May 24, 2022

What You Need To Know About Selling in a Seller's Market In Connecticut

What You Need To Know About Selling in a Sellers’ Market In Connecticut

What You Need To Know About Selling in a Sellers' Market | MyKCM

Even if you haven’t been following real estate news, you’ve likely heard about the current sellers’ market. That’s because there’s a lot of talk about how strong market conditions are for people who want to sell their houses. But if you’re thinking about listing your house, you probably want to know: what does being in a sellers’ market really mean?

What Is a Sellers’ Market?

The latest Existing Home Sales Report from the National Association of Realtors (NAR) shows housing supply is still very low. There’s a 2-month supply of homes at the current sales pace.

Historically, a 6-month supply is necessary for a normal or neutral market where there are enough homes available for active buyers. That puts today deep in sellers’ market territory (see graph below):

What You Need To Know About Selling in a Sellers' Market | MyKCM

What Does This Mean for You When You Sell?

When the supply of houses for sale is as low as it is right now, it’s much harder for buyers to find homes to purchase. That creates increased competition among purchasers which can lead to more bidding wars. And if buyers know they may be entering a bidding war, they’re going to do their best to submit a very attractive offer upfront. This could drive the final price of your house up.

And because mortgage rates and home prices are climbing, serious buyers are motivated to make their purchase soon, before those two things rise further. That means, if you put your house on the market while supply is still low, it will likely get a lot of attention from competitive buyers.

Bottom Line

The current real estate market has incredible opportunities for homeowners looking to make a move. Listing your house this season means you’ll be in front of serious buyers who are ready to buy. Let’s connect so you can jumpstart the selling process.

May 23, 2022

Buying in a Flood Zone In Connecticut

Buying in a Flood Zone In Connecticut

 

It can be disturbing to realize that the beautiful home you've fallen in love with is in a flood zone. While it's not necessarily a deal-breaker, there are some serious considerations to understand before moving forward.

Flood zones are defined by the Federal Emergency Management Agency (FEMA) and are categorized according to the level of risk. A high-risk area is defined as having a 1+% chance of annual flooding, whereas a low-to-moderate location has a 0.2% or less chance of annual flooding.

FEMA maintains a flood map center where you can research the classification of the location and the level of concern. Zones labeled A and V are the highest risk zones. These are areas that are either coastal or riverside communities. These Special Flood Hazard Areas will have to carry flood insurance and have a 25% chance of serious flooding in a 30-year timeframe. Zones labeled B, C, and X are lower risk.

 

Flood insurance is available to homeowners in any location. It makes sense that homes located in high-risk areas will pay higher premiums than those in lower risk zones. In addition to normal homeowner's insurance, flood insurance can range from a few hundred a year to thousands per year. The good news is that proper flood insurance provides excellent coverage in the event of damage, even providing temporary housing if necessary. Coverages vary, so it's important to discuss the options with your insurance agent.

 

Posted in CT Buyer Tips
May 19, 2022

How Homeownership Can Help Shield You From Inflation In Connecticut

How Homeownership Can Help Shield You from Inflation In Connecticut 

How Homeownership Can Help Shield You from Inflation | MyKCM

If you’re following along with the news today, you’ve likely heard about rising inflation. You’re also likely feeling the impact in your day-to-day life as prices go up for gas, groceries, and more. These rising consumer costs can put a pinch on your wallet and make you re-evaluate any big purchases you have planned to ensure they’re still worthwhile.

If you’ve been thinking about purchasing a home this year, you’re probably wondering if you should continue down that path or if it makes more sense to wait. While the answer depends on your situation, here’s how homeownership can help you combat the rising costs that come with inflation.

Homeownership Offers Stability and Security

Investopedia explains that during a period of high inflation, prices rise across the board. That’s true for things like food, entertainment, and other goods and services, even housing. Both rental prices and home prices are on the rise. So, as a buyer, how can you protect yourself from increasing costs? The answer lies in homeownership.

Buying a home allows you to stabilize what’s typically your biggest monthly expense: your housing cost. If you get a fixed-rate mortgage on your home, you lock in your monthly payment for the duration of your loan, often 15 to 30 years. James Royal, Senior Wealth Management Reporter at Bankrate, says:

A fixed-rate mortgage allows you to maintain the biggest portion of housing expenses at the same payment. Sure, property taxes will rise and other expenses may creep up, but your monthly housing payment remains the same.” 

So even if other prices rise, your housing payment will be a reliable amount that can help keep your budget in check. If you rent, you don’t have that same benefit, and you won’t be protected from rising housing costs.

Use Home Price Appreciation to Your Benefit

While it’s true rising mortgage rates and home prices mean buying a house today costs more than it did a year ago, you still have an opportunity to set yourself up for a long-term win. Buying now lets you lock in at today’s rates and prices before both climb higher.

In inflationary times, it’s especially important to invest your money in an asset that traditionally holds or grows in value. The graph below shows how home price appreciation outperformed inflation in most decades going all the way back to the seventies – making homeownership a historically strong hedge against inflation (see graph below):

How Homeownership Can Help Shield You from Inflation | MyKCM

So, what does that mean for you? Today, experts say home prices will only go up from here thanks to the ongoing imbalance in supply and demand. Once you buy a house, any home price appreciation that does occur will be good for your equity and your net worth. And since homes are typically assets that grow in value (even in inflationary times), you have peace of mind that history shows your investment is a strong one.

Bottom Line

If you’re ready to buy a home, it may make sense to move forward with your plans despite rising inflation. If you want expert advice on your specific situation and how to time your purchase, let’s connect.

May 19, 2022

After Forbearance - Now What In Connecticut?

After Forbearance - Now What In Connecticut?

Covid-19 has impacted homeowners across the country. With job losses and income reductions, many have taken advantage of the ability to enter a forbearance program with their lenders. During the forbearance program, the agreements state that no late  fees will be assessed, and the balance of missed payments will be deferred to the end of the loan. 

As a result, many homeowners have been able to keep their homes during this time of economic upheaval. 

Some of these affected may now have stabilized and are ready to exit forbearance. They might be wondering if they will be penalized for this if they choose to refinance or buy a new home., Fortunately, there is good news for these homeowners. Part of the program is that the lender will not have that issue to contend with when they are ready to find a new loan.

Lenders understand that this is a unique situation and that it is representative of the way a borrower will remit payment in the long run. Additionally some potential homebuyers may need to relocate to take advantage of new employment opportunities - requiring them to sell their homes and buy new ones. The good news is that homeowners who exit their forbearance plans can apply for refinance or new loan after consecutive, on time mortgage payments.

Covid-19 has impacted our lives in many ways. Fortunately, the lending community has taken unprecedented steps to ensure the long-term damage to individuals and housing is minimized as much as possible.

May 17, 2022

Is It Enough To Offer Asking Price in Today's Housing Market In Connecticut

Is It Enough To Offer Asking Price in Today’s Housing Market In Connecticut?

Is It Enough To Offer Asking Price in Today’s Housing Market? | MyKCM

If you’re planning to buy a home this season, you’re probably thinking about what you’ll need to do to get your offer accepted. In previous years, it was common for buyers to try and determine how much less than the asking price they could offer to still get the home. The buyer and seller would then negotiate and typically agree on a revised price that was somewhere between the buyer’s bid and the home’s initial asking price.

In today’s real estate market, buyers shouldn’t shop for a home with the same expectations.

Things Are Different Today

Today’s housing market is anything but normal. According to the National Association of Realtors (NAR), the average home that’s sold today:

  • Receives 4.8 offers
  • Sells in just 17 days

Homes selling quickly and receiving multiple offers shows how competitive the housing market is for buyers right now. This is because there are more buyers on the market than homes for sale. When the number of homes available can’t keep up with demand, homes often sell for more than the asking price.

How Does This Impact You When It’s Time To Submit an Offer?

Market conditions should help guide your decisions throughout the process. Today, the asking price of a home is often the floor of the negotiation rather than the ceiling. Knowing this is important when it’s time to submit an offer, but you should also use that information as you’re searching for homes too. After all, you don’t want to fall in love with a home that ultimately sells for a price higher than what you’ve budgeted for.

The Mortgage Reports has advice if you’re looking to purchase a home in a competitive market. The article encourages you to be realistic with your housing search, saying:

The best thing to do is set your budget and expectations ahead of time so you know how much you can afford to offer — and when to walk away. This will make negotiations a lot easier.”

Of course, when you’ve found your dream home, you’ll want to do everything you can to submit your best offer up front and win a potential bidding war. Knowing the current market is key to crafting a winning offer. That’s where working with an expert real estate advisor becomes critical.

A real estate professional will draw from their experience and expert-level knowledge of today’s housing market throughout the process. They’ll also balance conditions in your area to make sure your offer stands out above the rest.

Bottom Line

Understanding how to approach the asking price of a home and what’s happening in today’s real estate market are critical for buyers. Let’s connect so we can work together to create a winning plan for you.

May 16, 2022

Room Update - Try Color Blocking

Room Update - Try Color Blocking

Repainting a room is one of the easiest ways to freshen the décor while changing the feel of the room. The hottest design trend this year takes this to a whlole new level. Color - blocking techniques are dominating magazines and social media with vivid color palettes and bold geometric patterns, turning the traditional painting project into something special.

Color-blocking takes many forms- everything from a simple way to differentiate one space from another by changing the wall shade, to artistic pairings that would feel at home in a modern art gallery. Your style most likely falls somewhere in between. The common theme is to try something new while changing the feel of the room.

Before you start your project, take time to consider the desired final look. Consider the relationship of your chosen colors and how each plays a part in the design. Bright shades create a sense of energy while softer tones are calming. Use blocked color to trick the eye into adding or subtracting space using light or dark colors. Color-blocking can also be used to draw attention to architecturally interesting elements such as a curved entrance or crown molding.

This weekend is a great time to update your space by trying something new and modern. Choose traditional color palettes and subtle shapes to compliment your current design or go to bold and completely change the room, Any home décor style can benefit from the techniques of color- blocking with a little imagination, masking tape, and a paintbrush

May 13, 2022

6 Upgrades Millennial Buyers Pay More For

6 Upgrades Millennial Buyers Pay More For - and 1 Exception

Home sellers assume they must make some upgrades before putting their home on the market. While any deferred maintenance or extreme wear-and tear- issues should be addressed, major upgrades or updates may not net more money when you sell; especially with millennial buyers, who are looking for their first home in droves.

6 Common Upgrades Millennial Buyers Won't Pay Extra For - and 1 They Will

1. Professional Landscaping - Although a nicely maintained yard is attractive to all buyers, over-the-top landscaping with special hardscapes or fountains will not appeal to millennials.

2. Upgrades Utilities - You may appreciate the new plumbing, but buyers won't offer more for the latest systems.

3. HVAC -  Again, new system are appreciated, but buyers won't offer more for the latest systems.

4. New Roof -  A leaking roof will certainly lower the sales price but replacing one will not have the opposite effect.

5. Swimming Pool - Not only will millennial buyers not pay more for a pool, but they may shy away entirely considering the cost of upkeep and safety for the young children.

6. Trendy Home Decor -  This may seem counterintuitive but adding the latest design features that will quickly go out-of-style can be a turnoff.

And finally, the one they will pay extra for? Solar panels. Younger buyers are conscious of their carbon footprint and are looking for environmentally-friendly options in their homes and lives. The millennial buyers are here, and understanding what they want in a new home will help sellers capitalize on this home's lives. The millennial buyers are here, and understanding what they want in a new home will help sellers capitalize on this fresh market of home buyers

May 13, 2022

What You Actually Need To Know About the Number of Foreclosures in Today's Housing Market

What You Actually Need To Know About the Number of Foreclosures in Today’s Housing Market In Connecticut

What You Actually Need To Know About the Number of Foreclosures in Today’s Housing Market | MyKCM

While you may have seen recent stories about the volume of foreclosures today, context is important. During the pandemic, many homeowners were able to pause their mortgage payments using the forbearance program. The goal was to help homeowners financially during the uncertainty created by the health crisis.

When the forbearance program began, many experts were concerned it would result in a wave of foreclosures coming to the market, as there was after the housing crash in 2008. Here’s a look at why the number of foreclosures we’re seeing today is nothing like the last time.

1. There Are Fewer Homeowners in Trouble

Today’s data shows that most homeowners are exiting their forbearance plan either fully caught up on payments or with a plan from the bank that restructured their loan in a way that allowed them to start making payments again. The graph below depicts those findings from the Mortgage Bankers Association (MBA):

What You Actually Need To Know About the Number of Foreclosures in Today’s Housing Market | MyKCM

The same MBA report mentioned above estimates there are approximately 525,000 homeowners who remain in forbearance today. Thankfully, those people still have the chance to work out a suitable repayment plan with the servicing company that represents their lender.

2. Most Homeowners Have Enough Equity To Sell Their Homes

For those who are exiting the forbearance program without a plan in place, many will have enough equity to sell their homes instead of facing foreclosures. Due to rapidly rising home prices over the last two years, the average homeowner has gained record amounts of equity in their home.

Marina Walsh, CMB, Vice President of Industry Analysis at MBA, says:

“Given the nation’s limited housing inventory and the variety of home retention and foreclosure alternatives on the table across various loan types, . . . Borrowers have more choices today to either stay in their homes or sell without resorting to a foreclosure.”

3. There Have Been Fewer Foreclosures over the Last Two Years

One of the seldom-reported benefits of the forbearance program was it gave homeowners facing difficulties an extra two years to get their finances in order and work out a plan with their lender. That helped prevent the foreclosures that normally would have come to the market had the new forbearance program not been available.

Even as people leave the forbearance program, there are still fewer foreclosures happening today than before the pandemic. That means, while there are more foreclosures now compared to last year (when foreclosures were paused), the number is still well below what the housing market has seen in a more typical year, like 2017-2019 (see graph below):

What You Actually Need To Know About the Number of Foreclosures in Today’s Housing Market | MyKCM

4. The Current Market Can Easily Absorb New Listings

When the foreclosures in 2008 hit the market, they added to the oversupply of houses that were already for sale. It’s exactly the opposite today. The latest Existing Home Sales Report from the National Association of Realtors (NAR) reveals:

“Total housing inventory at the end of March totaled 950,000 units, up 11.8% from February and down 9.5% from one year ago (1.05 million). Unsold inventory sits at a 2.0-month supply at the present sales pace, up from 1.7 months in February and down from 2.1 months in March 2021.”

A balanced market would have approximately a six-month supply of inventory. At 2.0 months, today’s housing market is severely understocked. Even if one million homes enter the market, there still won’t be enough inventory to meet the current demand.

Bottom Line

If you see headlines about the increasing number of foreclosures today, remember context is important. While it’s true the number of foreclosures is higher now than it was last year, foreclosures are still well below pre-pandemic years.

If you have questions, let’s connect to talk through the latest market conditions and what they mean for you.

May 12, 2022

Why This Housing Market Is Not a Bubble Ready To Pop In Connecticut

Why This Housing Market Is Not a Bubble Ready To Pop In Connecticut

Why This Housing Market Is Not a Bubble Ready To Pop | MyKCM

Homeownership has become a major element in achieving the American Dream. A recent report from the National Association of Realtors (NAR) finds that over 86% of buyers agree homeownership is still the American Dream.

Prior to the 1950s, less than half of the country owned their own home. However, after World War II, many returning veterans used the benefits afforded by the GI Bill to purchase a home. Since then, the percentage of homeowners throughout the country has increased to the current rate of 65.5%. That strong desire for homeownership has kept home values appreciating ever since. The graph below tracks home price appreciation since the end of World War II:

Why This Housing Market Is Not a Bubble Ready To Pop | MyKCM

The graph shows the only time home values dropped significantly was during the housing boom and bust of 2006-2008. If you look at how prices spiked prior to 2006, it looks a bit like the current spike in prices over the past two years. That may lead some people to be concerned we’re about to see a similar fall in home values as we did when the bubble burst. To help alleviate those worries, let’s look at what happened last time and what’s happening today.

What Caused the Housing Crash 15 Years Ago?

Back in 2006, foreclosures flooded the market. That drove down home values dramatically. The two main reasons for the flood of foreclosures were:

1. Many purchasers were not truly qualified for the mortgage they obtained, which led to more homes turning into foreclosures.
2. A number of homeowners cashed in the equity on their homes. When prices dropped, they found themselves in an underwater situation (where the home was worth less than the mortgage on the house). Many of these homeowners walked away from their homes, leading to more foreclosures. This lowered neighboring home values even more.

This cycle continued for years.

Why Today’s Real Estate Market Is Different

Here are two reasons today’s market is nothing like the one we experienced 15 years ago.

1. Today, Demand for Homeownership Is Real (Not Artificially Generated)

Running up to 2006, banks were creating artificial demand by lowering lending standards and making it easy for just about anyone to qualify for a home loan or refinance their current home. Today, purchasers and those refinancing a home face much higher standards from mortgage companies.

Data from the Urban Institute shows the amount of risk banks were willing to take on then as compared to now.

Why This Housing Market Is Not a Bubble Ready To Pop | MyKCM

There’s always risk when a bank loans money. However, leading up to the housing crash 15 years ago, lending institutions took on much greater risks in both the person and the mortgage product offered. That led to mass defaults, foreclosures, and falling prices.

Today, the demand for homeownership is real. It’s generated by a re-evaluation of the importance of home due to a worldwide pandemic. Additionally, lending standards are much stricter in the current lending environment. Purchasers can afford the mortgage they’re taking on, so there’s little concern about possible defaults.

And if you’re worried about the number of people still in forbearance, you should know there’s no risk of that causing an upheaval in the housing market today. There won’t be a flood of foreclosures.

2. People Are Not Using Their Homes as ATMs Like They Did in the Early 2000s

As mentioned above, when prices were rapidly escalating in the early 2000s, many thought it would never end. They started to borrow against the equity in their homes to finance new cars, boats, and vacations. When prices started to fall, many of these homeowners were underwater, leading some to abandon their homes. This increased the number of foreclosures.

Homeowners didn’t forget the lessons of the crash as prices skyrocketed over the last few years. Black Knight reports that tappable equity (the amount of equity available for homeowners to access before hitting a maximum 80% loan-to-value ratio, or LTV) has more than doubled compared to 2006 ($4.6 trillion to $9.9 trillion).

The latest Homeowner Equity Insights report from CoreLogic reveals that the average homeowner gained $55,300 in home equity over the past year alone. Odeta Kushi, Deputy Chief Economist at First Americanreports:

“Homeowners in Q4 2021 had an average of $307,000 in equity - a historic high.”

ATTOM Data Services also reveals that 41.9% of all mortgaged homes have at least 50% equity. These homeowners will not face an underwater situation even if prices dip slightly. Today, homeowners are much more cautious.

Bottom Line

The major reason for the housing crash 15 years ago was a tsunami of foreclosures. With much stricter mortgage standards and a historic level of homeowner equity, the fear of massive foreclosures impacting today’s market is not realistic.

May 11, 2022

Why It's Critical To Price YOur House Right In Connecticut

Why It’s Critical To Price Your House Right In Connecticut

Why It’s Critical To Price Your House Right | MyKCM

When you make a move, you want to sell your house for the highest price possible. That might be why many homeowners are eager to list in today’s sellers’ market. After all, with record-low inventory and high buyer demand, many homes are selling for more than asking price. Data from the National Association of Realtors (NAR) shows 46% of homes are selling above list price today.

But even in a market like we have now, working with an agent to set the right asking price is critical, as pricing it too high or too low could have a negative impact on your final sale. Here’s why.

Pricing Your House Right Is Crucial Even in a Sellers’ Market

The price you set for your house sends a message to potential buyers. Price it too low and you might raise questions about your home’s condition or lead buyers to assume something is wrong with the property. Not to mention, you could leave money on the table, which decreases your future buying power if you undervalue your house.

On the other hand, price it too high and you run the risk of deterring buyers. When that happens, you may have to do a price drop to try to re-ignite interest in your house when it sits on the market for a while. But be aware that a price drop can be seen as a red flag for some buyers who will wonder why the price was reduced and what that means about the home.

In other words, think of pricing your home as a target. Your goal is to aim directly for the center – not too high, not too low, but right at market value. Pricing your house fairly based on market conditions increases the chance you’ll have more buyers who are interested in purchasing it. That makes it more likely you’ll see a bidding war, too. And when a bidding war happens, you’ll likely get an even higher final sale price. Plus, when homes are priced right, they tend to sell quickly.

To get a look into the potential downsides of over or underpricing your house and the perks that come with pricing it at market value, see the chart below:

Why It’s Critical To Price Your House Right | MyKCM

Lean on a Professional’s Expertise To Price Your House Right

There are several factors that go into pricing your house and balancing them is the key. That’s why it’s important to lean on an expert real estate advisor when you’re ready to move. A local real estate advisor is knowledgeable about:

  • The value of homes in your neighborhood
  • The current demand for houses in today’s market
  • The condition of your house and how it affects the value

A real estate professional will balance these factors to make sure the price of your house makes the best first impression and gives you the greatest return on your investment in the end.

Bottom Line

Even in a sellers’ market, pricing your house right is critical. Don’t rely on guesswork. Let’s connect to make sure your house is perfectly priced.