Hope Leitner, Realtor®, CRS

What truly causes a housing bubble and the inevitable crash? For the best explanation, let’s go to a person who correctly called the last housing bubble – a year before it happened. “A bubble requires both overvaluation based on fundamentals and speculation. It is natural to focus on an asset’s fundamental value, but the real key for detecting a bubble is speculation…Speculation tends to chase appreciating assets, and then speculation begets more speculation, until finally, for some reason that will become obvious to all in hindsight, the ‘bubble’ bursts. I have taken to calling the housing market a ‘bubble’.” – Bill McBride of Calculated Risk calling the bubble back in April 2005 Where do we stand today regarding speculation? There are two measurements that are used to determine the speculation in a housing market: 1. The number of homes purchased by an investor and 2. The number of homes being flipped (resold within a twelve-month period) As compared to 2005, inve

In today’s market, with home prices rising and a lack of inventory, some homeowners may consider trying to sell their home on their own, known in the industry as a For Sale by Owner (FSBO). There are several reasons why this might not be a good idea for the vast majority of sellers. Here are the top five reasons: 1. Exposure to Prospective Buyers Recent studies have shown that 95% of buyers search online for a home. That is in comparison to only 17% looking at print newspaper ads. Most real estate agents have an internet strategy to promote the sale of your home. Do you? 2. Results Come from the Internet Where did buyers find the home they actually purchased? • 49% on the internet • 31% from a Real Estate Agent • 7% from a yard sign • 1% from newspapers The days of selling your house by just putting up a sign and putting it in the paper are long gone. Having a strong internet strategy is crucial. 3. There Are Too Many People to Negotiate With Here is a list o

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: 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.

Some police departments report as high as 98% of calls are false alarms. Not only is this an incredible waste of police resources that could be available for legitimate emergencies, it annoys neighbors, startles pets and results in expensive false alarm fees. Know your codes – entering an incorrect keypad code is a common mistake leading to false alarms. The solution is to create codes that are easy for all members of the family to remember without them being obvious to potential burglars like your street number. Let everyone know when you change your code. Secure windows and doors – be sure that all windows and doors are closed before activating your alarm. Disarm your system before opening a window or door. House guests – tell visitors that you have an alarm system and when you normally arm it. Housekeepers, baby sitters, outside family and close friends also need to be aware of your procedures and possibly give them a code to disarm the system if it is accidentally ac

There are many benefits to homeownership. One of the top benefits is protecting yourself from rising rents, by locking in your housing cost for the life of your mortgage. Don’t Become Trapped A recent article by Apartment List addressed rising rents by stating: “ Rents are up 2.7% year-over-year at the national level . Year-over-year growth continues to fall between the 2.1% rate from this time last year and the 3.4% growth rate from October 2015.” The article continues explaining that: “ Despite the seasonal slowdown, rents are still up year-over-year in 89 of the 100 Largest cities . Additionally, the Urban Institute revealed that, “ Over a quarter of renters, or 11.1 million households, are severely cost burdened , spending at least half their income on rental housing . These households struggle to save for a rainy day and pay other bills, including groceries and healthcare. It’s Cheaper to Buy Than Rent As we have previously mentioned, the results of the lat

During the holidays as throughout the year, getting cash from an ATM is normal for many people. ATM’s are available 24 hours a day and they’re located in bank branches, convenience stores, grocery stores, malls, airports, sports venues and on street corners. Unfortunately, the convenience aspect can compromise personal safety especially if you are distracted or not paying attention. Planning for an ATM withdrawal and applying common sense can help you avoid trouble. Be aware of your surroundings throughout the entire transaction like people sitting in a nearby parked car or someone offering to help you. Safeguard your PIN. Don’t share it with anyone. Don’t write it down. Don’t use your birthdate, last four digits of your phone number or other obvious numbers. If there are other people at the ATM to make a withdrawal, shield the keypad when entering your PIN number. Keep your car doors locked and windows raised, except for your driver’s window, when usin

In a recent CNBC article, it was reported that many baby boomers are selling their current homes and moving into rentals, rather than purchasing another home. “Between 2009 and 2015, the number of renters aged 55 or above rose 28 percent, while those aged 34 or younger only increased 3 percent... Meanwhile, more than 5 million baby boomers across the nation are expected to rent their next home by 2020, according to a 2016 analysis from Freddie Mac.” This makes sense in the short term for many reasons. If you are moving to a different part of town or a new region of the country, you may decide to rent until you pick the perfect home in an area you love. However, is renting a good long-term strategy? A mortgage payment remains fixed. Rents, however… The Census Bureau recently released their 2017 third quarter median rent numbers. Here is a graph showing rent increases from 1988 until today: As you can see, rents have steadily increased and are showing no signs of slow

In many markets across the country, the number of buyers searching for their dream homes greatly outnumbers the number of homes for sale. This has led to a competitive marketplace where buyers often need to stand out. One way to show you are serious about buying your dream home is to get pre-qualified or pre-approved for a mortgage before starting your search. Even if you are in a market that is not as competitive, knowing your budget will give you the confidence of knowing if your dream home is within your reach. Freddie Mac lays out the advantages of pre-approval in the ‘My Home’ section of their website: “It’s highly recommended that you work with your lender to get pre-approved before you begin house hunting. Pre-approval will tell you how much home you can afford and can help you move faster, and with greater confidence, in competitive markets.” One of the many advantages of working with a local real estate professional is that many have relationships with lenders who wi

If you’re beginning to feel the pressure of running out of time to find the perfect gift, here are a few suggestions that may not be on their “list” but will certainly be appreciated. The gift of really listening without interrupting, daydreaming or planning your response can be exactly what people want when they have something important to say. The gift of affection with appropriate hugs, kisses and pats on the back can demonstrate your love for family and friends better than words. The gift of laughter by sharing articles, cartoons and funny stories will say "I love to laugh with you." The gift of a simple, written note shows sincerity and real heartfelt sentiment that may be remembered for a lifetime and could even change a life. The gift of a sincere compliment supports a person’s need to be accepted and appreciated. "You look great in that color", "That was outstanding" or "I really enjoyed that" can make someone's day. The

Why is there so much paperwork mandated by the lenders for a mortgage loan application when buying a home today? It seems that they need to know everything about you and requires three separate sources to validate each and every entry on the application form. Many buyers are being told by friends and family that the process was a hundred times easier when they bought their home ten to twenty years ago. There are two very good reasons that the loan process is much more onerous on today’s buyer than perhaps any time in history. 1. The government has set new guidelines that now demand that the bank proves beyond any doubt that you are indeed capable of paying the mortgage. During the run-up to the housing crisis, many people ‘qualified’ for mortgages that they could never pay back. This led to millions of families losing their home. The government wants to make sure this can’t happen again. 2. The banks don’t want to be in the real estate business. Over the last seven yea

Here are five reasons listing your home for sale this winter makes sense. 1. Demand Is Strong The latest Buyer Traffic Report from the National Association of Realtors (NAR) shows that buyer demand remains very strong throughout the vast majority of the country. These buyers are ready, willing and able to purchase… and are in the market right now! More often than not, multiple buyers are competing with each other to buy a home. Take advantage of the buyer activity currently in the market. 2. There Is Less Competition Now Housing inventory is still under the 6-month supply that is needed for a normal housing market. This means that, in the majority of the country, there are not enough homes for sale to satisfy the number of buyers in the market. This is good news for homeowners who have gained equity as their home values have increased. However, additional inventory could be coming to the market soon. Historically, the average number of years a homeowner stayed in their h

You’ve got $500,000 in liquid assets for your retirement and you’re still 15 years away. All your bills are paid; you have a small mortgage on your home; cars are paid for and great credit. Don’t break your arm patting yourself on the back yet. People think more about what they’re going to do when they retire than whether they’ll have the funds to do them. Ask anyone who has retired, it takes more money than you thought it did. Let’s look at a hypothetical situation. To retire with $125,000 income in today’s dollars with a life expectancy of 25 years after retirement, you’ll need to have a net worth of $1.5 million at retirement including what Social Security may provide. Your $500,000 will grow to $1,045,420 in 15 years which will leave you about a half million short. You’ll need to save $24,149 each year for the next 15 years to reach your goal. Is this surprising? Did you imagine that this example would be that far from its goal? It might seem staggering to save $24,