How Long do Most Families Live in a House?

KCM Crew, July 15th, 2018

How Long Do Most Families Live in a House? | MyKCMThe National Association of Realtors (NAR) keeps historical data on many aspects of homeownership. One of their data points, which has changed dramatically, is the median tenure of a family in a home, meaning how long a family stays in a home prior to moving.

As the graph below shows, over the last twenty years (1985-2008), the median tenure averaged exactly six years. However, since 2014, that average is almost ten years – an increase of almost 50%.

How Long Do Most Families Live in a House? | MyKCM

Why the dramatic increase?

The reasons for this change are plentiful!

The fall in home prices during the housing crisis left many homeowners in a negative equity situation (where their home was worth less than the mortgage on the property). Also, the uncertainty of the economy made some homeowners much more fiscally conservative about making a move.

With home prices rising dramatically over the last several years, 95.3% of homes with a mortgage are now in a positive equity situationaccording to CoreLogic.

With the economy coming back and wages starting to increase, many homeowners are in a much better financial situation than they were just a few short years ago.

One other reason for the increase was brought to light by NAR in their 2018 Home Buyer and Seller Generational Trends ReportAccording to the report,

“Sellers 37 years and younger stayed in their home for six years…”

These homeowners, who are either looking for more space to accommodate their growing families or for better school districts to do the same, are likely to move more often (compared to typical sellers who stayed in their homes for 10 years). The homeownership rate among young families, however, has still not caught up to previous generations, resulting in the jump we have seen in median tenure!

What does this mean for housing?

Many believe that a large portion of homeowners are not in a house that is best for their current family circumstance; they could be baby boomers living in an empty, four-bedroom colonial, or a millennial couple living in a one-bedroom condo planning to start a family.

These homeowners are ready to make a move, and since a lack of housing inventory is still a major challenge in the current housing market, this could be great news.

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Homes More Affordable Today than 1985-2000

KCM Crew, July 14th, 2018

Homes More Affordable Today than 1985-2000 | MyKCMRising home prices have many concerned that the average family will no longer be able to afford the most precious piece of the American Dream – their own home.

However, it is not just the price of a home that determines its affordability. The monthly cost of a home is determined by the price and the interest rate on the mortgage used to purchase it.

Today, mortgage interest rates stand at about 4.5%. The average annual mortgage interest rate from 1985 to 2000 was almost double that number, at 8.92%. When comparing affordability of homeownership over the decades, we must also realize that incomes have increased.

This is why most indexes use the percentage of median income required to make monthly mortgage payments on a typical home as the point of comparison.

Zillow recently released a report comparing home affordability over the decades using this formula. The report revealed that, though homes are less affordable this year than last year, they are more affordable today (17.1%) than they were between 1985-2000 (21%). Additionally, homes are more affordable now than at the peak of the housing bubble in 2006 (25.4%). Here is a chart of these findings:

Homes More Affordable Today than 1985-2000 | MyKCM

What will happen when mortgage interest rates rise?

Most experts think that the mortgage interest rate will increase to about 5% by year’s end. How will that impact affordability? Zillow also covered this in their report:

Homes More Affordable Today than 1985-2000 | MyKCM

Rates would need to approach 6% before homes became less affordable than they had been historically.

Bottom Line

Though homes are less affordable today than they were last year, they are still a great purchase while interest rates are below the 6% mark.

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Closing on a House Checklist: 6 Things Home Buyers Must Do Before They Move In

Closing on a House Checklist: 6 Things Home Buyers Must Do Before They Move In https://www.realtor.com/advice/buy/closing-on-a-house-checklist/?cid=soc_shares_article_tw#homeinspection #title

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Is Inventory the Biggest Threat to Realtors?

Home price gains continuously outpace income growth

House blue keys

Pending home sales modestly decreased in May, marking the fifth consecutive month of annual declines, according to the latest report from the National Association of Realtors.

The Pending Home Sales Index, a forward-looking indicator based on contract signings, declined by 0.5 % in May to 105.9, up from 106.4 in April. With May’s decrease, the index is down 2.2%, marking the fifth consecutive month of annual declines.

“Pending home sales underperformed once again in May, declining for the second-straight month and coming in at the second-lowest level over the past year,” NAR Chief Economist Lawrence Yun said.

Yun also said that although a majority of the nation’s Realtors describe their markets as competitive and fast-moving, low inventory is stalling the market.

Although the lackluster spring is largely attributed to low supply, closing data suggests that home price gains continue to outpace income growth. Furthermore, inventory declined on an annual basis for the 36th consecutive month, and listings typically went under contract in just over three weeks, according to Yun.

“With the cost of buying a home getting more expensive, it’s clear the summer months will be a true test for the housing market. One encouraging sign has been the increase in new home construction to a 10-year high,” Yun added. “Several would-be buyers this spring were kept out of the market because of supply and affordability constraints. The healthy economy and job market should keep many of them actively looking to buy, and any rise in inventory would certainly help them find a home.”

Yun forecasts existing home sales will decrease 5.49 million in 2018, a decrease from 5.51 million in 2017. The national median existing home price, he predicts, will increase about 5% in 2018. For comparison, existing home sales increased 1.1% in 2017 while prices rose 5.7%.

The PHSI in the Northeast increased 2% to 92.4 in May, but is 4.8% lower than 2017. The Midwest index increased by 2.9% at 101.4, but is still 2.5% lower than this time last year.

Lastly, pending home sales in the South declined 3.5% to a 122.9, remaining unchanged from 2017. The index in the West modestly increased 0.6% to 94.7 and is 4.1% below 2017.

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See How One Designer Filled a Home with Color and Pattern – Without It Becoming Overwhelming

See How One Designer Filled a Home With Color and Pattern—Without It Becoming Overwhelming https://www.realsimple.com/home-organizing/colorful-blue-family-home-tour?utm_source=twitter.com&utm_medium=social&utm_campaign=social-button-sharing via @RealSimple

http://www.realsimple.com, June 26th, 2018

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You DO NOT Need 20% Down to Buy your Home NOW!!!!

KCM Crew, June 26th, 2018

You DO NOT Need 20% Down to Buy Your Home NOW! | MyKCMThe Aspiring Home Buyers Profile from the National Association of Realtors (NAR) found that the American public is still somewhat confused about what is required to qualify for a home mortgage loan in today’s housing market. The results of the survey show that the main reason why non-homeowners do not own their own homes is because they believe that they cannot afford them.

This brings us to two major misconceptions that we want to address today.

1. Down Payment

A recent survey by Laurel Road, the National Online Lender and FDIC-Insured Bank, revealed that consumers overestimate the down payment funds needed to qualify for a home loan.

According to the survey, 53% of Americans who plan to buy or have already bought a home admit to their concerns about their ability to afford a home in the current market. In addition, 46% are currently unfamiliar with alternative down payment options, and 46% of millennials do not feel confident that they could currently afford a 20% down payment.

What these people don’t realize, however, is that there are many loans written with down payments of 3% or less.

Many renters may actually be able to enter the housing market sooner than they ever imagined with new programs that have emerged allowing less cash out of pocket.

2. FICO®Scores

An Ipsos survey revealed that 62% of respondents believe they need excellent credit to buy a home, with 43% thinking a “good credit score” is over 780. In actuality, the average FICO® scores for approved conventional and FHA mortgages are much lower.

The average conventional loan closed in May had a credit score of 753, while FHA mortgages closed with an average score of 676. The average across all loans closed in May was 724. The chart below shows the distribution of FICO® Scores for all loans approved in May.

You DO NOT Need 20% Down to Buy Your Home NOW! | MyKCM

Bottom Line

If you are a prospective buyer who is ‘ready’ and ‘willing’ to act now, but you are not sure if you are ‘able’ to, let’s sit down to help you understand your true options today.

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Closing on a House Checklist: 6 Things Home Buyers Must Do Before They Move In

Closing on a House Checklist: 6 Things Home Buyers Must Do Before They Move In https://www.realtor.com/advice/buy/closing-on-a-house-checklist/?cid=soc_shares_article_tw#homebuyers #Closing

www/realtor.com, June 25th, 2018

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