Real Estate

3.8 Million Homes Needed to Close the Affordable Housing Gap

A recent Freddie Mac study on the U.S. housing supply found that approximately 3.8 million additional homes are needed in order to close the affordable housing gap. The ongoing housing shortage is large and rising, due in part to the effects of the pandemic, as well as the high demand for homes coming from eager buyers rapidly entering into the purchasing market. Even before the COVID-19 pandemic and current recession, the housing market was facing a substantial supply shortage. In 2018, it was estimated that there was a housing supply shortage of approximately 2.5 million units, meaning that the U.S. economy was about 2.5 million units below what was needed to match long-term demand. Using the same methodology, it was estimated that the housing shortage increased to 3.8 million units by the beginning of 2021. The main driver of the housing shortfall has been the long-term decline in the construction of single-family homes as builders struggle to meet exploding demand. In 2020, it was estimated that there were only 65,000 new entry-level homes completed—less than one-fifth of the entry-level homes constructed per year in the late 1970s and early 1980s. "The U.S. is currently experiencing an increase in housing demand that is well beyond what record low mortgage rates would typically yield as many people are spending more time at home. This high demand has driven the housing supply shortage even higher and has caused home prices to rise over 12% from a year ago." Freddie Mac experts do not expect housing demand to decrease any time soon.

*Source: Freddie Mac- Perspectives & Research*

Read more...

Buy First, Sell Later

Buying a new home after your current home has gone under contract and only having less than a week to find a new home can be an extremely stressful situation. One way to make the process of buying a new home easier is to buy first and sell later. Meaning buy your new home, move into it at your leisure, then once your old home is empty, list and sell it. There are many benefits to this strategy. Firstly, this makes it so you only have to move one time and won't have to deal with expensive storage fees or doubled moving expenses. You’ll also have a cushion in case something goes wrong during the process of purchasing the new home. Like in the unfortunate case of a deal falling through, you’ll still have your old home to stay in. It also gives you time to make improvements or repairs on your old home before listing, which can help ensure you receive top dollar offers from interested buyers. To make this type of financing happen there are two major considerations to work out: your down payment AND qualifying for both mortgage payments. Qualifying for both payments can be tough. If you qualify for both payments right away, it’s smooth sailing. If by chance you don’t qualify for both, there is still an option for you. You can convert your existing home to a rental property and use 75 percent of the home to a rental property and use 75 percent of the rental income to offset the existing payment. This strategy works great if you are wanting to acquire rental properties and grow your real estate portfolio. Figuring out the best strategy to purchase and sell your home can be a bit complex and difficult at times. So, you never want to go at the process alone! It is always better to have a trusted mortgage professional on your side. There is never any harm in discussing your situation with a mortgage lender, like me, who will be able to tell you after running a few numbers whether you can make the buy first, sell later strategy work. If you think this is something you would like to look into, give me a call and let's discuss it further.
Read more...

Stop Waiting, Start Saving

Every year, households across the country make the decision to rent for another year or take the leap into homeownership. They will consider their budget, their desire to move, commute times, and many other factors. However, there is a financial advantage to owning a home that is often forgotten when making this decision – the significant wealth one can build through equity while owning a home. The typical gain in home equity has increased significantly over the last five years. According to a recent report, the average homeowner gained $17,000 in equity in just the last year alone. As you make your plans for the rest of the year, be sure to consider the equity benefits of home price appreciation as you weigh the financial advantages of buying over renting. When you do, you may find this is the perfect time to jump into homeownership. If you’re ready to buy your first home for a great rate, let me know. I’ll take the time to guide you through it. Are you already a homeowner and just on the fence about refinancing? Even though Mortgage Rates are slightly higher than their all-time lows, it may still be very favorable to refinance. In many cases, you can significantly reduce your interest rate, monthly payment and even take off your costly mortgage insurance. It might be tempting to play the market and see if interest rates come back down to the all-time lows we saw at this time last year. But even if the rates eventually do go back to those historic lows, you will have already missed out on banking significant savings by refinancing today. It would likely take several years before a potential lower rate in the future would catch up to the savings you could start seeing right away. There is no guarantee that rates will move lower, like I always say you have the choice between the rate today or the rate tomorrow. We can’t predict the future, but we can see what we can do with what we have today. Odds are you could benefit in some way from refinancing today. It’s time to stop waiting and start saving, reach out to us if you want me to run the numbers to see how much you could save with a refinance or if you are curious to see what you qualify for when it comes to purchasing a new home.
Read more...

Seller Confidence is Growing Due to Vaccines

Last fall, a published Zillow report found that 29% of homeowners reported that their life or financial situation was too uncertain to enter into the housing market. The share of homeowners feeling this uncertainty dropped to 25% at the beginning of this year. This is a sign that potential sellers are growing more confident thanks to the continued demand for homes, rapid home appreciation and vaccine distribution. Homeowners who decided to sell their homes during the uncertainty of 2020 were rewarded with offers above list price, shorter selling times and buyer demand that has lasted well past the traditional “peak” selling season. That trend is likely to continue into 2021 as vaccine distribution continues to help re-jump the economy. The vaccine rollout will likely bring a boost of inventory that the market desperately needs, as sellers become increasingly willing to move now that the pandemic is more under control. This will result in a greater number of new listings beginning this spring. This increase in inventory will give buyers much needed breathing room and more options in an extremely competitive market. The pandemic triggered a buying frenzy, at first with wealthy city-dwellers wanting to get away to suburban life. As companies have continued to let more of their staff work from home, people have realized they can live far from the office, in whatever location suits their desires. These flurry of activity will die off eventually, but for now it continues to be a motivating factor. Economists are forecasting a pretty hot market in 2021, driven by historically low mortgage interest rates and a surge of young buyers approaching prime home buying years. If you’re feeling overwhelmed or uncertain about the current market, the best thing to do is to talk to a mortgage professional who can answer all of your questions. We can tell you what kind of mortgage you qualify for, and the best strategy to help you achieve your real estate goals. Contact us today with any questions you have about buying or selling. 801.206.4343

**Source: Zillow Premiere Agent & MBS Highway**

Read more...

Get the Loan, Skip the Appraisal

We are always looking for ways to save you money when it comes to your home purchase or refinance. One of the ways we do this is to check whether your property is eligible for an appraisal waiver – which could save you hundreds in appraisal fees! Also known as a property inspection waiver, an appraisal waiver allows a homeowner to forgo hiring (and paying for) an appraiser to perform an appraisal on their current or prospective home. Instead of someone coming out to walk through the property, we will use automated information based on data such as recent home sales in your neighborhood, to get the appraised value. Appraisals can cost anywhere from $500 to $1000, so having it waived can save you a lot of out-of-pocket money. It also helps to alleviate the stress of an appraisal potentially coming in low. When an appraisal does come in low, buyers typically have to bring additional funds to the closing table to cover the difference. An appraisal waiver immediately removes this stress from this part of the transaction for both the buyer and seller. No more having to wait weeks to find out if you are going to be able to close. In fact, with an appraisal waiver it’s possible to close in 15 days or less! An appraisal waiver does require a 20% down payment to qualify, and I have to run the address through a system called DU prior to submitting any offers. Not all homes are qualified for an appraisal waiver but checking to see if a property is qualified is easy, just reach out to me with an address! Appraisal waivers can save you money and time, which is crucial in today’s market. Reach out to me today see if you qualify for and let me show you how great working with ALV Mortgage can be.
Read more...

Smart Way to Spend Your Stimulus Check

You may be wondering how to best use the $1,400 payment you may have received as a result of the latest round of stimulus relief. One thing may folks will be doing with their stimulus money is investing it! A recent survey shows that retail investors on average plan to put 37% of their stimulus into stocks. For those investors ages 25-34, the intended share is close to half. Data from the Census Bureau show that of all Americans that received a payment, 15% were putting at least some into savings or investments. One of the best ways to build wealth is by investing. Investing allows you to put your money into accounts that have the potential to bring you a strong return. If you don’t invest, you are missing out on opportunities to increase your financial worth. There is the downside that you have the potential to lose your money in investments, however, if you invest wisely, the potential to gain money is significantly higher than if you never invest. When it comes to investing you don't just have to invest in stocks. You can invest in real estate either through owning your own home, purchasing a home as a rental or vacation property or purchase an investment building. When you invest in real estate, you are putting some of your money into the equity of the property, which is like a forced savings account that can bring you a strong return down the road. Plus, with homes expected to appreciate by 6% in 2021 you could be looking at an amazing return on your investment! Have questions about investing in real estate? Reach out to us by email or give us a call at anytime.
Read more...

Now is the Time to Buy

The housing market will remain hot this year as favorable interest rates and sky-high demand continue to drive the market forward. Although we are seeing a small rise in rates they are still near all-time lows. The main worry for today’s market is the low inventory of houses on the market. Sure, you can sell your home no problem, but what are you going to move into? Supply is extremely tight and inventory levels are dramatically below anything we have seen in the past. New construction is not keeping up with demand, and the pandemic shutdowns took a huge chunk out of builders’ production, as they were not able to put anything on the market for six months. However, thanks to low interest rates, they were selling more than they ever sold before. The market was already struggling with inventory but due to this decrease in builders’ supply inventory got even tighter. Plus let’s not forget, with low inventory comes higher home prices since more buyers are competing for the same homes which drives up a seller’s price. A recent report showed home prices grew by about 10% in 2020 and show no signs of letting up in 2021. We won’t begin to see price decrease unless there is an is an excess inventory. The good news for the housing market is we are definitely not over built. Builders are more in demand than ever and are working quickly to build new inventory for the market. As new inventory comes onto the market and more people decide to sell their homes, buyers looking to buy this spring could be entering into the market at an amazing time. Fitting perfectly into a sweet spot where there is more inventory and fewer buyers, since a handful of buyers will be bowing out to wait to for the market to slow down. But the thing with real estate is you don’t want to wait. You could be missing out on major appreciation gain. Currently high demand and tight supply are pointing towards 6% appreciation for homes in 2021. For instance, if you buy a home for $600,000 with 10% or $60,000 down, a 6% appreciation on that home equals a 60% return on that down payment investment. You can’t expect an appreciation gain like that if you try to wait for the market to slow down. If you're shopping for a home, with rates near historic lows and home prices appreciating nationwide, there is an amazing opportunity to build wealth for your family through real estate. Contact me today and let’s discuss your situation.
Read more...

2020 – A Record Year for Home Sales

In a recent report from the Salt Lake Board of Realtors 2020 took the top spot as the best year for home sales since 2005. Despite conditions surrounding the COVID-19 pandemic, 2020 was the best year in overall home sales in Salt Lake County. More than 19,000 homes were sold, beating the previous 2005 record of 18,907 home sales. 2020 broke another record with an all-time low of 12 days on the market for a single-family home, which is down from 24 days in 2019 and even further below the long-term average of 41 days. The increase in demand stems from Utah’s rapid growth in jobs and population over the last few years and has brought an inventory shortage to the Utah housing market. While this on-going shortage is shrinking, due to recent high levels of residential construction, the shortage continues to impact the real estate market. The two most visible impacts are on sales and prices. The median sales price of a single-family home in Salt Lake County in 2020 increased by almost 12% to $425,000. This puts Utah as one of the highest median prices in the country. If you have been thinking about selling your home, there has never been a better time. With low inventory houses forcing buyers to snatch houses off the market quickly you could receive multiple offers which always give you an increased chance of getting an outstanding offer for your home. Due to low inventory prices have been on the rise which has added to the growing concern of housing affordability for buyers in Utah. Continued historically low interest rates and a strong rebound from the pandemic suggest that 2021 could be another record-breaking year for the Utah real estate market. It can be expected that the median sales price of a single-family homes will increase by 8% to $455,000, and the price of condominiums/townhomes will increase by 10% to $335,000. However, most experts agree that mortgage rates will remain around 3% in 2021. Low rates always help offset the price increase and makes owning a home more affordable. If you are thinking 2021 is the year for you to mark homeowner off of your bucket-list give me a call. With a low inventory creating a competitive market for buyers you don’t want to go at the process alone. Let me be your guide to your next home.     Article Source: Salt Lake Board of Realtors Housing Forecast
Read more...

Real Estate Fact vs. Fiction

It’s amazing to me, but, right here in Salt Lake County, there are over 94,000 residents who are currently renting even though they can afford to purchase a home. They are qualified to buy a home, so why wouldn’t they? Some people think that the housing market isn’t stable, but home prices in Salt Lake County are forecasted to appreciate by 4.9% over the next year, and 23.1% over the next 5 years. What does that mean in dollars and cents? Well, if you purchased a home at the median price of $352,000, you would gain $81,000. This is a very strong market; however, here is the biggest misconception: in a national survey, the number one reason why people are still renting even though they are qualified to purchase a home is because they think they need 20% down. It’s hard to believe that people still believe they need 20% down. That couldn’t be further from the truth! You can purchase a home with as little as 5%, or even 3% down, based upon the programs that are available. If you have questions down payment assistance or becoming a home owner, contact me – I’ll show you your options!
Read more...

Experience Matters

One of the classic conundrums in buying a house is that buyers need to sell their homes before they can buy their new property. Even if they have the funds to close the transaction, for most people, having two mortgage payments at the same time (on the old and new house) means that their debt-to-income ratios fail to meet the lender's standards. However, the rules for Fannie Mae and Freddie Mac both have a loophole that might let you buy a new home before your old house closes without having to rent out your old home. It all hinges on whether or not you have found a buyer. Fannie Mae's rules say that you can exclude the mortgage payment on your existing home if you have a buyer with an executed purchase agreement without a financing contingency. This means that once the buyer for your existing home passes their financing contingency, you can close on the purchase of your new house. If your mortgage is underwritten by Freddie Mac, the rules are even more flexible. Like with Fannie Mae, you can exclude your existing monthly mortgage payment from the debt-to-income ratio relative when your buyer's financing contingency goes away. However, where things get really interesting is that if you are relocating and have an employer relocation benefit, a relocation company will take responsibility for your old loan. You can exclude that existing mortgage payment from the debt-to-income ratio and close on your new mortgage prior to selling your existing house. These rules can be complicated. They also require you to have the funds to close on your new home without the proceeds from the sale of your existing home. Nevertheless, a loan officer who understands these intricate guidelines can give you some additional flexibility and help you get into your new home more quickly. If you are interested in taking advantage of these rules, work with both a real estate agent and mortgage broker that understands them and can help you structure your transaction appropriately. To schedule an appointment to review your specific situation please give me a call at 801-206-4343.
Read more...