Month: March 2013

3 Financial Reasons to Buy a Home NOW!


Sotheby‘s Realty, Newton, MA.  Top Agents for Buyers and Sellers, Newton, MA.

 

 

Posted: 27 Mar 2013 04:00 AM PDT

 

This week, we are going to look at the three financial reasons to buy a home now instead of waiting: prices are rising, interest rates are increasing and rents are skyrocketing. – The KCM Crew

 Rents Are Skyrocketing

money evaporating houseWhether you own or rent, you will have a monthly housing expense. The question is how that expense will change in the future. When you purchase a home, for the most part, you lock-in that monthly housing expense for the length of the mortgage you take (15 or 30 years for example). When you rent a home, your housing expense is impacted by movements in the supply and demand for rental properties.

Historically, residential rental rates increase by 3.2% on an annual basis. However, in the current housing environment, there is an increasing demand for residential rental properties. This increase in demand has dramatically impacted rates. Zillow, in their most recent report, revealed that rental rates in the U.S. increased by 4.5% over the last twelve months. Other studies have projected rental rate increases of 4-5% over the next few years.

The only way to have control of your housing expense is to buy.

But Isn’t Buying Much More Expensive Than Renting?

Not right now! As a matter of fact, with prices down and mortgage rates at historic lows, it is LESS EXPENSIVE to buy than rent in most areas. In a recent reportTrulia revealed it is cheaper to buy than rent in ALL of America’s largest regions.

According to Jed Kolko, Trulia’s Chief Economist:

“People who didn’t buy a home last year may have missed the bottom of the market, but they haven’t completely missed the boat. Buying remains cheaper than renting in all 100 large metros. Even buyers who can’t get today’s lowest mortgage rates will still find that buying makes more financial sense than renting in nearly all local markets.”

However, Kolko went on to say that this opportunity may soon disappear:

“Although buying a home is still cheaper than renting, the gap is closing. In 2013, home prices should rise faster than rents, and mortgage rates are likely to rise in the next year as the economy improves. By next year, buying could be more expensive than renting in some housing markets, even for people with the best credit.”

Again, the only way to lock-in your monthly housing expense is to take that decision out of the hands of a landlord by owning. With both prices and interest rates set to increase, the best time to buy is right now.

 

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Top 10 Remodeling Projects


Sotheby’s Newton, MA, top buyer and seller agent in Newton, MA.

 

Top 10 Remodeling Projects [INFOGRAPHIC]

by THE KCM CREW on MARCH 22, 2013 · 0 COMMENTS

  • Top 10 Remodeling Projects

Original InfoGraphic by California Association of Realtors (CAR)

Real Estate is a Simple Business: Supply and Demand


Sotheby‘s Realty, Newton, MA.  Newton, MA real estate,  Listing and Buyer Agent, Newton, MA

Future House Values? Simple as Supply and Demand

Posted: 04 Mar 2013 04:09 AM PST

 

Months SupplyFor some time now, we have attempted to shed light on the fact that pricing in today’s real estate market, as it is in the markets for every other saleable item, will be determined by the concept of ‘supply and demand’.

According to dictionary.com:

“The relationship between supply and demand determines the price of a commodity. This relationship is thought to be the driving force in a free market.”

In real estate, supply and demand is represented as the current month’s supply of homes for sale (the number of homes for sale divided by the number of homes sold in the previous month).

While there is no steadfast rule that will apply to pricing in every category of housing, here is a great guideline:

  • 1-4 months supply creates a sellers’ market where there are not enough homes to satisfy buyer demand. Appreciation is guaranteed.
  • 5-6 months supply creates a balanced market. Historically home values appreciate at a rate a little greater than inflation.
  • 7-8 months supply creates a buyers’ market where the number of homes for sale exceeds the demand. Depreciation follows.

What is happening across the country right now?

In most parts of the country, home values are rising. This is for two reasons:

  1. According to NAR’s latest Existing Homes Sales Report, raw unsold inventory is at the lowest level since December 1999 when there were 1.71 million homes on the market.
  2. According to this month’s Pending Sales Report from NAR, houses going into contract reached levels last seen in April 2010 which was the month the Home Buyers’ Tax Credit expired.

This has resulted in a 4.2-month supply at the current sales pace which is the lowest housing supply since April 2005 when it was also 4.2 months.

Based on the table above, we can see that the supply/demand ratio is leaning toward a sellers’ market where prices will appreciate. That has created positive movement in housing values in most parts of the country.

When your real estate professional discusses home values, he/she should be prepared to show what the supply/demand ratio for homes similar to yours is in your area.