Do Mortgage Rates Interest You?

With over 60% of the public owning their own home, and a high percentage of the rest stating a desire to, the interest rates on mortgages should keep your interest. With the holidays, cold weather, Super Bowl and stock market plunge, it was easy to miss the upward creep of mortgage rates the last 4 weeks. Pretty much everyone has been warning of rising rates for many years now, as they have remained historically low since 2008 or so. That’s 10 years of ultra low rates. 10 years of homeowners locking in low rates. Will this be the year they truly rise? No one knows for certain, but when they do, lots of people will kick themselves for not buying or refinancing sooner.

Whether a first time buyer, a move-up buyer, relocation buyer, downsizing buyer, sideways buyer for different area; or those refinancing from a rising adjustable rate to a fixed, getting rid of Private Mortgage Insurance, have better credit now, consolidating loans, or just haven’t gotten around to it in 10 years. All of these situations may call for a new home loan, and the interest rate can affect your decision of when and how much, especially when buying. In addition, most every year, the fastest home price appreciation happens from March to June, when the highest number of buyers are writing offers, and I expect this year to be the same. Lately, it has averaged a half to one percent price rise per month for those 4 months. If rates stay the same or drop back, you don’t lose as much, but if they go up, you may lose twice. **One instance where it may pay to wait 3 or 4 months – if you need a high appraisal to hit that 20% equity number on a refinance to eliminate PMI, it will help to have the higher spring sale prices closed for the appraiser to use.

Today, a fixed 30 year mortgage is running around 4.25% with no points. A month ago they were 3.87%. You can lower that rate with a shorter term loan of 20, 15 or even 10 years by a half percent or more to lock in the 3s. This makes a lot of sense when refinancing a loan that has less than 20 years left on it, as your payment should be similar if not less, you still pay off at the same time (not go back to a 30 year schedule), and you can get a lower rate on the shorter term loan. Pay it down faster and build your equity!

This is The Home Equity Coach talking — it is early February, buy in the next 6 weeks and ride the price wave. If you have a home to sell, put it on the market after you buy or even move and get the best of both worlds! Plus locking in a still-low interest rate? Practically money in the bank. If you cannot do this financially, I will walk you thru your still-good options. Now contact me and let’s get to work!

Gary is Bullish on 2018 Home Values, Plus 2017 Sales in Review

Greetings and welcome 2018!

2017 bestowed another solid increase on the real estate market in St Louis, and across the country. Our local residential market notched a 4% annual gain, similar to the past 4 years, and pushed the average sale price for homes and condos to $234,339. Some parts of the metro experienced more, of course, and some less. The number of sales was up 2.3% from 2016, so home supply is really not shrinking, it is a faster increase in buyers than homes coming on market. Average days on market decreased 15% to 44, with median days a meager 16! Months of Inventory (ratio of homes on the market to how many are selling) shrunk 11% to 2.5 months showing the higher demand.

As for submarkets, I compared 4 factors: days-on-market (DOM), average price negotiation (list price to sale price ratio), months-of-inventory, and sale price increase, to determine hot and cold areas of our metro. I found St Charles County and the Central Corridor (Mid STL County) to be in the highest demand with price appreciation between 5.5% to 6%, shorter DOM, and lower supply. The Central Corridor had the highest average sale price in the region, no surprise, at $400,000. South County showed only 3% appreciation but had strong indicators otherwise, so I anticipate a higher price increase there in 2018. North County had the highest value increase at 7%, but the other factors were sluggish – among the highest DOM and most supply, although every category in every submarket across the area improved. I believe the dropping number of distress sales in North Co helped push the average price up. West County showed a 2.3% price increase, and average indicators. My experience here is that homes below $500,000 were selling faster, and higher prices were slower, keeping the average just average. I believe the big spenders in 2017 were staying closer in, as evidenced by the Central Corridor rise. The city of STL (2.3% up) and Jefferson County (4.3% up) were on the slow side, with higher DOM and home supply. Jeff Co, along with their solid appreciation, had a very low negotiation factor of 99.3% list price to sale price (sellers came off price only .7%), a close second to St Charles, so don’t expect to get a low offer accepted there!

Looking ahead to 2018, economic indicators are almost all positive. With the STL unemployment rate now at 3.4%, and running below the national average, now at 4.1%, for about 2 years; the stock market at all time highs, wage growth increasing, the global economy strengthening, and our region’s reputation for affordability, I anticipate an increase of 5%, maybe 6% in home values this year. Now is the time to be planning and prepping for a move in 2018 – contact me now to take advantage of the best market we have seen in 12 years!

Go Home Values!

HEC Yeah! The Home Equity Coach

To build on my article from 2 weeks ago – accelerating home equity to Increase your Net Worth Faster – I have now coined it the Home Equity Coach program and have purchased www.TheHomeEquityCoach.com.  I plan to expand this free program over the next 12 months, as I strongly believe in building wealth thru real estate ownership, among your other investments such as stocks and businesses.  Since the road is not always clear on how to get there, I am offering my service on this important financial asset that can be easily overlooked and taken for granted .  Of course, I will continue my main occupation as a Realtor representing home sellers and buyers for years to come.  This program is a supplemental guide for homeowners to realize a larger payoff upon selling, which can then be used for a larger down payment on the next home, pay down other debts, invest in retirement funds, or however you wish! 

 

Financial experts seem to agree that the proper percent of home equity compared to your total net worth should be in the 20%-30% range, meaning if your net worth is $500,000 that your home’s value minus the loan(s) is $100,000 – 150,000.  This percent will fluctuate substantially over your lifetime – smaller when buying your first home, and higher when selling your last one.  Currently, the average person’s home equity is a much higher % of their total financial worth, as the average savings/investing rate is lower than it should be.  So even though my goal is to build your equity faster, I also believe you need to be properly invested and balanced in different asset classes.  You should not be house-rich and cash-poor.

I have represented 365 clients buying and selling a wide variety of homes and locations over a 27 year career that includes managing other agents for five years.  This experience has given me many insights on how to make a financially-smart purchase, to grow that value while enjoying your life there, paying down the debt sooner, and eventually selling it with a larger check in hand.  I can enter the picture in any of these stages to lend guidance in achieving these goals with you.  It can apply to your own home or to rental homes you own.  This is NOT a get-rich-quick scheme; buy-for-zero-down investment; flipping-houses-with-other-people’s-money; or anything you have heard advertised.  Nor is it designed to sell you a larger home (unless you want to of course, then I am happy to :).  I simply feel bad for folks that have missed opportunities to accelerate their wealth during their home ownership using tools already available to them.  In the end, I hope to earn/ keep your business when it is time to buy and sell homes.  That’s it!

If this terminology intimidates you, don’t worry, I can simplify.  If it is too basic, it is supposed to be.  The concept here is not difficult to grasp, just difficult to maintain the discipline, that is where having a coach can be invaluable.  Contact me soon to arrange a home visit where we can begin your plan.  Time to bring in the Coach!

Happy HEC-ing!

Increase your Net Worth Faster

Home “equity” is simply your home’s value minus what you owe on it.  Many of us have a rough idea of what our home is worth and also what we owe on it.  Several years ago, 25% of home owners had a negative number, severely hampering their ability to move or refinance.  Fortunately today, few owners are in that position as average home values have risen steadily for 5 years.  I believe you should have a clear picture of these two numbers, and how to drive them further, as it can be a large percentage of your net worth.  It can harm you, and it can help you, in house matters and in other life pursuits.  Your home equity is an important figure – you should have more than a vague idea of what it is and how to increase it.   Even as you closely track your assets and investments, this may be a higher priority as you can take several steps to build it, and limit your risk of losing your home.

I am offering to assist you in focusing closely on (1) what your house is truly worth; (2) how to increase that value without overspending; (3) evaluating how and where to get maximum return on repairs and improvements; (4) comparing home loan options on purchase and refinance that work best for you; and (5) making that mortgage work for you.

I offer these services for free in the hopes of earning your business in the future, and referrals of those you know in the immediate term looking to sell or buy homes.  Consider me an unbiased third party on home improvements and loans, as I do not financially gain from the choices you make.  I would not steer you wrong in these matters knowing that you may come to me later to sell your home, and I have to answer to my recommendations.  Also, I can give you hard figures to track your home equity amount so you have a clear number to work with, which can benefit you in several ways; plus I can document your repairs and improvements for an easy record (now required by title companies for 12 month period prior to sale) of paid receipts, lien waivers and warranties when it is time to sell.

If you don’t own a home, let’s change that and start building your equity for 2018.  It can be exciting to watch how leveraging a down payment on a home purchase that is appreciating in today’s market can dramatically magnify your net worth!  Leveraging works in reverse too, I can show you how to be mindful of that.  If you are not completely sure of how this works, take the time to understand this basic principle of finance.  Another principle worth understanding is the magic of compounding – it is not just for interest on your savings, it works on your mortgage payoff too!

Happy equity building!