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Is Home Price Appreciation Accelerating Again?

April 30th, 2021

Is Home Price Appreciation Accelerating Again? | MyKCM

At the beginning of the year, industry forecasts called for home price appreciation to slow to about half of the double-digit increase we saw last year. The thinking was that inventory would increase from record-low levels and put an end to the bidding wars that have driven home prices up over the past twelve months. However, that increase in inventory has yet to materialize. The National Association of Realtors (NAR) reports that there are currently 410,000 fewer single-family homes available for sale than there were at this time last year.



This has forced those who made appreciation forecasts this past January to amend those projections. The Mortgage Bankers Association, Fannie Mae, Freddie Mac, the National Association of Realtors, and Zelman & Associates have all adjusted their numbers upward after reviewing first quarter housing data. Here are their original forecasts and their newly updated projections:      Even with the increases, the updated projections still don’t reach the above 10% appreciation levels of 2020. However, a jump in the average projection from 5.3% to 7.7% after just one quarter is substantial. Demand will remain strong, so future appreciation will be determined by how quickly listing inventory makes its way to the market.

Bottom Line

Entering 2021, there was some speculation that we might see price appreciation slow dramatically this year. Today, experts believe that won’t be the case. Home values will remain strong throughout the year.


Homeownership Is Full of Financial Benefits

April 23rd, 2021

Homeownership Is Full of Financial Benefits | MyKCM

A Fannie Mae survey recently revealed some of the most highly-rated benefits of homeownership, which continue to be key drivers in today’s power-packed housing market. Here are the top four financial benefits of owning a home according to consumer respondents:
  • 88% - a better chance of saving for retirement
  • 87% - the best investment plan
  • 85% - the chance to be better off financially
  • 85% - the chance to build up wealth

Additional financial advantages of homeownership included in the survey are having the best overall tax situation and being able to live within your budget.

Does homeownership actually give you a better chance to build wealth?

No one can question a person’s unique feelings about the importance of homeownership. However, it’s fair to ask if the numbers justify homeownership as a financial asset.

Last fall, the Federal Reserve released the Survey of Consumer Finances, a report done every three years, with the latest edition covering through 2019. Their findings confirmed that homeownership is a clear financial benefit. The survey found that homeowners have forty times higher net worth than renters($255,000 for homeowners compared to $6,300 for renters).

The difference in net worth between homeowners and renters has continued to grow. Here’s a graph showing the results of the last four Fed surveys:Homeownership Is Full of Financial Benefits | MyKCM        The above graph only includes data through 2019, but according to CoreLogic, the equity held by homeowners grew by $26,300 over the last twelve months alone. That means the gap between the net worth of homeowners and renters has probably widened even further over the last year.

Some might argue the difference in net worth may be due to homeowners normally having larger incomes than renters and therefore the ability to save more money. However, a study by First American shows homeowners have greater net worth than renters regardless of their income level. Here are the findings:Homeownership Is Full of Financial Benefits | MyKCM       Others may think homeowners are older and that’s why they have a greater net worth. However, a Joint Center for Housing Studies of Harvard University report on homeowners and renters over the age of 65 reveals:

“The ability to build equity puts homeowners far ahead of renters in terms of household wealth…the median owner age 65 and over had home equity of $143,500 and net wealth of $319,200. By comparison, the net wealth of the same-age renter was just $6,700.”

Homeowners 65 and older have 47.6 times greater net worth than renters.

Bottom Line

The idea of homeownership as a direct way to build your net worth has met the test of time. Let’s connect if you’re ready to take steps toward becoming a homeowner.


Real Estate Market Update for the Month of April

April 16th, 2021

April 2021 residential real estate market update for Portland, Oregon and the metro area. This month we'll also discuss some "hot topics" of concerns...a market bubble? Prices out of control? All the "looming" foreclosures with mortgage forbearance ending (at some point)? We'll dig deep into some of these thoughts and look at the data to try to find answers to these issues.



Though I do not have a crystal ball, however the facts and figures don’t lie. Keep on reading as we take a look into various reports that are a great indicator of what to expect in the coming months within the Portland metro real estate market.

Looking at the residential highlights, the RMLS reports that new listings on the market have decreased 0.1% from March 2020 and increased 40.1% from February of 2021. 

Pending sales increased 42.6% from March of 2020 and increased 51.5% of offers accepted in February of 2021. 

Closed sales slightly increased from 8.5% in February of 2020 and shot up to 29.2% since January of 2021. 

Inventory levels are at .8 months through the month of March and the total market time decreased to 37 days. 

Comparing 2021 to 2020, the average sales price has increased by 16.6% from $461,600 to $538,200. According to this report the median sales price has also increased around 14.9% from $415,000 to $477,00. 

If you are ready to purchase a home be prepared to offer above asking and to jump quick! Headlines infer that interest rates will go up however Fannie Mae & Freddie Mac indicate that interest rates are so far staying relatively steady! 

To read the full market report provided by the RLMS publication check out my Facebook page! And of course, if you have any questions don’t hesitate to reach out! 


Your Tax Refund and Stimulus Savings May Help You Achieve Homeownership This Year!

April 9th, 2021

If you’re planning to buy a home this year, saving for a down payment is one of the most important steps in the process. One of the best ways to jumpstart your savings is by starting with the help of your tax refund.

Using data from the Internal Revenue Service (IRS), it’s estimated that Americans can expect an average refund of $2,925 when filing their taxes this year. The map below shows the average anticipated tax refund by state:


Thanks to programs from the Federal Housing Authority, Freddie Mac, and Fannie Mae, many first-time buyers can purchase a home with as little as 3% down. In addition, Veterans Affairs Loans allow many veterans to put 0% down. You may have heard the common myth that you need to put 20% down when you buy a home, but thankfully for most homebuyers, a 20% down payment isn’t actually required. It’s important to work with your real estate professional and your lender to understand all of your options.


How Can Your Tax Refund Help?

If you’re a first-time buyer, your tax refund may cover more of a down payment than you realize.

If you take into account the median home sale price by state, the map below shows the percentage of a 3% down payment that’s covered by the average anticipated tax refund:


The darker the blue, the closer your tax refund gets you to homeownership when you qualify for one of the low down payment programs. Maybe this is the year to plan ahead and put your tax refund toward the down payment on a home.

Not Enough Money From Your Tax Return? 

A recent paper from the National Bureau of Economic Research found that, of the households that received a stimulus check last year, “One third report that they primarily saved the stimulus money.” If you had the opportunity to save your Economic Impact Payments, you may consider putting that money toward your down payment or closing costs as well. Your trusted real estate professional can also advise you on the down payment assistance programs available in your area.

Bottom Line

Saving for a down payment can seem like a daunting task, but it doesn’t have to be. This year, your tax refund and your stimulus savings could add up big when it comes to reaching your homeownership goals.


Thank you to MYKCM.COM for providing this informative blog post.

Single-Family or Multi-Family Which One is Better For Your?

April 2nd, 2021

As a real estate agent and long time investor, I often get asked which is better single family or multi-family for rental properties? The answer : It depends.




Whether you are a rookie, looking for your first real estate investment or a well seasoned investor game planning for your next deal, the right answer is completely dependent on your own individual goals, experience level and financial position. 

Although I can’t provide you with a complete comprehensive analysis of which type of property would be ideal for you, I can provide you with a breakdown of both the pros and cons of each property investment.


Single Family 

Single - Family rental property, known as SFR, is a residential property with one rent-able unit. There are many benefits with investing in a single family property, especially if you are just starting your investment journey.

Pros

More Affordable
From a financial standpoint, single family homes are a more tangible purchase. To buy a single unit property, requires fair less capital and smaller down payment than a multi-family home. This financial flexibility is definitely appealing to those who have less money to put down, or desire to pay in full!

There are also tax advantages to purchasing a SFR! According to a Bigger Pocket article, “residential rental properties are the single most-tax-advantaged asset class in the tax system. Writing off five separate properties on your taxes can be freakishly beneficial to your bank account”.

Resale Opportunity
Year-over-year the demand for single family homes on the real estate market has dramatically increased! According to one report over “five million homes sold in an average year”. The high demand creates a prime resale opportunity. Not to mention the long-term appreciation of a home, come time to sell, can be a bit advantage when you decide to put the rental on the market!

According to an article from Bigger Pockets “SFR’s will almost always appreciate more than MFRs.” It’s important to note that values might not appreciate equally across your prospective area. Make sure to keep an eye out on which neighborhoods are growing and appreciating - that will be your target area!

Less Turnover
Since single-family rental usually attracts a family, it’s less likely that there will be year-over-year rental turnover. Single Family homes, provide families with the opportunity to have their own individual space, develop relationships with their neighbors, and settle into school districts are ll important aspects of a single family rental that will cause your renters to call your property home for the long(er) term.

Cons

For a single-family rental purchase there are a long of positives, however there are also some risk that you should be prepared and well-equipped for.

Less cash-flow
Single-Family rental properties are single unit residences of which will only house one set of people. Because of the limited cash-flow from a single-family rental property this might put you in a sticky position if the tenants do not pay their rent. You’ll end up footing the cost for the entire mortgage.

Difficult to Scale
From an investor portfolio perspective, a single-family home can be difficult if they are underperforming. If the ROI is underperforming, you might need to consider selling the low-performing property to help optimize your portfolio. Overall, the cash flow of one single-family rental property is not strong on it’s own and if you want to elevate your portfolio you will probably need to consider purchasing multiple single family homes to have adequate profit flowing in.

Multi Family 

Multi- Family rental property, known as MFR, is a property with multiple rent-able units. Do keep in mind that a property with more than four rental units is considered to be a commercial property. Commercial properties are financed quite differently than residential units. Although multi-family rentals can seem intimidating at first there are many benefits to including a multi-family property in your investment portfolio.

Pros

Scalability
Once you choose to take that leap and purchase a multifamily property, you instantly have a real estate portfolio! The fact that you would then have more units in your back pocket means more cash flow than a one unit property. According to a Bigger Pockets article “Apartment buildings typically have a lower cost per door, property management is typically more effective and profitable and any improvements made can help to lift the value of many units, not just one”.

More Cash Flow
With having a multi-unit rental property, the risk of a  potential vacancy keeps you in a better position financially then if you have a vacancy from a single unit home. With having multi-doors, you receive multi- streams of income leveraging your financial position if there were to be an extended vacancy in one of your units.

Another cash-flow benefit is maintenance expenses are often lower “because similar amounts of materials and labor can cover more at once”.
Even more, multi-family properties are valued by their net income, not comparable sales like a single unit property. Not only do investors have the ability to adjust rent but also the efficiency of operational management like utilities.


House Hacking Opportunities
A major perk of having a multi-family rental property is that you can choose to live there too. If you choose to live on one side of your new duplex or triplex, you have the opportunity to cut your own housing expenses and also act as the onsite property manager, which can save you more money since you won’t have to hire someone to manage the rental property/building.

Cons

Although there are many benefits to a multi-family investment property, you should be prepared for some of the issues that might arise.

Financing
To be in a position to purchase a multi-unit rental property can be a little challenging, especially if this is your first rental property. Multifamily properties may require more capital to purchase. Make sure that you talk with your local lender on various loan solutions and mortgage products they can offer.

Tenant Screening
With multi-family rental properties, you're more likely to see frequent turnover than a single-unit property. This being said, if you do not carefully and properly screen your potential tenants you could end up having someone live in one of your units that can’t afford the rent. Having an excellent and quality screening process can help you avoid more turnover, fees and other vacancy expenses down the road.

Management and Operations
With a larger unit requires more diligence and systems to properly manage the property. It is prudent to make sure you have your real estate systems in place before you tackle such a large investment. If your day-to-day life doesn’t allow you to manage the regular management of a multi-family rental property you may want to outsource these tasks to a property management company, though this can become costly so you will want to make sure to weigh out your options.

Resale Options
Usually only real estate investors are interested in multi-family rental properties. So, if and when you choose to resale your multi-unit property your pool of potential buyers may be limited. Not to mention, investors are looking for a business deal and it’s unlikely they will settle for over-asking.

When it comes down to it, both single-family or multi-family rental properties are both great options for rentals. However, if you are looking for your first real estate investment, I would encourage you to look at single-family homes to get your start on your investment portfolio. For rookies, single-family homes are overall lower risk and offer an easier exit-strategy if you find that real estate investing is not for you.

That being said, higher-risk equals higher-reward. Multi-family units are known to be the bigger player in beefing up your real estate portfolio. I would encourage you to consult your fellow investors, real estate agent and mortgage lender to strategize what would be the best fit for you!


Buyer & Seller Perks in Today's Market 

March 26th, 2021

Right now, the housing market is full of outstanding opportunities for both buyers and sellers. Whether you’re thinking of buying your first home, moving up to a bigger one, or selling so you can downsize this spring, there are perks today that are powering big moves for people across the country. Here are the top two to keep on the radar this season.

The Biggest Perk for Buyers: Low Mortgage Rates
 Today’s most compelling buyer incentive is low mortgage interest rates. The 30-year fixed-rate is now averaging just over 3%. While that’s slightly higher than the record-lows from 2020 and earlier this year, it’s still way lower than historic norms, making purchasing a home an ongoing perk for hopeful buyers (See graph below):


Buyer & Seller Perks in Today’s Housing Market | MyKCMThis is a huge advantage for buyers and helps to make owning a home attainable for more households – and there’s good reason to strive for homeownership. The latest Homeowner Equity Report from CoreLogic shows how homeowners saw major gains in their net worth last year, all thanks to owning a home. Frank Martell, President and CEO of CoreLogic, explains:

“Positive factors like record-low interest rates and a booming housing market encouraged many families to enter homeownership. This growing bank of personal wealth that homeownership affords was noticed by many but in particular for first-time buyers who want a piece of the cake. As a result, we may see more of those currently renting start to enter the market in the near future.”

Low mortgage rates are a plus for buyers right now, but experts forecast we’ll see them continue to rise as the year goes on. If you’re ready to purchase a home, it’s wise to get started on the process soon so you can secure today’s comparatively low rate.

The Biggest Perk for Sellers: Low Inventory
Today, there are simply not enough houses on the market for the number of buyers looking to purchase them, and it’s creating a serious sellers’ market. According to Danielle Hale, Chief Economist at realtor.com:

“Total active inventory continues to decline, dropping 50 percent. With buyers active in the market and sellers still slow to put homes up for sale, homes are selling quickly and the total number actively available for sale at any point in time continues to decline.” (See map below):



Buyer & Seller Perks in Today’s Housing Market | MyKCMThe lack of houses for sale continues to challenge the market, and with low mortgage rates fueling buyer demand, homes are hard for buyers to find today. According to the latest Realtors Confidence Index Survey by the National Association of Realtors (NAR), the average house is now receiving 4.1 offers and is on the market for only 20 days.

Buyers are clearly eager to purchase, and because of the shortage of inventory available, they’re often entering bidding wars. This is one of the factors keeping home prices strong and giving sellers leverage in the negotiation process.

Homeowners who are in a position to sell shouldn’t wait to make their move. There’s a light at the end of the tunnel for today’s inventory shortage, so listing this spring will get your house on the market when conditions are most favorable. With low inventory and high buyer demand, homeowners can potentially earn a greater profit on their houses and sell them quickly in the fast-paced spring market.

Bottom Line
Whether you’re thinking about buying or selling a home, there are major perks available in today’s housing market. Let’s connect today to discuss how these favorable conditions play to your advantage in our local area.




Real Estate Market Update for the Month of March

March 19th, 2021

Around this time of year, one would expect for the real estate market to be in full bloom. However, in light of 2020 events, we are continuing to see abnormal fluctuations in our market, particularly in the Portland Metro Market. 

As a potential home buyer, buyer’s agent, lender or builder, it might feel like it’s a dog eat dog world. With inventory levels at extreme lows, interest rates steadily climbing and home values skyrocketing, the real estate industry is an incredibly competitive market. 


Let’s take a deep drive into the RMLS publication of the latest real estate market numbers! 

Looking at the residential highlights, the RMLS reports that new listings on the market have decreased 10.3% from February 2020 and are down 4.1% from January of 2021. 

Pending sales also took a dive 15% since February of 2020 and decreased from 11.5% to 2.4% offers accepted in January of 2021. 

Closed sales slightly increased from 4.3% in February of 2020 and shot up to 7.1% since January of 2021. 

It’s no surprise that inventory levels are still holding at 1.0 months through the month of February and the total market time decreased to 42 days. 

Just comparing 2021 to 2020, the average sales price has increased by 14.8% from $460,200 to $528,500. According to this report the median sales prices has also increased around 15.3% from $407,500 to $470,00. This is an insane increase in home equity values! 

If you have been paying attention to the bond markets the last couple of months, you might have noticed that bond yields are continuing to steadily trend upwards, which will directly affect the price in interest rates.

When it comes to new construction, headline news articles have also reported that home builder fees and lumber prices have significantly increased over the last year. The increase in building material costs will certainly cause a shift in the affordability of new construction homes. 

In other recent news, Fannie Mae and Freddie Mac just announced that they are pulling away from backing as many second home and rental property loans. Only 7% of loans sold back to Fannie Mae and Freddie Mac by mortgage lenders can be investment or second home loans. Mortgage Lenders are combating this by increasing interest rates and costs associated with investment and second home loans to keep them under the 7% threshold thrown at them by the government sponsored entities. This being said, there are many great Mortgage Lenders that do offer conventional and portfolio loan products, and competitive rates that might be well suited for your purchasing needs. 

With the combination of high demand, limited supply, and low interest rates, it makes this a very competitive market. So for those who were on the fence about purchasing a home in March of 2020 and neglected to take advantage of the 2020 spring market, it’s possible that those potential buyers are no longer in a position to purchase a home. 

Although there are no current signs that interest rates or pricing will be coming down for quite a while, we must remain optimistic as we head into the Spring season. Traditionally, Spring is  the prime time for activity in the real estate market and the month of March, in particular, is where we tend to see new listings hit the market.   

We can spend so much time exhausting the numbers of the real estate market, but we have to keep an open mind. Today, the position of the real estate market is vastly different than it was a year ago, even 20 years ago. The interest rates of less than 3% are in the past and it is possible that they might never get that low again. Interest rates below 6-7% is still historically CHEAP money and should not deter you from your real estate goals. The selling market is HOT and hopefully with brighter days ahead, this will be an encouraging sign for sellers to list their homes and get more inventory out on the market! 

To read the full market report provided by the RLMS publication check out my Facebook page! And of course, if you have any questions don’t hesitate to reach out! 




Wrapping Up 2020 

January 15th, 2021

As we leave 2020 behind us and we press forward into a new year, the housing market news has flooded the media with overly optimistic predictions from some intermixed with an opposing view of doom and gloom expressed by others. While we cannot fully predict what the year 2021 will bring, we do know the trends of the 2020 markets that will help prepare us for the coming months. 



As our nation is in the midst of Presidential transfer, the investor market does not seem to be overreacting to the changing of powers from the Trump administration to the Biden administration and many theorize that the economy will follow a similar pattern to the Obama administration of 2009-2017. 

The health crisis brought significant challenges that affected the housing market and caused consumers to reevaluate their current living space. Schools are online, kids and parents are at home, and everyone is desperate for more space! One major problem, inventory levels remain at rock bottom with less than 1 month of inventory in the Portland metro market. Some suspect that due to the increase in mortgage forbearance to 6%, many homeowners will not be able to sustain their mortgage payment, and will be forced to sell. This will stimulate an increase in inventory levels but in the same token decrease overall home values as more inventory floods the market. With historically low interest rates, extremely low inventory levels, and inflated growth in appreciation seen in 2020, many believe that 2021 will remain a seller’s market. 

What about new construction? Well, new construction has been down in the Portland metro area since 2017 and due to the inflated prices of labor, materials, permits, deconstruction and rates, it’s likely that new construction will continue to decline throughout 2021. 

While there is no all-seeing eye that forecasts an accurate depiction of what 2021 will bring, there is no doubt that buyers and sellers will be active this year. Some spots of the Portland Real Estate market remain red hot while others are at a standstill due to the low inventory. 


If you are ready to make a move, let’s connect to layout your goals and financial picture. Based on your financial position, it might be the perfect time to find your dream home or next investment property.