Buying or Selling in 2018? 5 Reasons to Resolve to Hire a Pro [INFOGRAPHIC]

Buying or Selling in 2018? 5 Reasons to Resolve to Hire a Pro [INFOGRAPHIC] | MyKCM

Some Highlights:

  • As we usher in the new year, one thing is for certain… if you plan to buy or sell a house this year, you need a real estate professional on your team!
  • There are many benefits to using a local professional!
  • Pick a professional who knows your local market and can help you achieve your dreams!

There’s More to a Bubble Than Rising Home Prices

There's More to a Bubble Than Rising Home Prices | MyKCM

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, investor purchases are down dramatically (from 23% to 13%) and so is flipping (from 8.2% to 5.7%). McBride explains:

“There is currently some flipping activity, but this is more the normal type of flipping (buy, improve and then sell). Back in 2005, people were just buying homes and letting them sit vacant – and then selling without significant improvements. Classic speculation.”

What are the experts saying about speculation in today’s market?

DSNews recently ran an article which asked two economists to compare the speculation in today’s market to that in 2005-2007. Here is what they said:

Dr. Eddie Seiler, Chief Housing Economist at Summit Consulting:

“The speculative ‘flipping mania’ of 2006 is absent from most metro areas.”

Tian Liu, Chief Economist of Genworth Mortgage Insurance:

“The nature of housing demand is different as well, with more potential homeowners and far fewer speculators in the housing market compared to the 2005-2007 period.”

And what does McBride, who called the last housing bubble, think about today’s real estate market?

Sixty days ago, he explained:

“In 2005, people were just buying homes and letting them sit vacant – and then selling without significant improvements. Classic speculation. And even more dangerous during the bubble was the excessive use of leverage (all those poor-quality loans). Currently lending standards are decent, and loan quality is excellent…

I wouldn’t call house prices a bubble – and I don’t expect house prices to decline nationally like during the bust.”

Bottom Line

Speculation is a major element of the housing bubble formula. Right now, there are not elevated percentages of investors and house flippers. Therefore, there is not an elevated rate of speculation.

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.

Large 5 BR, 3Bath Colonial in East Orange

$75,000

14 Watson Avenue, East Orange, NJ  07018

Spacious colonial featuring hardwood floors, five bedrooms two  kitchens, three full baths. Excellent curb appeal. Centrally located. Property is Sold “AS IS”. Buyer may be eligible for $100.00 down payment ask how? If home built before 1978 a LBP addendum is included.  Easy NYC commute.  FHA Case Number: 352-636261.  FHA financing UI (uninsured) 203K Eligible.  Available to all bidders.  Bids are accepted daily until a winner is selected. For property condition report, forms, disclosures, availability and to place a bid please visit http://www.hudhomestore.com. Buyer to verify all information.

 

Call Robert George for details and showings 609-474-0360.

Nice 2 Family Home In Irvington

$145000

 

Well-Kept Income Producing Home. Separate Utilities for Each Unit. Easy Access to GSP and Mass Transit. Quiet Neighborhood. Extra Room in Each Unit Can Be Used As Office/Den.Tenant Use of Backyard.   HUD home being sold “As Is”.  Buyer is responsible for all inspections and certifications  Available to all bidders.  Bids are accepted daily until a winner is selected. FHA Case #352-692517  IE

 

Call Rob for details and showings  609-474-0360.

2 BR Home in Belleville

$85,000

 

93 Magnolia Street, Belleville, NJ  07109

 

Call Robert for details and showings 609-474-0360.

 

HUD Home – 2 Bedroom,1 bath single family. Property is available to all bidders.   Bids are accepted daily until a winner is chosen.  Property is Sold “AS IS”. Buyer may be eligible for $100.00 down payment ask how. If home built before 1978 a LBP addendum is included. FHA financing UI (uninsured) 203K Eligible. Case # 352-627266 For property condition report, forms, disclosures, availability and to place a bid please visit http://www.hudhomestore.com. Buyer to verify all information.

Buyer Demand Continues Outpacing the Supply of Homes for Sale

Buyer Demand Continues Outpacing the Supply of Homes for Sale | MyKCM

The price of any item is determined by the supply of that item, as well as the market demand. The National Association of REALTORS (NAR) surveys “over 50,000 real estate practitioners about their expectations for home sales, prices and market conditions” for their monthly REALTORS Confidence Index.

Their latest edition sheds some light on the relationship between Seller Traffic (supply) and Buyer Traffic (demand).

Buyer Demand

The map below was created after asking the question: “How would you rate buyer traffic in your area?”

Buyer Traffic | MyKCM

The darker the blue, the stronger the demand for homes in that area. Only three states had a ‘stable’ demand level.

Seller Supply

The index also asked: “How would you rate seller traffic in your area?”

As you can see from the map below, 21 states report a ‘weak’ sellers traffic, 25 states report a ‘stable’ sellers traffic, only 4 states and DC report a ‘strong’ sellers traffic. Meaning there are far fewer homes on the market than what is needed to satisfy the buyers who are out looking for their dream homes.

Seller Traffic | MyKCM

Bottom Line

Looking at the maps above, it is not hard to see why prices are appreciating in many areas of the country. Until the supply of homes for sale starts to meet the buyer demand, prices will continue to increase. If you are debating listing your home for sale, let’s get together to help you capitalize on the demand in the market now!

Americans Still Believe Real Estate is Best Long-Term Investment

Americans Still Believe Real Estate is Best Long-Term Investment | MyKCM

According to Bankrate’s latest Financial Security Index Poll, Americans who have money to set aside for the next 10 years would rather invest in real estate than any other type of investment.

Bankrate asked Americans to answer the following question:

“What is the best way to invest money you wouldn’t need for 10 years or more?”

Real Estate came in as the top choice with 28% of all respondents (3% higher than last year), while cash investments – such as savings accounts and CD’s – came in second with 23% (the same as last year). The chart below shows the full results:

Americans Still Believe Real Estate is Best Long-Term Investment | MyKCM

The article points out several reasons for these results:

“After bottoming out at the end of 2011 following the worst housing collapse in generations, home prices have gone gangbusters recently, climbing back above their record pre-crisis levels. Prices jumped 6.6 percent during the 12 months that ended in May, according to CoreLogic.

Toss in persistently low interest rates, tax goodies that come with owning a mortgage, and the psychological payoff from planting your roots, and maybe it’s no wonder real estate remains popular.”

The article also revealed that:

“Bankrate’s Financial Security Index — based on survey questions about how people feel about their debt, savings, net worth, job security and overall financial situation — has hit its third-highest level since the poll’s inception in December 2010.”

Bottom Line

We have often written about the financial and non-financial reasons homeownership makes sense. It is nice to see that Americans still believe in homeownership as the best investment.

Great 2 BR 2 Bath House In Bloomfield

Contact info:
Robert George | RTG Property Solutions LLC |609-474-0360
Great 2 BR 2 Bath House In Bloomfield
163 Jerome Place, Bloomfield, NJ 07003
$182,160
KEY FEATURES
Year Built: 1902
Sq Footage: 1568 sqft.
Bedrooms: 2 Beds
Bathrooms: 2 Bath
Floors: 2
Lot Size: 3875 Square Feet
Property Type: Single Family House
HUD House FHA Case #352-611686. FHA financing IE (Insured Escrow) 203K Eligible. Available to all bidders. Bids are accepted daily until a winner is selected. For property condition report, forms, disclosures, availability and to place a bid please visit http://www.hudhomestore.com. Buyer to verify all information.

Contact info:
Robert George
RTG Property Solutions LLC
609-474-0360

 

Nice 2 Family Home On Dead End Street

$80,000

 

211 Brookside Avenue, Irvington, NJ  07111

 

Call Robert for details and showings 609-474-0360.

 

HUD Home – 2 Family. Unit 1 – 2 bedroom/1bath with deck.  Unit 2 – 3 bedroom/1bath.  Finished basement & 2 car attached garage.  Avail to all bidders.   Bids are reviewed daily until one is accepted Property is Sold “AS IS”. Buyer may be eligible for $100.00 down payment ask how. If home built before 1978 a LBP addendum is included. FHA financing UI (Uninsured) 203K Eligible. Case # 352-564863 For property condition report, forms, disclosures, availability and to place a bid please visit http://www.hudhomestore.com. Buyer to verify all information.