UNDERSTAND AND USE LISTING PRICES IN NETHER PROVIDENCE TOWNSHIP

UNDERSTAND and use Listing Prices IN NETHER PROVIDENCE TOWNSHIP

In Today’s Market, Listing Prices Are Like an Auction’s Reserve Price | MyKCM

For generations, the process of buying and selling a home never really changed. A homeowner would try to estimate the market value of their house, then tack on a little extra to give themselves some negotiating room. That figure would become the listing price. Buyers would then try to determine how much less than the full price they could offer and still get the home. As a result, the listing price was generally the ceiling of the negotiation. The actual sales price would almost always be somewhat lower than what was listed. It was unthinkable to pay more than what the seller was asking.

Today is different. You may need to change the way you look at the asking price of a home.

The record-low supply of homes for sale coupled with very strong buyer demand is leading to a rise in bidding wars on many homes. Because of this, homes today often sell for more than the list price. In some cases, they sell for a lot more.

According to Lawrence Yun, Chief Economist at the National Association of Realtors (NAR):

“For every listing there are 5.1 offers. Half of the homes are being sold above list price.”

Nether-Providence-01-16--to--0521-Sales-Price-to-Original-Price-RatioIn this market, you likely can’t shop for a home with the former approach of negotiating to a lower price.

Due to the low supply of houses for sale, many homes are now being offered in an auction-like atmosphere in which the highest bidder wins the home. In an actual auction, the seller of an item agrees to take the highest bid, and many sellers set a reserve price on the item they’re selling. A reserve price is the minimum amount a seller will accept as the winning bid.

The graph to the left demonstrates what is happening in Nether Providence Township. From 2016 (and before), Average Sale Prices were always lower than the Average Original Listing Price. NO LONGER!!!!! Starting in 2020, Average Sales Price was right at 100% of the Original Listing Price. So far in 2021, it is actually higher at 101.6% of the original listing price.

When navigating a competitive housing market, think of the list price of the house as the reserve price at an auction. It’s the minimum the seller will accept in many cases. Today, the asking price is often becoming the floor of the negotiation rather than the ceiling. Therefore, if you really love a home, know that it may ultimately sell for more than the sellers are asking. So, as you’re navigating the homebuying process, make sure you know your budget, know what you can afford, and work with a trusted advisor who can help you make all the right moves as you buy a home.

Bottom Line

Implications are HUGE for both buyers and sellers.

  • For Sellers, it is time to be aggressive with your original listing prices because buyers are hungry and willing to pay more.
  • For Buyers, you need to be aware that to get that house you really want, you will probably have to pay more than asking price.
  • How to make the most of these conditions for both buyers and sellers will be the subjects of a future blog post.

Confused?  Don’t be. If you are thinking about buying or selling, give me a call or text (484-574-4088) and lets set up a time to talk.

3 Reasons This is NOT the 2008 Real Estate Market

3 Reasons This is NOT the 2008 Real Estate Market | MyKCM

No one knows for sure when the next recession will occur. What is known, however, is that the upcoming economic slowdown will not be caused by a housing market crash, as was the case in 2008. There are those who disagree and are comparing today’s real estate market to the market in 2005-2006, which preceded the crash. In many ways, however, the market is very different now. Here are three suppositions being put forward by some, and why they don’t hold up.

SUPPOSITION #1

A critical warning sign last time was the surging gap between the growth in home prices and household income. Today, home values have also outpaced wage gains. As in 2006, a lack of affordability will kill the market.

Counterpoint

The “gap” between wages and home price growth has existed since 2012. If that is a sign of a recession, why didn’t we have one sometime in the last seven years? Also, a buyer’s purchasing power is MUCH GREATER today than it was thirteen years ago. The equation to determine affordability has three elements:  home prices, wages, AND MORTGAGE INTEREST RATES. Today, the mortgage rate is about 3.5% versus 6.41% in 2006.

SUPPOSITION #2

In 2018, as in 2005, housing-price growth began slowing, with significant price drops occurring in some major markets. Look at Manhattan where home prices are in a “near free-fall.”

Counterpoint

The only major market showing true depreciation is Seattle, and it looks like home values in that city are about to reverse and start appreciating again. CoreLogic is projecting home price appreciation to reaccelerate across the country over the next twelve months.

Regarding Manhattan, home prices are dropping because the city’s new “mansion tax” is sapping demand. Additionally, the new federal tax code that went into effect last year continues to impact the market, capping deductions for state and local taxes, known as SALT, at $10,000. That had the effect of making it more expensive to own homes in states like New York.

SUPPOSITION #3

Prices will crash because that is what happened during the last recession.

Counterpoint

It is true that home values sank by almost 20% during the 2008 recession. However, it is also true that in the four previous recessions, home values depreciated only once (by less than 2%). In the other three, residential real estate values increased by 3.5%, 6.1%, and 6.6%.

Price is determined by supply and demand. In 2008, there was an overabundance of housing inventory (a 9-month supply). Today, housing inventory is less than half of that (a 4-month supply).

Bottom Line

We need to realize that today’s real estate market is nothing like the 2008 market. Therefore, when a recession occurs, it won’t resemble the last one.

NETHER PROVIDENCE HOME VALUES

Nether Providence Home Values are are basically the same as Wallingford Home Values as the two entities have almost the same borders.

As we say frequently on our “Dad and Daughter Talk Real Estate” program, residential real estate is the single most reliable way to build individual and family wealth. Nether Providence Home Values are a sterling example of this principle.

NETHER PROVIDENCE TOWNSHIP, MEDIAN HOME VALUES, 2015 THROUGH 2020

If you had purchased the median priced house in Nether Providence Township in 2015 ($335,000),  by 2020 your net worth would have been $85,000 more than if you had kept on renting.

But John you say, I do not have a 20% down payment ($67,000) to get started. Not to fear, there are lots of down payment options for a lot less than 20%.

For example, if you used the Federal Housing Administration lowest down payment option (3.5% ) you could have owned that house for a total investment of about $33,000; monthly payment of about $2,513.37. Probably about the same as you are paying for an apartment right now.  And it may be possible to arrange for a seller assist of up to perhaps $10,000. That would lower your cash needed for the deal to about $23,000.

And we have not even mentioned the tax advantages. You can deduct your mortgage interest and property taxes. Married you can claim up to $10,000 in property taxes and all of your interest on mortgages up to $750,000.

For this house the taxes are $11,350 so the maximum you can deduct is $10,000. Add interest of about $9,900 and you should be able to reduce your federal taxes by at least $2,000. (Assumes a 12% marginal tax rate).

And consider this, for your total investment of $33,000, you have an increased net worth of $85,000. That is a 257% return on your money. Try matching that in the stock market.

And all the while you enjoy life a lot more by living in your very own home.

Interested, lets get together and discuss how to get your and your family on a faster track to a lot bigger net worth.

For a good general update on our local real estate market, check out our video page.

And if you are thinking about buying or selling, I would love to be one of the realtors you interview. Please check out what other clients think about me.

Delaware County Home Values

Delaware County Home Values

Just How Strong Is the Housing Recovery? | MyKCM

Delaware County Home Values

Delaware County Home Values have been a shining light in the current economic situation. Call John Herreid at 484-574-4088 for details.

All-time low mortgage rates coupled with a new appreciation of what a home truly means have caused Delaware County Home Values to push forward through this major health crisis. Let’s look at two measures that explain the resilience of the real estate market.

Purchase Mortgages

The number of buyers getting a mortgage to purchase a home is a strong indicator of the strength of a housing market. Below is a graph of the week-over-week percent change in that number for the entire country, as reported by the Mortgage Bankers’ Association:Just How Strong Is the Housing Recovery? | MyKCMThe number dropped dramatically in March and mid-April when the economy was shut down in response to COVID. It increased substantially from later in April through the middle of June. The strong increase in May and June was the result of the pent-up demand from earlier in the spring along with the normal business that would have been done during that time.

Since July, the market has remained consistent on a weekly basis, but still reflects a double-digit increase from the levels one year ago. The August 12 report shows a whopping 22% increase over last year.

Delaware County, Residential Detached Sales

Like purchase mortgages, actual sales are also a powerful indicator of the strength of the real estate market.  Here’s a graph of those data since January, 2019. The graph mirrors the one above, showing a drop in early spring followed by a strong recovery in late spring and early summer.

Sales were stronger than 2019 (which was a very good year) through March when the governor effectively locked down all real estate transactions. April, May and June were down dramatically; but July and August posted dramatic recoveries,up 14% from the same months in 2019.

Delaware County Home Values, 2019 and 2020 To Date

Delaware County Home Values showed surprising resilience, especially given the drop in actual sales in April, May and June. Sales prices were actually higher than each corresponding month in 2019. August was an all time record breaker at $646,000.

Bottom Lines, Delaware County Home Values

All  indicators show that the Delaware County housing market recovered quickly from the early setback 1n 2020 caused by the shelter-in-home orders. They also show that Pennsylvanians have realized the importance of their homes during this time and are buying more houses than they did prior to the pandemic.

Interested, please give a call to John Herreid at 484-574-4088 and lets set up a time to talk.

Just How Strong is the Housing Recovery?

The residential real estate market has definitely been the shining light in this country’s current economic situation. All-time low mortgage rates coupled with a new appreciation of what a home truly means has caused the housing market to push forward through this major health crisis. Let’s look at two measures that explain the resilience of the real estate market.

Nether Providence Township Real Estate, Homes for Sale in Rose Valley, PA and Homes for Sale in Swarthmore, PA are strong examples of these trends

Purchase Mortgages

The number of buyers getting a mortgage to purchase a home is a strong indicator of the strength of a housing market. Below is a graph of the week-over-week percent change in that number, as reported by the Mortgage Bankers’ Association:Just How Strong Is the Housing Recovery? | MyKCMThe number dropped dramatically in March and mid-April when the economy was shut down in response to COVID. It increased substantially from later in April through the middle of June. The strong increase in May and June was the result of the pent-up demand from earlier in the spring along with the normal business that would have been done during that time.

Since July, the market has remained consistent on a weekly basis, but still reflects a double-digit increase from the levels one year ago. The August 12 report shows a whopping 22% increase over last year.

Pending Contracts

Like purchase mortgages, pending contracts are also a powerful indicator of the strength of the real estate market. Zillow reports each week on the percent change in the number of homes going into contract. Here’s a graph of their data:Just How Strong Is the Housing Recovery? | MyKCMThe graph mirrors the one above, showing a drop in early spring followed by a strong recovery in late spring and early summer. Then, in July, it settles into a consistent level of deals. That level, like the one for purchase mortgages, is well ahead of the level seen last year. The last report revealed that pending deals were 16.9% greater than the same time last year.

Bottom Line

Both indicators prove the housing market recovered quickly from the early setback caused by the shelter-in-home orders. They also show that Americans have realized the importance of their homes during this time and are buying more houses than they did prior to the pandemic.

HOW TECHNOLOGY IS ENABLING THE REAL ESTATE PROCESS

How Technology Is Enabling the Real Estate Process | MyKCM

Some buyers and sellers are thinking they cannot move ahead with a purchase or sale because all the key players are “locked down”. While that is true in Pennsylvania, there are a lot of Internet based options that are allowing business to proceed. Read on  to get a sense and then give a shout if you have questions.

Today’s everyday reality is pretty different than it looked just a few weeks ago. We’re learning how to do a lot of things in new ways, from how we work remotely to how we engage with our friends and neighbors. Almost everything right now is shifting to a virtual format. One of the big changes we’re adapting to is the revisions to the common real estate transaction, which all vary by state and locality. Technology, however, is making it possible for many of us to continue on the quest for homeownership, an essential need for all.

Here’s a look at some of the elements of the process that are changing (at least in the near-term), due to stay-at-home orders and social distancing, and what you may need to know about each one if you’re thinking of buying or selling a home sooner rather than later.

1. Virtual Consultations – Instead of heading into an office, you can meet with real estate and lending professionals through video chat. Whether it’s your first initial needs analysis as a buyer or your listing appointment as a seller, you can still get the process started remotely and create a plan together. Your trusted advisor is still on your side.

2. Home Searches & Virtual Showings – According to theNational Association of Realtors (NAR), the Internet is one of the three most popular information sources buyers use when searching for homes. Your real estate agent can send you listing information and help you request a virtual showing when you’re ready to start looking. This means you can virtually walk through the homes on your wish list while keeping your family safe. As a seller, you can still have virtual open houses and virtual tours too, so as not to miss those buyers looking to find a home right now.

3. Document Signing – Although this is another area that varies by state, today more portions of the transaction are being done digitally. In many areas, your agent or loan officer can set up an account where you can upload all of the required documents and sign electronically right from your computer.

4. Sending Money – Whether you need to pay for an appraisal or submit closing costs, there are options available. Depending on the transaction and local regulations, you may be able to pay by credit card, and most banks will also allow you to wire funds from your account. Sometimes you can send a check by mail, and in some states, a mobile escrow agent will pick up a check from your home.

5. Closing Process – Again, depending on your area, a mobile notary may be able to bring the required documents to your home before the closing. If your state requires an attorney to be present, check with your legal counsel to see what options are available. Also, depending on the title company, some are allowing drive-thru closings, which is similar to doing a transaction at a bank window.

Although these virtual processes are starting to become more widely accepted, it does not mean that this is the way things are going to get done from now on. Under the current circumstances, however, technology is making it possible to continue much of the real estate transaction today.

Bottom Line

If you need to move today, technology can help make it happen; there are options available. Let’s touch base today to discuss your situation and our local regulations, so you don’t have to put your real estate plans on hold.

RECESSION? YES? HOUSING CRASH? NO

Recession? Yes. Housing Crash? No. | MyKCM

To all the home buyers, home sellers and home owners who are in a tizzy about house prices heading South, I have one word of advice. RELAX. AIN’T GONNA HAPPEN. Read more to see why.

With over 90% of Americans now under a shelter-in-place order, many experts are warning that the American economy is heading toward a recession, if it’s not in one already. What does that mean to the residential real estate market?

What is a recession?

According to the National Bureau of Economic Research:

“A recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.”

COVID-19 hit the pause button on the American economy in the middle of March. Goldman Sachs, JP Morgan, and Morgan Stanley are all calling for a deep dive in the economy in the second quarter of this year. Though we may not yet be in a recession by the technical definition of the word today, most believe history will show we were in one from April to June.

Does that mean we’re headed for another housing crash?

Many fear a recession will mean a repeat of the housing crash that occurred during the Great Recession of 2006-2008. The past, however, shows us that most recessions do not adversely impact home values. Doug Brien, CEO of Mynd Property Management, explains:

“With the exception of two recessions, the Great Recession from 2007-2009, & the Gulf War recession from 1990-1991, no other recessions have impacted the U.S. housing market, according to Freddie Mac Home Price Index data collected from 1975 to 2018.”

CoreLogic, in a second study of the last five recessions, found the same. Here’s a graph of their findings:Recession? Yes. Housing Crash? No. | MyKCM

What are the experts saying this time?

This is what three economic leaders are saying about the housing connection to this recession:

Robert Dietz, Chief Economist with NAHB

“The housing sector enters this recession underbuilt rather than overbuilt…That means as the economy rebounds – which it will at some stage – housing is set to help lead the way out.”

Ali Wolf, Chief Economist with Meyers Research

“Last time housing led the recession…This time it’s poised to bring us out. This is the Great Recession for leisure, hospitality, trade and transportation in that this recession will feel as bad as the Great Recession did to housing.”

John Burns, founder of John Burns Consulting, also revealed that his firm’s research concluded that recessions caused by a pandemic usually do not significantly impact home values:

“Historical analysis showed us that pandemics are usually V-shaped (sharp recessions that recover quickly enough to provide little damage to home prices).”

Bottom Line

If we’re not in a recession yet, we’re about to be in one. This time, however, housing will be the sector that leads the economic recovery.

Interest Rates Over Time

Kind of interesting to take a look back at Home Mortgage Interest Rates in our recent  history.

Just one more reason to get cracking on that first home purchase or move up buy now.  Best way to improve your personal standard of living and to build family wealth. 

Lets make an appointment to get together and get your started. Call or text to 484-574-4088 or email john@johnherreid.com

Interest Rates Over Time [INFOGRAPHIC] | MyKCM

Some Highlights:

  • With interest rates hovering at near historic lows, now is a great time to look back at where they’ve been, and how much they’ve changed over time.
  • According to Freddie Mac, mortgage interest rates are currently hovering near a five-decade low.
  • The impact your interest rate has on your monthly mortgage payment is significant. An increase of just $20 dollars in your monthly payment can add up to $240 per year or $7,200 over the life of your loan. Maybe it’s time to lock in now while rates are still low.

2020 Forecast – Continued Home Price Appreciation

2020 Forecast Shows Continued Home Price Appreciation | MyKCM

Bottom Line

Experts forecast home price appreciation to continue at a moderate rate as we move through 2020 and beyond. With appreciation growing, let’s get together and plan for your next move. Just call or text 484-574-4088 and let’s set up a time to talk.

Questions continue to rise around where home prices will head in 2020. The latest forecast from CoreLogic shows continued appreciation at 5.4% over the next year:2020 Forecast Shows Continued Home Price Appreciation | MyKCMAdditionally, ARCH Mortgage Insurance Company in their current Housing and Mortgage Market Review revealed their latest ARCH Risk Index, which estimates the probability of home prices being lower in two years. Based on the most recent results, 32 of the 50 U.S. states (plus D.C.) had a minimal probability of lowering by 2021.2020 Forecast Shows Continued Home Price Appreciation | MyKCM

 

How Property Taxes Can Impact Your Mortgage Payment

Dramatic differences in property taxes (primarily school taxes) can make a big difference in your mortgage payment. For example, recent sales of $400,000 houses in adjacent school districts carried property tax bills of $4,000  to over $12,000. Big dent in your budget if you do not know about them. One more reason that you need a knowledgeable realtor when you are thinking about a home purchase or sale. Like to know more, please call or text to 484-574-4088 and lets talk.

How Property Taxes Can Impact Your Mortgage Payment | MyKCM

When buying a home, taxes are one of the expenses that can make a significant difference in your monthly payment. Do you know how much you might pay for property taxes in your state or local area?

When applying for a mortgage, you’ll see one of two acronyms in your paperwork – P&I or PITI – depending on how you’re including your taxes in your mortgage payment.

P&I stands for Principal and Interest, and both are parts of your monthly mortgage payment that go toward paying off the loan you borrow. PITI stands for Principal, Interest, Taxes, and Insurance, and they’re all important factors to calculate when you want to determine exactly what the cost of your new home will be.

TaxRates.org defines property taxes as,

“A municipal tax levied by counties, cities, or special tax districts on most types of real estate – including homes, businesses, and parcels of land. The amount of property tax owed depends on the appraised fair market value of the property, as determined by the property tax assessor.”

This organization also provides a map showing annual property taxes by state (including the District of Columbia), from lowest to highest, as a percentage of median home value.How Property Taxes Can Impact Your Mortgage Payment | MyKCMThe top 5 states with the highest median property taxes are New Jersey, New Hampshire, Texas, Nebraska, and Wisconsin. The states with the lowest median property taxes are Louisiana, Hawaii, Alabama, and Delaware, followed by the District of Columbia.

Bottom Line

Depending on where you live, property taxes can have a big impact on your monthly payment. To make sure your estimated taxes will fall within your desired budget, let’s get together today to determine how the neighborhood or area you choose can make a difference in your overall costs when buying a home.