Blog :: 2017

Housing Prices are NOT Heading for Another Crash

Housing Prices are NOT Heading for Another Crash

As home values continue to increase at levels greater than historic norms, some are concerned that we are heading for another crash like the one we experienced ten years ago. We recently explained that the lenient lending standards of the previous decade (which created false demand) no longer exist. But what about prices?

Are prices appreciating at the same rate that they were prior to the crash of 2006-2008? Let’s look at the numbers as reported by Freddie Mac:

Housing Prices are NOT Heading for Another Crash | MyKCM

The levels of appreciation we have experienced over the last four years aren’t anywhere near the levels that were reached in the four years prior to last decade’s crash.

We must also realize that, to a degree, the current run-up in prices is the market trying to catch up after a crash that dramatically dropped prices for five years.

Bottom Line

Prices are appreciating at levels greater than historic norms. However, we are not at the levels that led to the housing bubble and bust.

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    You Don't Need 20% Down To Buy A Home!

    No… You Do Not Need 20% Down to Buy NOW!

    No... You Do Not Need 20% Down to Buy NOW! | MyKCM

    The 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 non-homeowners cite the main reason for not currently owning a home, as not being able to afford one.

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

    1. Down Payment

    NAR’s survey revealed that consumers overestimate the down payment funds needed to qualify for a home loan. According to the report, 39% of non-homeowners say they believe they need more than 20% for a down payment on a home purchase. In actuality, there are many loans written with a down payment 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 Ipson 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 of approved conventional and FHA mortgages are much lower.

    The average conventional loan closed in August had a credit score of 752, while FHA mortgages closed with a score of 683. The average across all loans closed in August was 724. The chart below shows the distribution of FICO® Scores for all loans approved in August.

    Bottom Line

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

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    Buyers ? Don't Go Into That New Construction Alone!

    New Construction So, you're looking to buy a home and you're considering new construction? Before you cross the threshold into any new construction property, consider this - once you enter that property and begin a discussion with the agent there, you are giving up a lot of control over your own transaction. It's essentially the builder's goal to control the transaction and if you're going up against their agent (who may not even be licensed as a Realtor), you will probably not be getting the best deal or even the best information. The builder's agents are skilled in negotiating the best terms and conditions for their client. In today's crazy market, every buyer should be represented by their own agent. This is especially important when you're dealing with a new home builder.  So, don't go into that new construction alone! The process will be similar to purchasing a resale. You and your agent will come up with the fair market value of the property based on similar sales. You will write up an offer which will include the typical contingencies such financing, appraisal and you will also want to do a home inspection.

    A word about home inspections:

    Don't think that just because a home is being build brand new that there aren't going to be some items that haven't been installed properly, have been omitted or are just plain incorrect. A home inspection performed by a licensed professional that you choose will not only make you feel comfortable about how the home operates, but may uncover defects that you will want to address with the builder. You'll want to do two inspections, one before the drywall is installed and one after the home is completed. We helped a client purchase a town home with a price of over $1,200,000 and during the pre-drywall inspection, our home inspector uncovered some defects in the way some of the plumbing was installed and if the drywall were installed there could have been a potential risk of water leaking behind the drywall. That could have lead to serious problems in the future. 

    At a time when new home builders are offering deals and sweepstakes designed to get you into the door, please don't go into that new construction alone! Let the professionals with Juli Clifford and Crew represent your BEST interests! Have fun searching for properties on your own and know that when you're ready, we are here for you!