What If I Wait Until Next Year to Buy a Home?

Real Estate News

What If I Wait Until Next Year to Buy a Home? | Keeping Current Matters

We recently shared that national home prices have increased by 6.7% year-over-year. Over that same time period, interest rates have remained historically low which has allowed many buyers to enter the market.

As a seller, you will likely be most concerned about ‘short-term price’ – where home values are headed over the next six months. As a buyer, however, you must not be concerned about price, but instead about the ‘long-term cost’ of the home.

The Mortgage Bankers Association (MBA), Freddie Mac, and Fannie Mae all project that mortgage interest rates will increase by this time next year. According to CoreLogic’s most recent Home Price Index Report, home prices will appreciate by 5.2% over the next 12 months.

What Does This Mean as a Buyer?

If home prices appreciate by 5.2% over the next twelve months as predicted by CoreLogic, here is a simple demonstration of the impact that an increase in interest rate would have on the mortgage payment of a home selling for approximately $250,000 today:

What If I Wait Until Next Year to Buy a Home? | Keeping Current Matters

Bottom Line

If buying a home is in your plan for this year, doing it sooner rather than later could save you thousands of dollars over the terms of your loan.

Amy Pearson

Real Estate Broker

Baird & Warner – Gold Coast

Amy.pearson@bairdwarner.com

May Real Estate Newsletter

Real Estate News

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Offering your abode for short-term rentals can be appealing if you want to earn extra income and have someone in the home while you’re away. Just talk to me first if you’re unsure whether your condo or homeowner’s association allows it and to find out whether your city or town has any restrictions.

To read the full newsletter including tips on gardening and featured properties, click here .

Amy Pearson

Real Estate Broker

Baird & Warner – Gold Coast

amy.pearson@bairdwarner.com

Buying a Home Is Cheaper Than Renting in the Majority of the US

Real Estate News

Buying a Home Is Cheaper Than Renting in the Majority of the US | Keeping Current Matters

The results of the 2018 Rental Affordability Report from ATTOM show that buying a median-priced home is more affordable than renting a three-bedroom property in 54% of U.S. counties analyzed for the report.

The updated numbers show that renting a three-bedroom property in the United States requires an average of 38.8% of income.

The least affordable market for renting was Marin County, CA, just over the Golden Gate Bridge from San Francisco, where renters spend a staggering 79.5% of average wages on rent, while the most affordable market was Madison County, AL where 22.3% of average wages went to rent.

Other interesting findings in the report include:

  • Average rent rose faster than income in 60% of counties
  • Average rent rose faster than median home prices in 41% of counties
  • While median home prices rose faster than average rents in 58% of counties

Bottom Line

Buying a home makes sense socially and financially. If you are one of the many renters out there who would like to evaluate your ability to buy this year, meet with a local real estate professional who can help you find your dream home.

Amy Pearson

Real Estate Broker

Baird & Warner – Gold Coast

amy.pearson@bairdwarner.com

How Much Do You Need to Make to Buy a Home in Your State?

Real Estate News

How Much Do You Need to Make to Buy a Home in Your State? | Keeping Current Matters

It’s no mystery that cost of living varies drastically depending on where you live, so a new study by GOBankingRates set out to find out what minimum salary you would need to make in order to buy a median-priced home in each of the 50 states, and Washington, D.C.

States in the Midwest came out on top as most affordable, requiring the smallest salaries in order to buy a median-priced home. States with large metropolitan areas saw a bump in the average salary needed to buy with California, Washington, D.C., and Hawaii edging out all others with the highest salaries required.

Below is a map with the full results of the study:

How Much Do You Need to Make to Buy a Home in Your State? | Keeping Current Matters

GoBankingRates gave this advice to anyone considering a home purchase,

“Before you buy a home, it’s important to find out if you can afford the monthly mortgage payment. To do this, some financial experts recommend your housing costs — primarily your mortgage payments — shouldn’t consume more than 30 percent of your monthly income.”

As we recently reported, research from Zillow shows that historically, Americans had spent 21% of their income on owning a median-priced home. The latest data from the fourth quarter of 2017 shows that the percentage of income needed today is only 15.7%!

Bottom Line

If you are considering buying a home, whether it’s your first time or your fifth time, consult a local real estate professional who can help evaluate your ability to do so in today’s market!

Amy Pearson

Real Estate Broker

Baird & Warner – Gold Coast

amy.pearson@bairdwarner.com

Mortgage Interest Rates Have Begun to Level Off

Real Estate News

Mortgage Interest Rates Have Begun to Level Off | Keeping Current Matters

Whether you are a buyer searching for your first home, or a homeowner looking to move up to your next home, you should pay attention to where mortgage interest rates are heading.

Over the course of 2018, according to Freddie Mac’s Primary Mortgage Market Survey, rates have increased from 3.95% in the first week of January to 4.40% in the first week of April.

At first glance, the difference between these numbers in such a short amount of time could be concerning, but if we look at the graph below, we’ll see that rates have already started to level off and return to the mark set in February.

Mortgage Interest Rates Have Begun to Level Off | Keeping Current Matters

This is great news for anyone looking to buy a home this spring! The spring is always one of the busiest seasons for home buying, and with rates increasing even more, buyers have come off the fence to lock in great rates! This is still great advice as the experts believe that rates will continue to rise throughout the year.

Every month, Freddie Mac, Fannie Mae, the Mortgage Bankers Association and the National Association of Realtors release their projections for where they believe mortgage rates will be in the coming months. If we take the average of what each of the four organizations is predicting for the second quarter, rates are expected to rise to about 4.48% by June.

That average climbs to 4.73% by the end of this year.

So, what does this mean?

Waiting until the end of the year to buy, with rates still projected to increase, will end up costing you more money on your monthly mortgage payment. For every $250,000 you need to borrow to purchase your dream home, you will spend $49.21 more per month, $590.52 per year, and over $17,700 by the end of your 30-year mortgage.

And that’s just the impact of your interest rate going up!

Bottom Line

If you are ready and willing to purchase a home, find out if you’re able to by sitting with a local real estate professional who can evaluate your needs and help you with next steps!

Amy Pearson

Real Estate Broker

Baird & Warner – Gold Coast

amy.pearson@bairdwarner.com

Steps to Finding an Airbnb Investment Property

Real Estate News

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If you have been thinking about buying an investment property and using it also as an Airbnb, there are several things you need to research before you decide to take that leap into becoming an investment Airbnb property owner.

1. Widen Your Search

Staying in your area to invest is not always the most lucrative. Sometimes if you widen your search, you can find a great property outside your city or state.

2. Target Where People Want to Visit in Your City

Determine what kind of tourism market you can expect and what time of year. What makes your city a place to visit? What about seasons? If you choose an area great for seasonal activities, you may find that you’ll have a low to zero occupancy rates during certain times of the year, can you afford that? Places near stadiums, shopping areas, museums, public transportation and other tourist destinations are ideal locations to consider for an Airbnb property.

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3. See What Others Pay & Charge

If you want to buy an Airbnb property, look at nearby home prices to compare. When you’re calculating your initial costs, include the down payment, closing costs, inspection costs, rehab costs as well as Airbnb expenses. These include the cleaning fees, property management fees, host service fee, damage fees, adding amenities, occupancy tax, etc.

You will want to research hotel prices during high season and low season as well as rent prices in the area. Then compare hotel prices to determine if you can create a positive cash flow and if you can set your nightly rate higher than what your daily rent would be if your property was leased full-time.

Breakdown of Investment Costs: Property Down Payment (20%) + Closing Costs + Inspection Costs + Rehab Costs

4. Protect yourself

Before you purchase the property, you should have an appraiser look at it and give you an appraisal report. You will also want to get an inspection done on the property to determine if there are any needed repairs that need to be done to the apartment. You might want to also take photos of the property documenting the apartment condition prior to listing the property for rent or as an Airbnb.

5. Get help

Whether you choose to invest far away or close to home, keep in mind that you will need to stay on call while having Airbnb guests. If you don’t have the time for that, then definitely consider getting a property management service.

Planning your costs and educating yourself about investing is important when considering purchasing an investment property. Prior to looking at an investment property in person, you will want to confirm with the listing agent if the condo building allows short-term rentals. Many condo buildings in Chicago do not allow short-term rentals under 6 months per their condo by-laws. Finding the right investment property can be stressful but worth it if you are prepared to handle all the details that come with an investment property.

Amy Pearson

Real Estate Broker

Baird & Warner – Gold Coast

amy.pearson@bairdwarner.com

 

April Real Estate Newsletter

Real Estate News

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Top 3 Things to Make Buying an Investment Property Easier

I’m always getting questions on this topic, so I want to share my top three things to know when you’re thinking about buying a home or property as an investment.

To read the full newsletter including tips for getting ready to sell and featured properties, click here .

Amy Pearson

Real Estate Broker

Baird & Warner – Gold Coast

amy.pearson@bairdwarner.com

Buyer Demand Still Outpacing the Supply of Homes for Sale

Real Estate News

Buyer Demand Still Outpacing the Supply of Homes for Sale | Keeping Current Matters

The price of any item is determined by the supply of that item, as well as market demand. The National Association of REALTORS (NAR) surveys “over 50,000 real estate practitioners about their expectations for home sales, prices and market conditions” for their monthly REALTORS Confidence Index.

Their latest edition sheds some light on the relationship between Seller Traffic (supply) and Buyer Traffic (demand).

Buyer Demand

The map below was created after asking the question: “How would you rate buyer traffic in your area?”

Buyer Demand Still Outpacing the Supply of Homes for Sale | Keeping Current Matters

The darker the blue, the stronger the demand for homes in that area. Only four states had a ‘stable’ demand level.

Seller Supply

The index also asked: “How would you rate seller traffic in your area?”

As you can see from the map below, 25 states reported ‘weak’ seller traffic, 21 states reported ‘stable’ seller traffic, 3 states and Washington D.C. reported ‘strong’ seller traffic, and only 1 state reported ‘very strong’ seller traffic. This means there are far fewer homes on the market than what is needed to satisfy the buyers who are out looking for their dream homes.

Buyer Demand Still Outpacing the Supply of Homes for Sale | Keeping Current Matters

Bottom Line

Looking at the maps above, it is not hard to see why prices are appreciating in many areas of the country. Until the supply of homes for sale starts to meet buyer demand, prices will continue to increase. If you are debating listing your home for sale, meet with a local real estate professional in your area who can help you capitalize on the demand in the market now!

Amy Pearson

Real Estate Broker

Baird & Warner – Gold Coast

amy.pearson@bairdwarner.com

Are You Aware of How Much Equity You Have in Your Home? You May Be Surprised!

Real Estate News

Are You Aware of How Much Equity You Have in Your Home? You May Be Surprised! | Keeping Current Matters

CoreLogic’s latest Equity Report revealed that 675,000 US homeowners regained positive equity in their homes in 2017. This is great news for the country, as 95.1% of all mortgaged properties are now in a positive equity situation.

U.S homeowners with mortgages (roughly 63% of all the properties) have seen their equity increase by a total of $908.4 billion since the fourth quarter 2016, an increase of 12.2%, year over year.”

Price Appreciation = Good News for Homeowners

Frank Nothaft, CoreLogic’s Chief Economist, explains:

Home-price growth has been the primary driver of home-equity wealth creation. The CoreLogic Home Price Index grew 6.2 percent during 2017. The largest calendar-year increase since 2013. Likewise, the average growth in home equity was more than $15,000 during 2017, the most in four years.”

He also believes this is a great sign for the market in 2018, saying:

“Because wealth gains spur additional consumer purchases, the rise in home-equity wealth during 2017 should add more than $50 billion to U.S. consumption spending over the next two to three years.

This is great news for homeowners! But, do they realize that their equity position has changed?

A study by Fannie Mae suggests that many homeowners are not aware that they have regained equity in their homes as their investment has increased in value. For example, their study showed that 23% of Americans still believe their home is in a negative equity position when, in actuality, CoreLogic’s report shows that only 4.9% of homes are in that position (down from 6.3% in Q4 2016).

The study also revealed that only 37% of Americans believe that they have “significant equity” (greater than 20%) when in actuality, 83% do!

Are You Aware of How Much Equity You Have in Your Home? You May Be Surprised! | Keeping Current Matters

This means that 46% of Americans with a mortgage fail to realize the opportune situation they are in. With a sizeable equity position, many homeowners could easily move into a house (either larger or smaller) that better meets their current needs.

Fannie Mae spoke out on this issue in their report:

“Homeowners who underestimate their homes’ values not only underestimate their home equity, they also likely underestimate 1) how large a down payment they could make with their home equity, 2) their chances of qualifying for mortgages, and, therefore, 3) their opportunities for selling their current homes and for buying different homes.”

Bottom Line

If you are one of the many Americans who is unsure of how much equity you have built in your home, don’t let that be the reason you fail to move on to your dream home in 2018! Meet with a local real estate professional today who can help you evaluate your situation and assist you along the way!

Amy Pearson

Real Estate Broker

Baird & Warner – Gold Coast

amy.pearson@bairdwarner.com

First-Time Home Buyers Seminar

Neighborhood News, Real Estate News

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The FREE First-Time Home Buyer Seminar is ideal for anyone who is thinking about buying their first condo or home in Chicago.

When: Wednesday, April 11, 2018 at 6pm -7pm

Location: Beermiscuous  – 2812 N. Lincoln Ave, Chicago, IL 60657

The seminar will include an explanation of the mortgage process including new tax regulations for real estate that will be presented by Lane Sears, Senior Loan Officer at Wintrust. You will also learn about the condo search process from start to closing by Amy Pearson, Realtor at Baird & Warner.

The event will be held at Beermiscuous located in the Lincoln Park neighborhood. Recognized as one of the top craft beer destinations in the city, Beermiscuous is a beer café and bottle shop that provides a coffee shop-style atmosphere for exploring craft beer. A curated selection of 16 rotating drafts and more than 350 bottles and cans are served in the café, or are available for to-go purchase.

All attendees will receive food and one drink of their choice.

Please email amy.pearson@bairdwarner.com for more information or to RSVP.

If you can’t attend the seminar on April 11th, there is another seminar that will be hosted on April 18, 2018 at 5:30pm the Wintrust Bank located on 231 S. LaSalle St, Chicago, IL 60604. Please email amy.pearson@bairdwarner.com for more information or to RSVP.