papasanproperties.com

Jan. 9, 2018

Net Worth of Homeowners 44X Greater than Renters

Every three years, the Federal Reserve conducts their Survey of Consumer Finances in which they collect data across all economic and social groups. The latest survey data, covering 2013-2016 was released two weeks ago. The study revealed that the 2016 median net worth of homeowners was $231,400 – a 15% increase since 2013. At the same time, the median net worth of renters decreased by 5% ($5,200 today compared to $5,500 in 2013). These numbers reveal that the net worth of a homeowner is over 44 times greater than that of a renter.

Owning a home is a great way to build family wealth

As we’ve said before, simply put, homeownership is a form of ‘forced savings.’ Every time you pay your mortgage, you are contributing to your net worth by increasing the equity in your home. That is why, for the fourth year in a row, Gallup reported that Americans picked real estate as the best long-term investment. This year’s results showed that 34% of Americans chose real estate, followed by stocks at 26% and then gold, savings accounts/CDs, or bonds.

Greater equity in your home gives you options

If you want to find out how you can use the increased equity in your home to move to a home that better fits your current lifestyle, let’s get together to discuss the process.

Jan. 4, 2018

How Rising Prices Will Help You Build Family Wealth in 2018

How Rising Prices Will Help You Build Family Wealth in 2018 Over the next five years, home prices are expected to appreciate on average by 3.35% per year and to grow by 24.34% cumulatively, according to Pulsenomics’ most recent Home Price Expectation Survey.

So, what does this mean for homeowners and their equity position?

As an example, let’s assume a young couple purchases and closes on a $250,000 home this month (January). If we only look at the projected increase in the price of that home, how much equity will they earn over the next 5 years? Since the experts predict that home prices will increase by 4.2% in 2018, the young homeowners will have gained $10,500 in equity in just one year. Over a five-year period, their equity will increase by nearly $45,000! This figure does not even take into account their monthly principal mortgage payments. In many cases, home equity is one of the largest portions of a family’s overall net worth. Not only is homeownership something to be proud of, but it also offers you and your family the ability to build equity you can borrow against in the future. If you are ready and willing to buy, find out if you are able to today!

Dec. 12, 2017

Before You Make an Offer, Here Are 4 Tips for Success!

Before You Make An Offer So, you’ve been searching for that perfect house to call a ‘home,’ and you finally found it! The price is right, and in such a competitive market, you want to make sure that you make a good offer so that you can guarantee that your dream of making this house yours comes true! Freddie Mac covered “4 Tips for Making an Offer” in their Executive Perspective. Here are the 4 tips they covered along with some additional information for your consideration:

1. Understand How Much You Can Afford

“While it’s not nearly as fun as house hunting, fully understanding your finances is critical in making an offer.”

This ‘tip’ or ‘step’ should really take place before you start your home search process. Getting pre-approved is one of many steps that will show home sellers that you are serious about buying, and will allow you to make your offer with the confidence of knowing that you have already been approved for a mortgage for that amount. You will also need to know if you are prepared to make any repairs that may need to be made to the house (ex: new roof, new furnace).

2. Act Fast

“Even though there are fewer investors, the inventory of homes for sale is also low and competition for housing continues to heat up in many parts of the country.” 

The inventory of homes listed for sale has remained well below the 6-month supply that is needed for a ‘normal’ market. Buyer demand has continued to outpace the supply of homes for sale, causing buyers to compete with each other for their dream homes. Make sure that as soon as you decide that you want to make an offer, you work with your agent to present it as soon as possible.

3. Make a Solid Offer

Freddie Mac offers this advice to help make your offer the strongest it can be:

“Your strongest offer will be comparable with other sales and listings in the neighborhood. A licensed real estate agent active in the neighborhoods you are considering will be instrumental in helping you put in a solid offer based on their experience and other key considerations such as recent sales of similar homes, the condition of the house and what you can afford.”

Talk with your agent to find out if there are any ways that you can make your offer stand out in this competitive market!

4. Be Prepared to Negotiate

“It’s likely that you’ll get at least one counteroffer from the sellers so be prepared. The two things most likely to be negotiated are the selling price and closing date. Given that, you’ll be glad you did your homework first to understand how much you can afford. Your agent will also be key in the negotiation process, giving you guidance on the counteroffer and making sure that the agreed-to contract terms are met.”

If your offer is approved, Freddie Mac urges you to “always get an independent home inspection, so you know the true condition of the home.” If the inspector uncovers undisclosed problems or issues, you can discuss any repairs that may need to be made with the seller, or cancel the contract. Whether buying your first home or your fifth, having a local real estate professional who is an expert in their market on your side is your best bet to make sure the process goes smoothly. Let’s talk about how we can make your dreams of homeownership a reality!

Dec. 6, 2017

5 Games to Keep Guests Entertained Over the Holidays

The holidays are here, which means lots of get-togethers with family and friends. If you're stumped on how to entertain your crew of party-goers, try one (or all!) of these easy and fun holiday-themed party games. And yes, they are all app-free so you can enjoy them unplugged!

Christmas Bingo

An oldie, but goodie! Click on over to download these free printables for an all-ages fun game of BINGO. Supplies needed: bag of Hershey's Kisses and printed bingo cards.

Holiday Alphabet Pasta Game

alphabet pasta

Buy a couple bags of alphabet-shaped pasta and give each team their own bag. Give them 5 minutes to spell out as many Christmas related words as possible. Make sure the words are left out for all to see. Each pasta letter may be only used once. Supplies needed: bags of alphabet-shaped pasta.

Drawing in a Snowstorm

Snowman Drawing Game

The game host instructs everyone to hold a paper plate on their head and to draw what the host instructs them to draw without looking at what they are drawing. At first, those drawing don’t even know what they are drawing. You can of course use anything you’d like. These instructions are for a snowman:

  1. Draw a circle.
  2. Draw a line under the circle for snow.
  3. Draw a smaller circle on top of your original circle.
  4. Draw an even smaller circle on top of the second circle to complete your snowman.
  5. Add 2 arms to your snowman.
  6. Add a carrot nose to your snowman
  7. Give your snowman a scarf
  8. Add eyes and a mouth to your snowman.
  9. Put a hat on top of your snowman.

Once completed, take the plates off your head and admire one another’s artistic talents! Supplies needed: a paper plate and marker

The 12 Days of Christmas

12 Days of Christmas

Each team is given 1 bin with 12 objects, one each to represent each of the 12 gifts given in the song The 12 Days of Christmas. Also included is Post-it notes numbered 1-12. It is up to the team to remember the song, determine which item is representing which gift, and tag them with the correctly numbered Post-it note. Each teams bin should be slightly different from each other so there is no "cheating" going on. Supplies needed: (per team) sticky notes numbered 1-12, one item to represent each of the 12 Days of Christmas. Note: You can make it a bit more complicated by adding items that do not belong.

Elf Movie Drinking Game  Elf Drinking Game

The perfect way to up the fun factor on an adults-only movie night. Make a list of  "take a sip whenever _____ happens" and share with everyone before the movie starts. Just make sure everyone has a safe ride home before imbibing too much. Want a family friendly version instead? Download the PG version here which has players sip hot cocoa and eat marshmallows instead. Supplies needed: adult beverages OR hot cocoa and marshmallows.

Posted in Things To Do
Dec. 5, 2017

Why Is There So Much Paperwork Required to Get a Mortgage?

Why Is There So Much Paperwork With Mortgage Why is there so much paperwork mandated by the lenders for a mortgage loan application when buying a home today? It seems that they need to know everything about you and requires three separate sources to validate each and every entry on the application form. Many buyers are being told by friends and family that the process was a hundred times easier when they bought their home ten to twenty years ago. There are two very good reasons that the loan process is much more onerous on today’s buyer than perhaps any time in history.

1. The government has set new guidelines that now demand that the bank proves beyond any doubt that you are indeed capable of paying the mortgage.

During the run-up to the housing crisis, many people ‘qualified’ for mortgages that they could never pay back. This led to millions of families losing their home. The government wants to make sure this can’t happen again.

2. The banks don’t want to be in the real estate business.

Over the last seven years, banks were forced to take on the responsibility of liquidating millions of foreclosures and also negotiating another million plus short sales. Just like the government, they don’t want more foreclosures. For that reason, they need to double (maybe even triple) check everything on the application.

However, there is some good news in the situation.

The housing crash that mandated that banks be extremely strict on paperwork requirements also allowed you to get a mortgage interest rate around 4%. The friends and family who bought homes ten or twenty years ago experienced a simpler mortgage application process, but also paid a higher interest rate (the average 30-year fixed rate mortgage was 8.12% in the 1990s and 6.29% in the 2000s). If you went to the bank and offered to pay 7% instead of around 4%, they would probably bend over backward to make the process much easier! Instead of concentrating on the additional paperwork required, let’s be thankful that we are able to buy a home at historically low rate.
Nov. 30, 2017

2 Charts That Show the Truth about Home Affordability

Home Affordability There is a lot of discussion about the current state of housing affordability for both first-time and move-up buyers, and much of the narrative is tarnished with a negative slant. However, the truth is that housing affordability is better today than at almost any time in our history.

The naysayers are correct in the fact that affordability today is not as good as it has been over the last several years. But, we must remember that home prices collapsed during the housing crash, and distressed properties (foreclosures and short sales) kept home values depressed for years. When we compare affordability to the decades that proceeded the crash, a different story is revealed.

Here is a graph of the National Association of Realtors’ Housing Affordability Index. The higher the graph, the more affordable homes are. We can see that affordability is better today than in the fifteen years prior to the boom and bust. CoreLogic just published a report showing the National Homebuyers’ “Typical Mortgage Payment.” Here is a graph of their findings: It reveals that, though a ‘typical’ housing payment was less expensive in 2012 (remember distressed properties), it is currently less expensive than it was in 2000 and is still projected to be lower next year than it was in 2000. Mark Fleming, Chief Economist at First American, explained it best:

“While borrowing power for the potential home buyer has fallen relative to the low point of 2012, it remains high today and will remain high next year, relative to the long run average. If you don’t want to rent anymore and are considering becoming a homeowner, even if mortgage rates rise next year, your borrowing power will remain strong by historic standards.”
Nov. 28, 2017

Bubble Alert! Is it Getting Too Easy to Get a Mortgage?

Too Easy to Get a Mortgage There is little doubt that it is easier to get a home mortgage today than it was last year. The Mortgage Credit Availability Index(MCAI), published by the Mortgage Bankers Association, shows that mortgage credit has become more available in each of the last several years. In fact, in just the last year:

  • More buyers are putting less than 20% down to purchase a home
  • The average credit score on closed mortgages is lower
  • More low-down-payment programs have been introduced

This has some people worrying that we are returning to the lax lending standards which led to the boom and bust that real estate experienced ten years ago. Let’s alleviate some of that concern. The graph below shows the MCAI going back to the boom years of 2004-2005. The higher the graph line, the easier it was to get a mortgage. As you can see, lending standards were much more lenient from 2004 to 2007. Though it has gradually become easier to get a mortgage since 2011, we are nowhere near the lenient standards during the boom. The Urban Institute also publishes a Home Credit Availability Index (HCAI). According to the 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 … it is easier to get a loan.”

Here is a graph showing their findings: Housing Credit Availability   Again, today’s lending standards are nowhere near the levels of the boom years. As a matter of fact, they are more stringent than they were even before the boom.

Bottom Line

It is getting easier to gain financing for a home purchase. However, we are not seeing the irresponsible lending that caused the housing crisis.