Create Wealth: Move Up Now!!

Many experts are currently discussing a variety of topics such as real estate as an investment, the movement on mortgage interest rates and reasons to buy now instead of waiting. It is important that we realize that this does not apply solely to the first time home buyer.

The opportunity that exists in real estate today is there for everyone.

However, the family that already owns a home might be thinking that, if they wait, their home could be worth more next year than it is now. And that may cause them to delay moving up to the home of their dreams thinking it makes good financial sense. Actually, the opposite is true. This is the best chance a family has to buy up into the home that makes sense for their family right now.

We must realize that whatever percentage of value we gain on our house will also be gained on our dream home.

Let’s assume your current home is worth $500,000. Your house will be worth $520,000 next year if prices rise by 4% over that time (a number projected by the Home Price Expectation Survey).

However, the $750,000 home you are hoping to move into will also appreciate by about that same 4%. That means next year it will be valued at $780,000. You wouldn’t make $20,000 by waiting. You would actually be losing $10,000 ($30,000 - $20,000).

And, you will pay a lower interest rate on the mortgage than you probably will next year.

Plug in the numbers that apply to your house and the home you are longing to buy and see what the bottom line turns out to be for you.

That is how wealth is built in this country - by purchasing real estate at the right time, at the right price and at the right terms.

Go out and find your family's dream house and buy it! Ten years from now, you will be glad you did!

Moving Up? Do it Now!

A recent study revealed that the number of existing home owners planning to buy a home this year is about to increase dramatically. Some are moving up, some are downsizing and others are making a lateral move. Another study shows that over 75% of these buyers will, in fact, be in that first category: a move-up buyer. We want to address this group of buyers in today’s blog post.

There is no way for us to predict the future but we can look at what happened over the last year. Let’s look at buyers that considered moving up last year but decided to wait instead.

Assume they had a home worth $300,000 and were looking at a home for $450,000 (putting 10% down they would get a mortgage of $405,000). By waiting, their house appreciated by approximately 10% over the last year (based on the Case Shiller Pricing Index). Their home could now sell for $330,000. That would mean an additional $30,000 in equity assuming they didn’t incur any expenses in selling the home.

But, the $450,000 home would now be worth $495,000. Adding the original 10% down payment ($45,000) to the additional equity ($30,000), they would now have a $75,000 down payment. That would still need a mortgage of $425,000.

Here is a table showing what additional monthly cost would be incurred by waiting:

According to the Home Price Expectation Survey, home prices are projected to appreciate by approximately 6% over the next eighteen months. Interest rates are also expected to rise by as much as another full percentage point in that same time period according to FreddieMac. If your family plans to move-up to a nicer or bigger home, it may make sense to move now rather than later.

Top 10 Home-Selling Mistakes

HGTV's FrontDoor.com identified what it believes to be the top 10 home-selling mistakes.

10. Waiting until spring to sell. People buy homes all year, so play up the home's seasonal amenities and take advantage of serious buyers looking in the off-season.

9. Not understanding the real estate contract. Go over the fine print of the agreement with your real-estate agent or attorney before signing to make sure you understand your responsibilities as well as any demands the buyer has made.

8. Going it alone without researching first. Selling a home for-sale-by-owner take time, and requires you to do paperwork, marketing and showings. Make sure you're up for the work involved in return for saving on the real-estate agent commission fee.

7. Ignoring lowball offers. If buyers submit a low offer, don't reject it completely. Counteroffer to see if they are willing to negotiate.

6. Wasting time on an unqualified buyer. Make sure a potential buyer is prequalified for a loan before accepting an offer.

5. Skimping on marketing. Mix traditional advertising, including a sign in the yard and an ad in a homes magazine, with Web techniques, including online photos and video.

4. Sabotaging the showing. Leave the home when it is being shown to prospective buyers so they can more easily focus, and make sure the home is accessible w! ith convenient showing hours and a lockbox for agents.

3. Not prepping for the sale. Visit open houses in the neighborhood to get a sense of what the competition offers, then make fixes and updates, declutter and clean to outshine them.

2. Overimproving. Don't make so many upgrades that you price your home out of the appropriate range for the area and fail to recoup your investment.

1. Overpricing. Your home should be priced in line with homes in the area that are of similar age, style and size.

FreddieMac: Housing is Stronger Today

In a recent blog post, FreddieMacexplained that “housing is stronger today than at any point since the Great Recession began and hit bottom in 2009”. They then gave three reasons which support their position:

1. Home sales are up 13% since their low point.
2. Housing starts are up 50% since they bottomed out.
3. House Prices are up 16% since their trough.

Projections Going Forward

FreddieMac also believes that the market will continue to improve through 2014. They projected:

1. Home sales to increase about 3% in 2014 as the purchase market continues to evolve
2. Almost 20% growth for housing starts in 2014, which will begin to help ease tight inventories in many markets
3. Home value increases will continue their positive momentum in 2014

Frank Nothaft, Freddie Mac vice president and chief economist, further explained what the housing market may look like in the agency’s April 2014 U.S. Economic and Housing Market Outlook:

"Tight inventory may pose a significant challenge for home buyers in many markets across the country, which may result in higher home prices and sales being lower than expected. This is good news for those markets that have room to run on the house price appreciation front, but it's also going to increase the affordability pinch in many markets, especially along the country's east and west coasts. Two indicators that are supporting local housing activity are rising consumer confidence and declining unemployment rates."

Bottom Line

The real estate market is improving every day. The biggest challenge is a lack of inventory in many markets. If you are thinking about selling, now may be the time to make the move.

A Great Reason to Sell Now

The price of any item (including residential real estate) is determined by ‘supply and demand’. If many people are looking to buy an item and the supply of that item is limited, the price of that item increases.

According to the National Association of Realtors(NAR), the supply of homes for sale is still below the normal 6 month level of inventory. That means less competition.

However, a recent study revealed that 71% of current homeowners are considering selling their home this year. Putting your home on the market now instead of waiting for this increased competition to come to the market might make a lot of sense.

Buyers currently in the market are motivated purchasers. They want to buy now. With limited inventory available in most markets, a seller will be in a great position to negotiate their best possible price.

Raving Review

Marilyn with Tony Elias & Associates has made another happy client. Marilyn helped us throughout the whole process and was always there for us. She walked us through every step of the sale and was very professional and upfront about everything. We would definitely recommend Marilyn to all our family and friends. Thank you Tony Elias & Associates for your help.

3 Reasons to Sell Your Home this Spring

Many sellers are still hesitant about putting their house up for sale. Where are prices headed? Where are interest rates headed? These are all valid questions. However, there are several reasons to sell your home sooner rather than later. Here are three of those reasons.

1. Demand is about to skyrocket

Most people realize that the housing market is hottest from April through June. The most serious buyers are well aware of this and, for that reason, come out in early spring in order to beat the heavy competition. We also have a pent-up demand as many buyers pushed off their home search this winter because of extreme weather. Sellers in markets where seasonal weather is never an issue must realize that buyers relocating to their region will increase dramatically this spring as these purchasers finally decide to escape the freezing temperatures of the winters in the north.

These buyers are ready, willing and able to buy…and are in the market right now!

2. There Is Less Competition - For Now

Housing supply always grows from the spring through the early summer. Also, there has been a growing desire for many homeowners to move as they were unable to sell over the last few years because of a negative equity situation. Homeowners have seen a return to positive equity as prices increased over the last eighteen months. Many of these homes will be coming to the market in the near future.

The choices buyers have will continue to increase over the next few months. Don’t wait until all the other potential sellers in your market put their homes up for sale.

3. There Will Never Be a Better Time to Move-Up

If you are moving up to a larger, more expensive home, consider doing it now. Prices are projected to appreciate by approximately 4% this year and 8% by the end of 2015. If you are moving to a higher priced home, it will wind-up costing you more in raw dollars (both in down payment and mortgage payment) if you wait. You can also lock-in your 30 year housing expense with an interest rate at about 4.5% right now. Freddie Mac projects rates to be 5.1% by this time next year and 5.7% by the fourth quarter of 2015.

Moving up to a new home will be less expensive this spring than later this year or next year.